Month-end accounting is supposed to reconcile the accounts, keep the books up to date, and provide data to management so they can make better decisions. In actuality, month-end close is often left incomplete or worse, skipped for a month or two by many small business owners who feel that fulfilling orders and serving customers takes precedence over accounting.
That’s a shame, because the month-end close is an important step towards keeping a company’s finances healthy. Skipping month-end accounting means missing opportunities to examine your company’s financial situation and developing strategies to boost revenues and reduce expenses. It also means that mistakes, missed invoices, and unpaid bills can pile up, leading to even bigger headaches later. Missing too many month-end closes makes year-end close a nightmare, too!
The following tips will take the pain out of the chore of month-end accounting and help you tackle it in record time.
5 Tips to Improve Month-End Accounting
- Clearly communicate the deadlines for month-end close. Make sure you create a reasonable schedule to submit expenses, budget items, and invoices, and then hold everyone accountable for following that schedule. Get everyone on the same page about what needs to be submitted to the accounting department and by when for month-end close.
- Never skip a month: Skipping a month is a recipe for disaster. It leads to unpaid invoices, receivables remaining uncollected, and late expense reimbursements. If you must delay month-end accounting for any reason, be sure to catch up as quickly as you possibly can.
- Document all outliers: Document everything that falls outside the norm of a typical business month. By end-of-year close, it’s unlikely you will remember everything pertaining to each outlier. Documenting the details now leads to a smoother year-end close later.
- Consistency: Consistency helps ensure accountability, and that goes for month-end close as well as for other projects. Setting a consistent date and method for performing month-end accounting helps you keep track of the details and prevents mistakes.
- Utilize every aspect of your accounting system: If your company has an ERP system, they’ve invested in great technology. Yet most software users do not utilize every feature of their software that could help them perform their jobs faster and better. Most use only about one-third of an ERP system’s features, in fact.
Preparation and Organization Help, Too
In addition to these tips, preparation and organization are big helps when it comes to month-end close. Organize all receipts, invoices, and bills before sitting down at the computer to tackle monthly close. File paper materials promptly or use a document scanner to scan them and add them to the ERP system. An organized, systematic approach to monthly closes helps keep your company on top of payables, receivables, and reimbursements.
Get the Book on Month-End Close
The day when month-end close rolls around should be just another workday. But it can mean late nights, long hours, and plenty of headaches if you’re not prepared or your company is disorganized about month-end accounting.
Acumatica understands these challenges and more. They’ve put together a free eBook you can download that offers tips to help you better manage month-end close. Think of it like a virtual aspirin for a recurring headache.
Get the eBook, Modernize Your Month-End Close, from Acumatica.
Mindover Software provides ERP software consulting, training, and implementation. For more information, please, contact us or call 512-990-3994.