The fiscal year-end close is a crucial time (and a big hurdle) for many businesses. It can be incredibly stressful for accounting departments, especially if they’re stuck in a maze of manual and disparate tasks.
As industry veterans and leaders at Vaco San Antonio, Stephen Dyer and Erica Baker bring extensive experience helping clients streamline and improve the year-end close process. From eliminating unnecessary tasks to improving future strategies, Dyer’s and Baker’s teams regularly work with companies to optimize financial and accounting practices.
We asked Dyer and Baker to outline some of their top advice for improving the fiscal year-end close process.
Create a specific, repeatable close process
One of the biggest challenges during year-end close is inconsistent processes and deadlines.
When multiple business units that operate in various geographies and currencies take an ad hoc approach to the close cycle, accounting teams receive inconsistent information on different deadlines. An excessive amount of time is spent hunting down information, resulting in a lengthened close cycle, overburdened financial and accounting teams, and delayed financial reporting.
Stephen Dyer, Managing Partner, Vaco San Antonio
Erica Baker, Managing Director, Vaco San Antonio
Creating a repeatable, company-wide close process mitigates these struggles:
- Evaluate each step in the close process for its priority level, average time to completion, and organizational dependencies.
- Develop a pre-close checklist that details the sequence for completing each task before the close process begins.
- Outline the information required from each department (e.g. receipts, vendor invoices, bank statements, and credit card statements).
- Create a closing schedule that outlines each activity and respective deadline. Keep dependent tasks open until preceding steps are complete and assign tasks to team members according to their specific competencies.
- Schedule reminders to help team members meet deadlines.
Once you have a consistent process outlined, ensure successful adoption by each department via communication, training, and alignment of roles and responsibilities.
Evaluate your month-end and quarter-end close processes
Companies that lack a streamlined monthly and quarterly close process are more likely to find errors when year-end close rolls around.
A key first step to improving monthly and quarterly close is to rank each general ledger account for its level of risk using qualitative and quantitative factors. This can help determine how often a particular account should be reconciled.
Implementing a reconciliation schedule based on an account’s risk level will help prevent the discovery large errors during the already-hectic close process. For public companies, identifying and correcting errors earlier in the fiscal year helps ensure that year-end SEC reporting deadlines are met.
Overall, Baker says, companies should hone in on process improvement opportunities, without hyper focusing on systems and technology.
“Process improvement isn’t always systems-related. It can start with performing walk-throughs, documenting your processes and really understanding them, so you can identify gaps and areas for improvement that will help you—not just now, but in the years going forward,” she says.
Eliminate manual processes
Many manual tasks can be easily automated, trimming time off the close cycle, mitigating human error, and reducing the amount of stress on the accounting team. When data is entered manually and stored in spreadsheets, for instance, tracking changes to the data is difficult, and collaboration across departments can create serious headaches.
Fortunately, a variety of automation solutions exist, many of which can be integrated with a company’s existing ERP system.
Accounting software, like accounts payable automation, can verify data, match invoices, streamline approvals, and produce reports on a schedule.
More robust solutions, like financial close software, help companies centralize the entire close process through workflows, real-time dashboards, data aggregation, close task management and assignments, and spreadsheet integrations. Cloud-based systems enable productivity and security for accounting departments with remote team members.
“We encourage our clients to use the year-end close process as an opportunity to find where the optimization and automation opportunities lie within their accounting and finance teams,” says Dyer. When Vaco is scoping a project to help a client during year-end close, he says, the teams emphasize the ongoing discovery of long-term strategies and solutions.
“It’s not just how can we solve this problem right now? It has to be a long-term strategy, whether it’s investment in automation or new systems, integrations with an ERP, or finding the right people for a long-term team,” Dyer says.
Address the threat of burnout on your accounting team
The fiscal year-end close can be a crushing lift for accounting teams burdened with manual processes. This is especially true for departments that are chronically understaffed, a struggle that is all too common in the current labor market. Unsurprisingly, exhaustion and burnout affect millions of accountants before, during, and after year-end close.
Burnout is such a serious, costly problem that it is now included in the World Health Organization’s (WHO) International Classification of Diseases (ICD-11). While burnout itself isn’t categorized as a disease in the ICD-11, it is recognized as a workplace phenomenon, and the WHO is developing evidence-based guidelines to address it.
The symptoms of burnout—exhaustion, disinterest in one’s job, lack of productivity, professional mistakes—are obviously a threat to an efficient and seamless year-end financial close. More importantly, though, burnout threatens a company’s retention strategies. Accounting professionals that feel stressed, unsupported, and drained by their jobs are far more likely to quit.
The first step to addressing burnout on your accounting team is to assess your team’s morale and measure their confidence in the year-end close process.
- Create an anonymous survey with questions formulated by accounting and finance managers.
- Determine the average number of days required to complete monthly, quarterly, and year-end closes.
- Ask team members to identify the tasks that are the most time-consuming.
This information is vital in helping you determine which resources you need to streamline the process, reduce your team’s stress level, improve employee retention, and–ultimately–improve the accuracy and timeliness of your year-end financial reports.
Bring in experienced accounting resources that can immediately contribute
The year-end close process requires strict timelines and meticulous attention to detail, but many companies don’t have the bandwidth to maintain both.
Likewise, many companies don’t have time to cross-train employees on accounting systems and processes, and they can’t risk the quality of their financial reports by delegating tasks to inexperienced staff.
Baker emphasizes the importance of bringing in accounting support that can make an immediate impact.
“This is a time when companies are already resource constrained and have immense workloads, so they don’t have the capacity to spend a lot of time getting new resources up-to-speed. Having a team of consultants that are extremely tenured and experienced, who are able to jump in and quickly add value with limited direction, is a huge differentiator,” Baker said.
Year-end financial close can feel like a dark spot on the calendar for many accounting departments. This is especially true when a company’s processes and systems aren’t optimized, and its teams don’t have the support they need.
Optimizing the financial close cycle by developing repeatable processes and reducing manual activities helps ensure that critical tasks are completed in a timely manner and talented team members remain engaged.
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Vaco is a premier professional services firm that provides talent solutions and business consulting to more than 12,000 clients throughout the globe.
About our authors
- Stephen Dyer, Managing Partner of Vaco in San Antonio, is an industry veteran who works everyday with companies who are facing setbacks and challenges in their key business processes. The financial year-end close is a common challenge for many of Dyer’s clients. Understaffed accounting departments, challenges with data structure, and process setbacks are some of the biggest hurdles Dyer sees as companies’ year-end close periods draw nearer.
- Erica Baker, a Vaco Managing Director and Partner who works alongside Dyer in San Antonio, is a Certified Public Accountant with over 20 years of professional experience. Erica is focused on understanding the business operations, drivers and goals within CFO organizations in order to help them achieve their critical goals. She understands firsthand how vital it is for companies to have the right accounting and finance support, especially during the deadline-driven environment of year-end close.