Tips to Streamline the Month End Close for Start-Up Businesses
Each month, businesses must undergo an accounting month end close process to verify account balances, identify and solve any discrepancies and produce monthly financial statements. This provides strong insight into the financial health of a business. Bookkeepers and accountants tend to start the monthly close once the month ends. This means business owners usually have to wait 2 weeks after this, to receive their financial statements and results of the past month. This leaves little time for reviewing and correcting any discrepancies.
Streamlining this process can help start-ups run a more efficient, timely and accurate monthly close process. We have outlined key steps to help businesses streamline their month end close and the benefits this can have business owners.
Streamlining Your Month End Close
There are many tips, tools and processes that can help to streamline your start-up’s month end close process. This alleviates some stress from your finance team and delivers more timely financial updates to your team.
Understand Why a Faster Month End Close is Important
A start-up founder should define why this is important for the business. The reason why you want to streamline this process will help you understand the benefits it will have for your business. For example, having faster access to financial data will benefit your company and help you identify potential financial trouble spots early. Additionally, it will help you present financial data in a timely manner to investors, leaders, and external stakeholders. Once you identify why you want a faster month to end close, share it with your organisation. Having your entire team on board in supporting a faster month end close is an important first step in the process.
Standardise Your Month End Close Procedures
Your month end closing process happens every month, meaning its an iterative, repeatable process. By standardising your procedure, you can streamline your month end close tasks and make your company operations more efficient. There are four key steps to standardising your month end close procedures.
Step 1: Take Stock of Your Month End Close Steps
The first step in making your financial close processes iterative and efficient is to take stock of all the steps you complete each month. As you go through a month end closing process, write down each step you take, the stakeholder that’s involved with that step and when it must be completed. By identifying these steps, it will allow you to determine the mechanics of the process and create a comprehensive and clear list of steps to completing month end close.
Step 2: Identify Dependencies
A major frustration for completing a quicker month end close cycle is in inter-office dependencies. The finance department often needs to source documents and information from employees in other departments. As you build your month end close checklist, look for dependencies. When you spot a dependency, plan how long it will take them to gather and provide you with the necessary accounting data. Include these on your month end close checklist and add extra time for connecting and checking with these decision makers.
Step 3: Work Backward from Your Target Month End Close Date
Once you know all of the steps you need to complete for month end close and how long each task takes to complete, work backward from your target month end close date. This helps you understand the start date for beginning you month end closing process.
Step 4: Build Your Month End Close Checklist
The month end close checklist allows your finance team to streamline the month end close process. These robust checklists should include who, what and when for each step. Meeting the deadline for each step of your checklist will ensure a faster and more streamlined month end close for your company.
Reflect on Month End Close
Performing a month end close post-mortem helps you learn from past mistakes. Consider your month end close checklist a living document that’s updated each month. Each time you review your process you will get to improve it. These changes can help your team to maintain a continuous improvement mindset and streamline month end close activities.
Automate as Much as Possible
Automation is key, to create a faster month end close process. Automation provides the speed and accuracy of traditionally slow, labour-intensive, and repetitive tasks. When you replace manual processes with intelligent, effective automation, you allow your finance team the flexibility to focus on other critical tasks.
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Gallagher Keane maintain their entire practise using cloud accounting software. This allows our clients to access their finance information online to make informed business decisions. Use of cloud accounting streamlines many tasks, saving you time, which allows you to focus on your business priorities. If you are interested in finding out more about Gallagher Keane’s online accounting services, why not book a no-obligation call with us.