The monthly close is a crucial task for every finance department – so why are more pros doubting their own numbers?
When it comes to trusting the actual results that come out of the monthly close, the numbers are startling. Of those surveyed by Adra Match, 30% of those in a managerial role – CFOs, controllers, department heads, etc. – trust the results. That’s a low number, but compare it to the percentage of staffers: Only 15% trust the numbers.
Overall, only 28% trust the monthly close number. This begs the question: What’s going on?
Too much to do in too little time?
A whopping 90% of Finance pros surveyed said they feel pressure during the monthly close. And only 39% are satisfied with the actual process of doing it.
A majority of the respondents said they were required to close the books in four to six days. A majority also said they use Excel, or Excel plus pen and paper, when reporting the numbers. Only a third have a dedicated ERP system. Some respondents also were quoted in the survey as saying, “There are too many manual processes. The more paperless and electronically streamlined, the better.”
Juggling tight deadlines while handling several different processes – digital or manual – paints a worrisome picture for finance pros. If the monthly close is viewed as a chore that just needs to be finished as soon as possible, then there are going to be some slip-ups that could lead to major problems.
And the 72% that don’t trust the numbers would be justified in their thinking.
Document mistakes to keep everyone accountable
To ensure an accurate close from your department, there needs to be accountability. Without it, a small error here and there will be viewed as insignificant. With that in mind, follow these crucial strategies to help out those recurring monthly close headaches:
- Make sure all parties are communicating. Not every reportable amount goes through the same process or is checked by the same people. So make sure all parties are on the same page in terms of manual adjustments or other special needs. For example, the process of documenting accruals would benefit by bringing together: the department responsible for the accrual, the department that reviews and posts it, the department that reviews it again and the department that determines if it’s billable.
- Start tracking mistakes. Start looking out for recurring manual adjustments and any other recurring issues. If you start to see a slip-up coming from one particular department or during a particular stage of the close, you know your red flag. If you’re seeing recurring mistakes, have a one-on-one with either the employee or with a rep from the vendor/customer that’s involved to get to the bottom of the issue.
- Grade your staffers. Give feedback after the close to everyone. Say what worked and what didn’t work and how the staff overall will improve for next time. The key here is to make sure staffers aren’t just viewing this as a painful task that has to get done because it does. Once the process becomes more efficient over time, consider challenging your staffers to get the close down quicker than before.
