When the end of the month rolls around, every accountant knows that it’s time to scramble. Closing out the previous month can be a hassle with filling out all the schedules, making the closing entries, correcting issues and checking to make sure nothing was missed. It can be a very time-consuming process, but there are ways to shorten the amount of time that must be spent closing the month – or even the year. Here are three ideas for a smoother, more efficient period close.
- Checklists are your friend – Start by making a list of all the standard processes, schedules and entries that need to be made to close the period. This can be done a couple of different ways; one is to go through the balance sheet line by line and look at what needs to be done for each of the items. Next, organize your list in the way that best suits your company’s structure. Some things to include on your checklist (besides the items to do) would be which person or role is responsible for which items, along with due dates on when every item is to be completed by.
- Not everything has to be done after period close – While you are assigning due dates to the items on your checklist, keep in mind that not all those things need to be done after the last day of the period. Things like depreciation and prepaid schedules can be tracked and booked at least a couple of days before period-end. Divide your checklist into pre-close and post-close entries, or things that can be done before the end of the month and things that must be done after.
- Monthly reconciliations – Although it is tempting to make reconciliations a yearly event, by performing reconciliations throughout the year you can save yourself the headache of searching through a years’ worth of information for a single error. By reconciling things like prepaids, clearing accounts and other miscellaneous balance sheet accounts monthly, in the event of an error, you will have 30 days to look through instead of 365 days.
The key to a successful, efficient period close is making as many processes standardized as possible. Laying out a step by step process for how to close your period-end can improve the amount of time that you spend closing the period. This also helps when you have staff turnover; the new staff will come in and already have a step-by-step process of what needs to be done.
If you follow these simple suggestions, you can improve not only the amount of time needed for closing the period, but also the accuracy of that information.