Content We Love — Metric of the Month: Cycle Time for Monthly Close
What is often the primary goal of a CFO when it comes to closing the books?
That’s simple – close faster without sacrificing accuracy and compliance.
CFOs want to save time for strategizing and getting ahead of the financial curve instead of struggling to keep up with it. An article from CFO.com stated that 25% of the 2,300 respondents surveyed said that their month end close process takes 10 or more days to wrap up.
The article points out that although most CFOs aim to close their books faster, speed is usually compromised by poor data quality flowing into the close.
If you’re finding that your month end close process is consuming more of your firm’s time and resources than it should, try these tips:
- Adopt a standard chart of accounts. By utilizing the consistency of names and identification numbers on the chart, there’s less guesswork involved which allows information to reach decision-makers quicker.
- Create strong governance by creating a system that pushes more accountability and consistency. In turn, this reduces the risk of errors being made in the month end close.
- Do as much as you can before you close the books. For example, find as many reconciliations and journal entries that can be made before the end of the month.
- Use a month end closing checklist. Communicate cut-off times with all departments, so the month end close is more of a process and less of a scramble.
Utilizing these tips can shorten your month end close, finally freeing up your accounting departments to strategize and plan ahead.
We understand that implementing these tips to your current close process is easier said than done. However, by implementing automation, not only can you achieve a faster, cheaper close, but you create a system of good governance and increase your visibility into the process – resulting in a reduction in errors usually caused by using manual processes.
To read the article in full, please click here.
Written by: Ashton Mathai & Caleb Walter