When the end of a reporting period approaches, accounting professionals brace themselves for long hours and late nights. The last-minute rush to send out invoices or pay bills, post adjustments and perform the many other end-of-month tasks leaves little time left.
When financial reports are due, pressure builds on finance teams to produce them quickly and without errors. With limited resources, inefficient processes and outdated software at their disposal it's almost impossible for the accounting department to be on time and stay error free.
Cumbersome financial close processes often persist in companies because, despite their flaws, it’s the way things have always been done. People accept that the errors, reporting delays and other headaches they deal with each close are normal, missing the opportunity to improve.
Here are 5 signs that your financial close process needs attention
The close process isn’t documented
The financial close process is often neglected in organisations, with accounting leaders assuming that their team knows what needs to happen. If they lack the bandwidth or simply fail at documenting it then tasks may get overlooked and completed out-of-order - ultimately leading to time being spent on unnecessary additional work adding to the pressure.
Lack of automation
In many companies, the financial close process remains largely manual taking up valuable resources that could otherwise be easily automated. A lack of automation means that it takes significantly longer to close the books and generate management reports than competitors who have automated the financial close. Manual processes are inherently inefficient, as well as being loathed by staff, but what’s more they delay access to critical management reports, making decision making inefficient which impacts further down the line.
There is a reliance on spreadsheets
There are many reasons to avoid using spreadsheets as a tool for critical data. They're insecure, especially when shared with others and easily modified which can lead to accounting errors - there's no way of knowing how changes were made or when they started! And since these applications lack detailed audit logs, it becomes difficult (if not impossible) tracking what changed between versions in case something goes wrong down the line.
Data is distributed around different departments
The close process touches many departments. For example, accounting may need information from sales or project management to prepare customer invoices and ensure that goods have been received in order to pay vendors. Waiting for these details is a major frustration for accounting personnel as it can add days before all of your numbers are finalised for the close process.
On top of this, referencing information from multiple sources, reformatting it and uploading it to the general ledger takes precious time and requires technical expertise that not everyone has. Moving data between systems also increases the risk of errors that can show up in financial reports if they’re not caught and corrected.
Lack of internal controls
A lack of internal controls is a major red flag that all is not well with your financial close process. Established internal controls are not just about following the rules, but also protect your company from internal fraud. A good compliance programme involves strict adherence to policies, as well as keeping financial statements clean by following approval requirements consistently across the business. Proper controls not only protect the business but also play in important role in ensuring the integrity of all financial statements.
NetSuite automates the financial close process
NetSuite financial management and accounting software automates the close process, helping ensure the timeliness and accuracy of financial reporting. With NetSuite, your accountants can stop relying on spreadsheets. Accounting processes can be managed within the accounting system, instead of using a variety of different tools, saves you time and reducing the risk of errors.
NetSuite’s governance, risk and compliance capabilities help companies achieve their risk management objectives with built-in processes and automated controls which ensure compliance with regulatory, operational and industry requirements.
Finally, NetSuite's unified business management platform integrates accounting, sales, shipping and other departments, providing a single version of the truth that eliminates the hurdles, frustrations and delays caused by storing information in department silos.
When combined, these capabilities give companies the ability to accelerate the close process by ensuring tasks are completed accurately and on time.