In a past life, it was all we could do to get information into the system, let alone use it, report on it, or (heaven forbid) analyze it! If you are in that situation, then you may need more boring in your life.
Business, entrepreneurship and the excitement of growing and changing to meet customer needs often drives people to continue to risk their own money in developing and running a business. Excitement should not come from the accounting or credit departments; most entrepreneurs want that part of their business to be quite dull, thank you very much. In fact excitement in accounting might imply incomplete information, and, at the worst, cataclysmic liability issues for owners and company officers.
The company Performance Analytics held a webinar on how to avoid month-end panic. You can find the seminar at the URL below… it is free though you have to provide some contact information:
http://performanceanalytics.ca/resources/webinars/avoid-month-end-panic, but be warned, the webinar crashed around minute 15 (of a 60 minute session), so the complete webinar may not be available to you.
Performance Analytics listed 6 main reasons for month-end panic:
- Lack of a systematic approach
- No integrated data sources
- Intercompany consolidations are difficult
- Currency translation complexity
- Challenges with IFRS vs. GAAP reporting
- Management and statutory reporting data not synchronized
They also offered a solution, called SAP-BPC (Business Process Consolidation), which accumulates and manages Excel and other Office docs, and help ensure that the info is consistent and up to date. In other words, looks at files across the company and integrating those documents.
An alternative view is that the real reason for month-end panic is solely due to the first point above: lack of a systematic approach. All of the other points after really come back to this one issue. If you are spending your time remembering what needs to be done, doing it in the wrong order, or undoing what you have done in one step with some other downstream action, you are not being systematic.
In fact the SAP-BPC system is likely very good (the webinar crashed before we got that far), but does it replace a complete and organized checklist, and a qualified and experienced staff? Unlikely. Also, in lean times (budget and staff), the last thing controllers and credit managers (and IT) need is another system to learn and maintain, and pay for. A month-end checklist can be created in Excel (or even on paper), and it is cheap, effective and accessible by people with low, moderate or advanced computer skills.
In the LinkedIn group for Business Controllers, a very active discussion surrounded the month-end check list, which seems to not be as well known or developed a tool as you might have thought, if the comments and questions surrounding that discussion are any indication.
The request went out to share month-end checklists so people could compare their list to that of others. Here are some characteristics that were seen as valuable as a result of those discussions:
- Tasks are listed by GL account
- Reconciliation deadlines that are in the right date-order, assigned to staff, and “hand-offs” are defined where either an employee informs the next person down the chain that they are done, or an employee knows how to determine that work is done.
- Processes (how to do each reconciliation or step) are documented
- ‘Critical’ and non-critical work is identified and coordinated with reporting needs, such as:
- “Flash week” – first week of month-end when certain reports can be published that will not change (or at least not much) between publishing and month-end. These reports often can include AR and sales lists, shipping reports or production stats.
- Inter-company & allocations – very important to get the work done in the right order so that your inter-company postings and allocations are completed with final information. Consider clearing accounts, FX posting, tax entries and corrections that result from account analysis.
Another key concept for your close routine is to do the work more frequently. In some cases companies will do all their closing work only quarterly and not monthly (for any number of reasons). While this may tie with less onerous reporting schedules, the quarterly routine can actually be less efficient than moving to a monthly routine. Benefits include:
- You get better at the work the more you do it
- You notice patterns when you are looking more often
- You identify and fix problems closer to the time they happened
- You can spend more time on account analysis because there are less transactions by month than by quarter
Boring is the stereotype for financial people everywhere. It is the detailed, in-depth administration that entrepreneurs often do not enjoy or want to get involved in that can sink the business. Experienced accounting and credit staff – designated accountants (CA/CGA/CMA), and Certified Credit Professionals (CCP) help keep the finances off of the front page and where it belongs, in the background, humming along quietly, softly and being very, very dull!