December marks the end of the fiscal year for many companies. It’s a critical time for finance professionals and certainly the cause for many year-end headaches. This is the time of year that finance teams bury themselves in their financial data to prepare those necessary year-end reports and statements. This annual close out period comes during one of the heaviest workload periods of the year, when month-end, quarter-end, and year-end combine into the perfect storm that requires every ounce of the finance department’s time and energy. According to CFO, it’s estimated that the average accounting team requires a full 25 days just to complete its annual close.
This is also known as “closing the books”, when organizations inspect and update their accounting records at the end of the year. This is the critical final step in the company’s annual financial reporting process. It identifies any balances or deficits on the company books which are then carried over into the new fiscal year. This helps create more realistic budgets based on what was spent the previous year. The primary goal is to maintain strong financial health and provide visibility into all the profits and losses of the business.
One of the easiest ways to reduce the workload and stress of the year-end closing is to:
Planning ahead can make all the difference in the world. The entire closing process can be simplified by performing pre-close activities throughout the year.
Confirm each team member’s responsibilities way in advance so that everyone knows precisely for what they are accountable. Make this checklist visible to all finance team members.
This includes your Income Statement, Cash Flow Statement & Balance Sheet.
Confirm all customers have been invoiced & their debt collected. Sometimes clients just need a friendly reminder that they owe you money. Always work to collect what is owed your business.
You must get an accurate count of the materials and supplies you have on hand. Otherwise, this will cost you money in the form of expired goods or empty shelves.
Match your bank & credit card statements with receipts. An accounting software solution will let you automate this process throughout the entire year.
This will reduce the amount of time it takes to confirm accounts are accurate.
This will ensure you settle all debts and collections before year-end.
Make sure you have all the correct forms and information on file to ensure W-2’s and 1099’s will go to the proper place.
You don’t want to have to add this to your list of critical to-do’s come December when your team is already overloaded with responsibilities.
While this should be an ongoing process, make sure all of your software programs have been backed up successfully.
If you don’t already have a financial reporting software solution in place, make that a top priority so that beginning in 2023 you can automate and simplify, not only your annual close, but every financial decision necessary to successfully operate and grow your organization. A leading technology solution will give your finance teams greater control and real-time visibility into the financial health of the company. It will save them time, money and resources, along with ensuring complete confidence in their data to make the very best decisions.
