As a Controller or CFO, the need to get your books closed within days after month end has never been more important.  If you need to bring operations to a halt in order to close payables, receivables and payroll, then you have some significant challenges in your organization.

Of course, getting your books closed in a timely manner is really a vague objective.  What ‘month end close’ is to one company could be something very different to another.  In my opinion, if you don’t have Financial Statements (Income Statement & Balance Sheet) delivered to management by the end of the first week, then the closing process needs to be examined and very closely.  Once you hit the two weeks from close mark  the prior month end is in your rear view mirror and the next month end is ‘closing in’.

I think we can all agree that ‘Closing the Books’ is much more than turning over the dial to the next monthly accounting period.

During my career as an analyst for a large publicly held company with 300+ operations, what was expected was to get the month closed and then print out financial statements which were immediately delivered to management.  At that point, there was no pre-release review of the financials by the Finance Department.  All  financial analysis was performed post publication.    While working as a controller at a large privately held company, it was exactly the opposite.  The owner wanted his financial statements thoroughly reviewed and analyzed before he saw them.  As the company has grown that has become much more challenging especially since the CFO provided ‘footnotes’ to each set of statements (approximately 25+ sets) pointing out the reasons for large or unexpected variances.

Let’s all agree that the books are not closed for the month until the Financials and other associated reports are in the hands of Senior Management.

Here are my TOP TEN  reasons companies struggle with Month End closing (in no order of importance):

  1. Too many transactions pour in at month end
  2. Multiple off site operations disrupt flow of transactions
  3. Attempting to make accruals and other adjustments at month end that management feels should be reflected
  4. Staffing issues
  5. Outdated software and hardware
  6. Holding up closing process to perform reconciliations
  7. Unresolved inventory costing issues
  8. Lag time related to posting customer payments on account
  9. Too many spreadsheets or other systems with interfacing data being fed into the system
  10. Failure to recognize how critical timely month end closing is to management

Next week we’ll investigate the ten reasons companies stumble when it comes to wrapping up their month end close within a matter of days.

Calling all Controllers & Accountants to reply!!!

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