As a small to mid-market business owner, you rely on timely and accurate financial reporting to make informed decisions about your business. However, if your accounting team is struggling to keep up with your monthly close, it can be frustrating and stressful.
In this blog post, we’ll discuss how long you should wait for your monthly close and what you can do to speed up the process.
First, What is a Monthly Close?
A monthly close is the process of finalizing your financial statements for the month, including your profit and loss statement, balance sheet, and cash flow statement. This process typically involves reconciling your bank and credit card accounts, reviewing your transactions for accuracy, and ensuring that all necessary journal entries have been made.
To learn more about best practices for the month-end closing process, read our blog, here.
Benefits of an Accurate, Relevant, and Timely Monthly Close
When done right, the month-end close provides your company a with accurate, timeley, and relevant financial statements and information to improve your organization, decision making, and risk management.
The month-end close allows you to keep accurate financial records throughout the year so you can see trends and make insightful business decisions at any time, not just at the end of the year.
At a quick glance, you can get a snapshot of where there are revenue problems, expense issues, operational issues, or inconsistencies within your company The month-end close supports your efforts to keepyour business on the right track through monthly reviews of key financial data.
The month-end close also makes your business transparent to others, instead of only having annual-financial data that could be months old and tell an inaccurate story. This provides great value for when you’re seeking a much-needed loan, or if there are potential buyers looking at an acquisition.
The monthly close process allows for the identification of errors or irregularities in financial statements, which could signal potential risks to your business. By detecting and addressing such issues early, you can mitigate their impact and prevent them from escalating into more significant risks.
It also involves a series of checks and balances designed to ensure the accuracy and completeness of financial data. These controls can help identify and address potential risks related to fraud, errors, or omissions in financial reporting, thereby reducing the risk of financial misstatements.
How Long Should the Month-end Close Process Take?
The length of time it takes to complete a monthly close can vary depending on the size of your business, the complexity of your accounting processes, and the efficiency of your accounting team. In general, a monthly closae should take between 5 and 15 business days. This means that if your month ends on the 31st, you should expect to receive your financial statements the following month.
What Can You Do to Speed Up the Monthly Close Process?
If your accounting team is struggling to keep up with your monthly close, there are several things you can do to speed up the process:
Evaluate Your Current Accounting Processes
Review your current accounting processes to identify areas where you can streamline or automate tasks. This may include investing in accounting software, creating standardized procedures for recurring tasks, simplify procedures, or outsourcing certain functions.
Bring in an Outsourced Accounting Team
Bringing on an outsourced accounting team with expertise in day-to-day accounting and accurate reporting can provide significant value for small to mid-market business owners. Not only can they help streamline your monthly close process, but they can also provide valuable insights and expertise to help you make informed decisions about your business.
Additionally, outsourcing your accounting functions can help you reduce overhead costs associated with hiring and managing an in-house accounting team.
At Signature Analytics, we specialize in providing outsourced accounting services to help businesses achieve timely and accurate financial reporting. Our team of experienced professionals can help you streamline your accounting processes and provide valuable insights to help you grow your business.
Set Clear Deadlines
Establish clear deadlines for the monthly close and communicate them to your accounting team. This can help ensure that everyone is on the same page and working towards the same goal.
Conduct Regular Reviews
Regularly review your accounting processes to identify areas of weakness and opportunities for improvement. This can help you identify bottlenecks and streamline your processes.
Common Challenges and How to Overcome Them
Missing data is a significant issue in the monthly close process because it can cause delays in reconciling accounts and make it challenging to report accurate financial information. When financial data is incomplete or missing, accountants may need to spend additional time tracking down missing information and reconciling accounts, which can significantly slow down the monthly close process. Inaccurate financial reporting can also lead to costly errors and misrepresentations of the company’s financial health, which can have serious consequences for the business.
Too Many Data Sources
Many organizations rely on spreadsheets, emails, phone calls, and in-person meetings to gather the data for their month-end close.
This causes delays as your accounting team is trying to recover the necessary information from employees, software systems, and accounts. It’s vital that, when it’s time for the month-end close to begin, you can draw all your financial data from as few sources as possible including a centralized source, such as Netsuite \, Quickbooks, or other accounting platform..
Unfortunately, human beings are error prone. While this may be okay when you spill your coffee in the morning, you don’t want human error anywhere near your accounting system.
You can reduce human error by automating your accounts with the right software and avoid mistakes that are often made with manual entry of data.
Poor Project Management
Any area of your business is going to falter with poor project management, and your accounting department is no exception.
When performing the month-end close, you want to have systems in place that increase accountability and quality-check the collected data. You also want your accounting team to have good time management processes by setting up deadlines and goals for them to work towards.
Learn More About Signature Analytics
A timely monthly close is critical for small to mid-market business owners who rely on up-to-date financial information to make smart decisions about their business. If your accounting team is struggling to keep up, there are several steps you can take to speed up the process.
At Signature Analytics, we specialize in helping businesses improve their accounting processes and streamline their monthly close. Contact us today to learn how we can help you achieve a faster and more accurate monthly close.
If you’re interested in outsourcing the month-end close process, or any of your other accounting needs, contact us today.