A CFO’s Guide To Steering Clear Of The Year-End Close Stress

Evaluate the current process

The successful completion of any complex task begins with putting together a plan, and that plan is going to be based on a calendar of what needs to be done – and when.  

1. Plan out your calendar
   • Determine your cut-off and your starting point for the new year.    
   • Have a process that identifies the last shipment, the last payment, the last cash receipt, the last invoice, and the last merchandise receipt for the year. Also, identify all of those first activities for the new year. This will assure a clean cut-off.
   • Determine who is going to be on the watch for each of these transactions. If the person responsible for each area is also the watch person, then it makes things easier.  
   • Have a log that records each of these transactions, because it is going to be important that everyone understands where these transactions sit in the schedule of activities.
2. Determine who is going to be responsible for each part of the close.  
3. Are there things that created problems for you last year, and have you done/plan to do differently what is necessary to correct the problems you faced?
4. Have a meeting with everyone involved to go over the plan, the schedule, and the potential problems.

What kind of software are you using?

Now is really the time to look at the tools that you’re using to complete the year-end close processes. All of the reconciliations that you have to make, from the bank accounts to inventory to accounts receivable and accounts payable, even down to the prepaids and accruals. If you’re still using spreadsheets and manual processes to verify balances, check entries and match transactions, you might want to look at new software that will do many of these tasks automatically. 

Even sophisticated ERP packages miss some of the newer capabilities that provide for the automatic matching of transactions. There are many software packages in the market that can provide capabilities that make your process smooth and more accurate. But what should you be looking out for? 

Accounting teams require a detailed close project plan for reducing close cycle time that includes a task-specific worksheet for faster and more accurate close. An AI-Powered anomalies detection system helps in addressing issues proactively rather than waiting until month end for adjustments. As a result, your finance department can perform continuous accounting. And with a connected workspace for faster completion of close tasks, your stakeholders can get real-time visibility into the status of tasks, dependencies, and delays.

Are you using AI to the best advantage?

We hear about robotics being used in manufacturing to get faster, repeatable, and more accurate results with fewer errors. The same is true of the new generation of accounting software add-ons. Think about reconciling the hundreds of transactions that occur in your AP or AR operations on a monthly basis, and think about the time that it takes to accomplish it with your existing staff. How would it change your accounting operation and workforce if those operations were done in seconds instead of hours?  Many current software packages that bolt into existing ERP programs use AI to accomplish two primary things:

1. Improve the results of repetitive operations so that in the end, you get faster reconciliations with a more accurate result. Those reconciliations match a set of predetermined parameters. And on top of that, by evaluating the upcoming results – as they happen – the software automatically adjusts. It learns whether its decisions are providing the best answers or not and then makes changes in line to attain more accurate results in the future. All done in the blink of an eye. And, if you decide to change the parameters, there is no training involved. The system follows your new direction instantly.  
2. Free staff to be involved in more evaluative decision-making
   Many of the tasks that are done by accounting staff, especially around the close, are repetitive tasks that can easily be done by an AI-powered software package. These include the laborious matching of transactions, posting cash receipts to the right account, identifying orphaned transactions, summarizing the details, and identifying the exceptions that need to be addressed.

   This can now be completely done by automated software, using a process that was only dreamed of just a few years ago. Let the staff work with the more interesting and challenging activities of solving the problems that arise during a close, as opposed to the normal routine and repetitive activities. The end result will also be more interested staff and a more engaged workforce.  

The added benefit

As companies continue to struggle to find, train and retain skilled workers, human resources continues to evaluate what they need to do to keep enough skilled staff to get the work done. 

What are the reasons why employees look for greener pastures?  There are many, and compensation only goes so far. It is the intrinsic feeling of reward that employees feel that makes them happy to come to work the next day. The employee/company relationship is much more complex now, and it would take a book to discuss all the reasons why employees leave companies. But one thing is certain. An employee that feels that they are making their own unique contribution to the company’s results will have a greater feeling of impact on the whole.  

How much of an impact do they feel in manually matching transactions? We know that their sense of accomplishment is much greater when they are making decisions and acting on information that they receive, rather than just sorting cards and matching transactions. The key to employee retention is employee engagement. Providing employees with an opportunity to work in an integrated fashion with AI-enabled software, elevates your accounting operations and ties your employees to your company through their sense of accomplishment.