The bells are ringing. Wake up, YOU!
It happens the same way, right? When you and your team suddenly see the client files flying in the air, the cluster of pending data to be reviewed, the 109397326382 transactions to be reconciled, you just know the sleepless nights are about to take over. It’s only time before you hit the wall.
Yeah, it’s the financial close. Happy Realization.
I don’t mean to look down upon you here, but the period of financial close kicks in setting the tone that it’s time to burn the candle at both ends. Regardless of a company’s size or financial sophistication, the financial close process can be highly tortuous and convoluted, when unplanned or performed recklessly.
Sequential steps — from recording transactions to generating financial statements — must be done efficiently, collaboratively, and accurately before accountants can close the books.
Let’s begin with the basics of this miserable yet magical time for accountants.
What is the financial close process?
The financial close process is a recurring system in which an accounting team verifies and adjusts account balances at the end of a designated period. It begins with documenting the journal entries for all the transactions and ends with fortifying data for the next fiscal year.
The significance of this process is the output, the financial reports that constitute the financial health and position of a company. The information can then be utilized by a multitude of stakeholders, namely, lenders, investors, management, and regulatory agencies, for conscious decision-making.
The internal management puts the statements to use to communicate the health of the company to external stakeholders and gauge results against preset objectives. The financial close encompasses the whole accounting cycle, culminating with generating financial statements and closing the books. Combined with other operational data, the underlying historical data in the company’s books are used for financial analysis, budgeting, and forecasting.
It’s crucial to track the close process and identify red flags resulting in a potential loss of client and reputation.
The aches and pains with close:
1. No Defined Process
To close the financial year the right way, one must have a well-established, standardized process. The predetermined plan draws a point for you to begin with. If all the employees work as per their will, the books are destined to be heterogeneous.
The comparisons will become cumbersome, increasing the possibility of errors and inconsistencies that could be omitted. In some companies, there is no seamless closing process. That is even worse. A little bit of magic math and uptight scheduling can give you a head start on the closing process.
2. Scrambling To Find Data
Scrambling at year-end to collect data is no joke. You’re under a tight deadline so you don’t have long to wait around. The year-end closing process is chock-full of data and if you are denied access to what you need promptly, it is a challenge to efficiently move through the process.
Extracting accurate data in real-time adds to the misery for the team, who constantly have to sit with a magnifying glass, first to collect the data followed by updating, resharing, re-updating ad infinitum. The problems that they encounter later are no surprises unless a standardized system is in place.
3. Little Automation
There used to be a time when the year-end closing process relied solely on human input. While that is still imperative to a certain degree, there are more tools than ever before for automating mundane, repetitive tasks that can be efficiently handled by new-age tools.
Automation is no longer the future. It’s the here and now. According to Deloitte, “Such tools can introduce a new level of rigor into the close process while realizing efficiencies that may have seemed far-fetched before”.
4. Lack of standardization
Worrying about collating the data is worse. Everyone will work on their formats, and variations for what is correct as per their knowledge. This creates furthermore trouble since there is no uniformity in practice. Also, one should beware of having “too many cooks in the kitchen.”
They say the more the merrier. Sadly, with the year-end financial closing process, there will be a greater chance for mix-ups and delayed deliverables.
Not just the team members, it certainly depends on the organization’s ability to streamline the tasks and how they are supposed to be done, which will assist the teammates in performing, tracking the progress bar, and staying on the same page.
5. Lack of a Post-Close Review
When working on the year-end close under pressure, we can easily overlook what comes next. And once the process is behind you, you can’t go back, once done it’s done. However, the post-close review process is just as important as the process itself. Without it, you won’t know what went right or wrong, and it will be all the more problematic to dig into mistakes and draw conclusions if need be.
Even though it’s not your idea of fun, conducting a post-close review will benefit you in the long run. You’ll thank yourself for it, 12 months in the future.
Fortunately, there are ways to make this recurring process more manageable and give financial teams and stakeholders the time they need to conduct analysis and make strategic business decisions
It’s never too late, time to change:
We often talk to companies who “close the books” within three days. This typically means that booking and reconciling high-risk transactions is over, but the in-depth analysis is yet to be done which tracks key business metrics.
The risk is significantly higher with companies who close the books within a short window and often rely more heavily on estimates and accruals.
For this reason, the review stage is critical. Validating the data through balance sheet review and account reconciliations reduces your exposure to risk and fraud.
We’re flattered with organizations that can finish off the process within three days—but only if you’re not sacrificing accuracy for speed.
We’re here with the perfect solution for you that can amplify your closing process by about 10X.
The Perfect Solution:
Meet Xenett Autoreview
An intelligent clean-up tool that will transform the way you review your books, completely. It identifies breaches and abnormalities, automatically ensuring you have clean, reliable books.
A single error in your books can break your engine and your car will crash. This is where Xenett Autoreview will play a part. Most importantly, it will be your savior during the rush hours, saving you bountiful time to shift gears to the core areas that warrant your immediate attention.
At Xenett, our end goal is “To build an ecosystem that empowers accountants to become more productive and scalable”.
Our ambassadors vouch for us. Xenett Autoreview has become a staple in their routine simply because of the magic it creates on-screen, with numbers, accounts, and entries.
Detects 90% of bookkeeping errors:-
Autoreview auto-detects and flags bookkeeping errors based on past trends and historical analysis. It assembles them all in one place, making it easier for you to review and rectify the errors and extract clean-accurate data.
Expedite the Month-end Close:–
Autoreview does not wait for the month-end to begin. The review starts as soon as you log in, and you can amend mistakes real quick. It not only permits you to resolve errors in real-time but also prevents their future occurrence thus, giving you speedy closure.
Streamlined Review Process:-
Autoreview has a robust, powerful engine that will catch accounting errors regardless, irrespective of any human intervention. The system reviews the files relentlessly, auto-syncs nightly to keep up-to-date records, and standardizes the tedious review process.
Financial Close is no mammoth!
Out n Out closing is the chore of accounting and has to be done every single month, regardless. It’s not mammoth and does not have to be challenging all the but if not done efficiently it can make your teams go nuts.
With the right methodologies, flexibility towards new technology, and with new-age tools like Xenett Autoreview in place, your financial close can glide on smoothly like butter spread on bread.
Don’t think too much. Pilot smart automated solutions like Xenett Autoreview and let them do their job right. They work for you so you don’t have to.