(This blog is authored by Thomas Grigely and John Siegel from FloQast, a SuiteCentric partner.)
Accountants have differing opinions on a wide variety of issues, but the month-end close isn’t one of them. 82 percent of accountants describe the close as a negative experience. This number is staggering — and sad, considering the month-end close is a fundamental responsibility for accountants. Let’s look at why the financial close is so cumbersome for accountants and four great ways to make the process less daunting.
Why the Month-End Close is So Painful
For rapidly growing companies, NetSuite offers a host of powerful tools to help accounting teams complete the close faster. With this said, there are key components involved in the close that NetSuite does not specialize in, like tracking and documenting workflow. Due to clunky communication processes, most organizations suffer from lack of transparency and poor documentation. This problem happens naturally as organizations grow, which is why it’s so common. As a result, team members typically have visibility only into their small piece of the close.
This is often complicated by the fact that documents are shared haphazardly across a disorganized local network drive. Procedures aren’t documented, and because everyone is so busy, no one is sure who needs what information anyway.
For most accountants, the close means long, hard hours in the office and frequent restatements. As a result, many accountants report increased stress during the close — to the point where one-third state that the month-end close impacts their personal relationships.
Best Practices to Reduce Stress
Given how negatively a month-end close process can impact employees, it’s a small wonder that it can be completely overhauled if organizations implement just four best practices.
Use a Collaborative Month-End Close Checklist
A close checklist that tracks employees’ responsibilities and their progress will keep everyone aware of how their work fits into the bigger picture. Each team member will know when their work needs to be completed and offer leaders insight into potential bottlenecks.
The average person may think NetSuite’s Period End Close Checklist would provide this, however, this is a misconception many Controller’s need to explain to a NetSuite Administrator or IT. Think of the Period End Close Checklist in NetSuite as the 30,000-foot view that allows you to check a box next to AP. Every accountant knows that in order to check this one box, many other tasks need to be completed. A simple Excel Checklist or Google Doc is often used to track all of these tasks and sign-offs but for growing teams, this can quickly become a burden. This is why FloQast’s workflow capabilities are so attractive to mid-market accounting teams. (Download our free Month-end Close Checklist for NetSuite here.)
It didn’t take long for Stack Overflow, an online community that offers developers training and networking opportunities, to see the value in this kind of checklist. Headquartered in New York City, the company went from a soft-close system without a detailed close checklist to using a more formalized close process. The new process included clear-cut procedures, controls, and timelines, allowing them to make the close easier to manage, with dramatically increased transparency and accountability. As a result, the time to close has been cut by more than half, from 22 days to 10.
Standardize Reconciliation Templates and Folder Structure
Speed up reconciliations, review, training, and auditor PBC requests by using a standardized reconciliation template. (Download our free best practice account reconciliation templates here.) This offers team members a way to plug their work into a template and avoid redundancies. Ensure that anyone in the organization can locate documents quickly and easily by establishing a consistent folder structure.
Accounting team’s should also look into NetSuite’s Bank Reconciliation Module and Fixed Asset’s Module for accounts with a high volume of transactions that need to clear. Automating this manual process can significantly decrease the amount of time accountants are spending on reconciliations. If you’re reading this and thinking to yourself, “that’s great but how do we automate Intercompany matches, Clearing Account Matches, SubLedgers, or any other accounts with a high volume of transactions?” Tools like FloQast Matching may be able to help.
Reevaluate Your Talent Mix
With technology becoming more foundational to accounting and finance processes, you need people on your team who can use technology to its fullest potential. Consider hiring tech-savvy accountants who might not possess the traditional pedigree a GAAP expert CPA might. Prior experience with NetSuite or a Cloud ERP could significantly help the learning curve but a willingness to learn and the belief that technology drives efficiency is also crucial.
Take Advantage of Cloud Accounting Technology
Using a cloud platform will make the close process less stressful and more efficient. Teams can access documents more quickly while working on documents simultaneously. This will create a level of transparency while eliminating the age-old problem of not being able to access a document when its owner is out of the office or leaves the organization.
Get started is as easy as creating a shared Microsoft Excel checklist in SharePoint or OneDrive, and rolling it forward each month. Even better than relying on Excel alone, which has limitations when it comes to workflow, is to use a close management software solution to track all checklist items, reconciliations, and review notes. RevLocal, a digital marketing company serving the U.S. and Canada, used to rely on an antiquated binder system and desktop-based Excel spreadsheets to manage the month-end close. When they switched to FloQast, they incorporated their Excel spreadsheets into our close management software, which keeps them in the cloud and always up-to-date.
When thinking about the close process, there is no debate around the efficiencies NetSuite can bring to processes like Revenue Recognition, Accounts Receivable, Accounts Payable, and Bank Reconciliations. Still, the accounting team will need a place to track workflow, organize their folder structure, perform trial balance tie-outs, store supporting documentation, and track KPI’s around close performance to significantly reduce the time it takes to close the books.
Life is Better with a Streamlined Close Process
A more efficient close process has benefits to your business, as well as to your team members. On average, teams using technology to streamline their month-end process typically shave three days off their close. Accounting and finance leaders that take advantage of cloud technology have better insight into the close process, are more confident in the close, manage less-stressed employees, and onboard new hires faster.
Interested in learning how close management software can help your accounting team close faster and more accurately? Contact Thomas or John from FloQast to learn more.
About Guest Authors from FloQast
Thomas Grigely is the Oracle NetSuite Channel Manager at FloQast and manages partnerships with top Solution Providers around the country. If you’re interested in evaluating or partnering with FloQast you can email him at Thomas@Floqast.com.
John Siegel is a Content Marketing Specialist for FloQast. Prior to joining the company, he wrote about Los Angeles-based tech companies for Built In LA. You can follow him on Twitter @JVNSiegel.