Performing month-end close in less than day > It can be done!

Most finance teams take an average of five days to perform the month-end process, but it can be done in just one day and can prove it…

As an attendee at the recent online Australian CFO Summit, hosted by Weel and supported by CFO Magazine A/NZ. I had the opportunity to hear from Tyler Caskey and Daniel Foo of TheBeanCounters present a highly entertaining and insightful step-by-step guide on how to master the ‘fast close’ to save time and avoid closing day stress.

Here are my top takeaways:

Day one month-end. Can it really be done?

Imagine the time savings when month-end can be finalised in just one day. It can be done – even in large businesses with multimillion dollar, even billion dollar, revenues.

Before starting TheBeanCouners, Caskey worked at Deloitte and KPMG where he specialised in clients with drawn out month-end reporting – anything from 20 to 50 days. Foo, a former auditor at Deloitte, said across the businesses he has worked for nothing has ever been better than five days when it comes to month-end closing.

The pair, who met while working in the finance team at AGL, developed TheBeanCounters to help businesses simplify their systems and eliminate time-consuming processes.

Making the month-end close as slick as can be is a number one priority and financial leaders can do this with the help of a well organised team, said Caskey.

“The most important thing I’ve ever done is worked through with my finance team and said we’re all doing month’s end on day one and we’re finishing at five o’clock, no matter what,” he said.

“Yes you still do your bank recs, your reconcile, you’ve got to chase your debts whatever it is. But on that day every single person from 9am to 5pm, is month end reporting and nothing else. I consider myself a coach of a football team – ‘Hey you’re on this, you’re doing that’.”

The basics

Centralising the accounting team is step one. Working together is a lot easier when your team is in one place, said Caskey.

“I came into a team that had finance in Sydney and Melbourne and Canberra,” he said.

“I reassigned my finance person in Canberra and helped the person in Melbourne find a new job and centralised it all in Sydney. That one play probably saved me a day or two.”

If your team is across different time zones, communicate with them early about deadlines.

Start your month-end process prior to the actual end of the month by hunting down the tricky issues and dealing with them first. But don’t get hung up on unnecessary items that slow you down, said Caskey.

“What I always say to people about month end is month end does not need to be perfect, month end needs to be about 90 to 95 per cent right,” he said. 

“Year end, that’s the only time you need to be perfect. Yes, your BAS, payroll tax, super – all your compliance needs to be bang on.”

Keep your month end tight!

Do this by sticking to the essentials. Just deliver financial statements and try not to throw in headcounts and sales data.

Time-saving on billing is key. If you can automate and do billing throughout the month, the efficiencies are highly worthwhile. Resolve billing issues as they arise during the month and delegate the billing responsibilities to one or two people in your team.

Have a hard cut-off with expenses and production, and use standing and recurring journals. Perform regular stocktakes and check your percentages early. Looking at salaries versus revenue and gross profit for total expenses so you can hunt down errors well before the month end.

Accruals do not need to be perfect, so make life easier and use rounded figures.

Payroll is easiest to manage if staff are paid monthly with fortnightly being the best option. It’s also more simple to organise when one person is in charge of payroll.

 Do your wage and leave accruals early. So if you close these on the 26th of each month, do them on the 26th so your payroll is done and dusted as early as can be.

Getting started

Making a change can seem daunting, so don’t rush. Take the time to become familiar with the problems and priorities your financial team should tackle in speeding up the month-end process, said Foo.

“I give myself three months to not change anything,” he said.

“If it’s a large enough business you’ll need to go a few rounds of month-end to feel out where all the quirks and issues are.”

Try to understand the business and the people, then aim for one big improvement per month and one little improvement per week.

Changing time-worn systems is hard work and the efficiencies can help not only the members of

a finance team, but those outside it as well. So when you achieve improvements, be sure to share them.

“The biggest issue I see in finance teams is they do all this hard work and they do not tell anyone about it so when it comes to payrise time, everyone’s like ‘What have you done?’,” Caskey said.

“Are you deserving of a $50k rise, do you deserve an $80k bonus? And if the answer is no you probably haven’t been vocal about what you’ve done.”

Efficient finance leadership

Start your efficiency mission by simplifying your systems. This can be done with measures such as creating one email inbox for invoices and keeping profits and loss reporting to one page.

Eradicate time-wasters – don’t send reports unless absolutely required. Strive for just two journals after month-end.

As the CFO or financial controller, make sure all deliveries come through you so sift through and work out what needs to be automated.

And of course, automation is a massive time saver. Caskey recommends Weel to simplify and track spending using real-time budget controls and insights.

“The moment I touched Weel and saw they do automatic follow ups for team members and clients so our finance leaders didn’t have to do follow ups, I was like ‘That’s a game changer’,” he said.

For further inspiration on ‘the fast close’, Caskey and Foo recommend the Accounting Best Practices podcast by Steven Bragg, who has been a CFO / Controller of four companies, or to re-watch the full live webcast recording click here for instant and full access.