In our previous post, Solutions to Periodic Reconciliations, Part 1 we identified solutions to help streamline the reconciliations process to better equip your accounting team. In this post, we will review some of the challenges in managing the period close and how they impact the accounting and finance organizations. We will then review some of the tools available to manage the close process and mitigate the pressure associated with the close.
Period close processing and accounts reconciliation are key components of the period-end process. An overarching element of the period close is that it has to be managed. There are a multitude of tasks that need to be completed in each period close. One of the traps of the period close is that management thinks it is the same old steps that need to be performed and that their employees should be able to do it “in their sleep.” Regardless of the routine nature of the tasks, the tasks and timing must be actively managed.
Challenges with Period-Close Management
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While many period-end tasks are the same period over period, there are always differences, and the impact needs to be planned for. Added to the changes of the monthly tasks, each quarter- and year-end close bring its own unique tasks and special steps.
During the period close, certain tasks are dependent upon the completion of others. For example, you must first close the subledgers before you close the general ledger. Managing the close becomes more difficult as a workforce is distributed. It is easy to manage period close when everyone is in the same office. However, many companies have distributed workforces that are in different time zones and even different continents. This can make it challenging to maintain a coordinated list of close tasks, especially when there may be changes to the tasks. Managing a national, or even international, close requires coordination and communication.
It is surprising the number of organizations that do not have a setlist of tasks and procedures to be performed at period close. For those that do, they are often defined by the end-users or different departments; thus, there may be different definitions and levels of importance across the organization as a whole. Sometimes the lists are posted on a shared drive; however, more often than not, they are maintained on one individual’s computer desktop and sometimes they are even maintained on a whiteboard. Updates come in via email or voicemail and someone checks off what has been done, with little or no insight into what needs to be done, any roadblocks to existing tasks, or task timing.
To learn more on how to overcome financial close challenges, you can download our entire guide here or below. Otherwise, stay tuned for blog #9 in the coming week!