By: Sharon Carbonell, CPA | Manager, Outsourced Accounting and Advisory Services

For many who work in the finance department of a nonprofit or for-profit business, the month-end close process is a constant source of strain. Inefficiency and operational ambiguity are sore spots in particular, generally the result of manual data entry, lack of coordination, deficient communication between departments, and/or lost or forgotten documents. While these issues are readily apparent, fixing them may be easier said than done. Moreover, while manual data entry or lost documents are not insurmountable issues by themselves, they prevent the finance team from consistently delivering accurate, real-time snapshots of the organization’s finances to leadership for making critical decisions. Setting realistic expectations, documenting process and procedures, and focusing on fundamental areas are together a worthwhile investment of time and resources to streamline operations and meet the needs of the organization.

Set Expectations

Start the process of improving your month-end close by evaluating whether your expectations, as an organization, are reasonable. Consider the size of your organization, the systems in place, the size of your staff, the amount of data processed, and the complexity of the transactions. What can your finance team reasonably accomplish with the resources you currently have in place? Are there simple changes you can make to improve the efficiency and responsiveness of your finance department?

Process Documentation

Although some nonprofits and government contractors are required to implement and follow documented procedures and processes for compliance with regulations, documentation is considered a best practice for all organizations. Documentation is the roadmap needed to ensure each team member is adhering to department’s agreed-upon policies and procedures, and it ensures your finance team can deliver essential data and reports to leadership.

Focus on the Fundamentals

Outlining fundamental areas and addressing these first will keep your finance team focused on the most important activities within your team.

  • Establish the main activities within the month-end close process. Determine whether some activities could be eliminated, consolidated, and/or deferred to the quarterly or annual closing.
  • Establish which team members are responsible for these activities and set due dates when possible.
  • If some activities are performed outside the accounting system (for example, in Excel), customize the templates used, train your team to use them properly, and establish where critical documents should be saved.
  • Finally, set a date for the close and stick with it.

An efficient month-end process increases discipline and structure, improves internal controls, and reduces significant risk. In addition to meeting organizational goals, finance leaders who invest the time and effort in improving their monthly-close process also benefit from a higher performing team and retention of valuable team members over time. For more on best practices for the monthly close process, watch our webinar, “Best Practices for Achieving Accurate and Timely Financial Statements – Beating the Monthly Close Woes”. If you have questions about how your organization can improve the monthly close process or would like more information about an accounting systems assessment, contact John Pace, CPA, CVA, Partner and Director of Outsourced Accounting and Advisory Services at jpace@grfcpa.com or 301-951-9090.