Month-end closing is a crucial part of your business operation. It keeps your business records organised and, at the same time, gives you a clear overview of your current financial position.
When you have organised and accurate records, you can lodge your taxes easier and have a clearer understanding of how your business is performing. The same is true when applying for government grants and business loans.
But if your month-end closing process takes longer than it should, it’s critical to re-evaluate your methods and find out how you can streamline the process. By doing so, you can reclaim your time and focus on the other key areas of your business.
To help you get started, we prepare these three key tips on how to improve your month-end closing process.
How to improve your business’s month-end closing process?
A consistent month-end close brings huge benefits to your business. As mentioned, it informs you of the financial health of your business which, in turn, is useful for making decisions and developing plans.
Aside from this, it also makes other accounting tasks easier such as tax preparation and audit. When you’re up to date with your financial reporting, you can better navigate your business towards your goals.
Here are three ways to improve this process.
1. Develop a standard operating procedure (SOP)
One of the best ways to improve your month-end reporting is by having a standard operating procedure that documents the process you must follow. Since it’s a routine task, your SOP must contain the following information:
- the schedule of your month-end closing, including the number of days it should take
- templates you can use to speed up the process, and
- a checklist of business records you need — such as balance sheet and inventory levels — when closing your books at month-end to make sure you cover everything.
Standardising your month-end closing improves the speed and accuracy of this task. Moreover, it also gives you insight into the potential reports you can automate. You can also use your SOP as a guide when you have to delegate this task to staff or when working with a new accountant. As always, using technology is an efficient way to assist with all strategies, and there are many tools that can assist with the creation of an SOP, such as Lucidchart.
2. Utilise technology
Using your SOP, find out if you can automate any of your existing reports. For example, if you’re already using accounting software, you can connect to your bank feeds, payroll software, or sales software to cut down the time you spend on manual data entry. It’s also a smart way to reduce human errors and reduce your paper use.
However, if you’re still manually processing your business records, we encourage you to invest in technology.
Cloud accounting software like Xero doesn’t require a huge up-front payment, unlike its desktop counterpart. Cloud software is also one of the accounting tools we recommend to our clients because we swear on the time and cost savings it brings. It’s also collaborative in nature — allowing you to coordinate with your accountant or consultant in real-time, even if you’re working from different locations.
3. Review your month-end closing process regularly
Scheduling a periodic review of your month-end process is another way to improve it.
Your priorities change as your business grows. The market is also evolving. This means that your processes may not be as efficient in the future.
Identify which of your processes are still effective and which of them needs upgrading. Then make small improvements one at a time. It can still leave a significant impact on your business as time goes by.
Delegate your month-end closing with us
ABJ Solutions is a team of finance and accounting professionals who specialise in bookkeeping, payroll, and other accounting processes. We harness the power of technology to help our clients improve their accounting departments.
If you need help in closing your books, contact us today.
