A key milestone for growing technology businesses is the ability to close your financial month accurately and in a timely manner.
This guide reveals actionable best practices that empower controllers to streamline processes and deliver timely, insightful financial statements.
Create checklists
One of the first things you can do is create lists of processes that need to be completed and recurring journal entries that must be posted to the general ledger.
Understand capabilities
Begin by understanding the capabilities of your ERP system and utilize automation whenever possible. Also, assess your team members’ proficiency with both ERP and Excel, searching for potential efficiencies and investigating any manually intensive, time-consuming processes.
Develop a timeline
Set a close process timeline and ensure alignment with your team. Publish the monthly close process calendar one week ahead of month-end. Be sure to consider the schedules of team members, including PTO and personal commitments, and factor in nonrecurring events such as required trainings or on-site visitors. Discuss any new journal entries required for the month based on business activities, such as fixed-asset additions, completion of capital projects, new prepaid expenses or write-offs of uncollectible receivables.
Communicate delays
If any potential delays are identified or verified, communicate these to the CFO by summarizing the issues succinctly, offering two to three potential solutions and keeping the CFO informed on progress and resolution.
Review statements
Review updated financial statements for completeness and accuracy. Confirm that all processes and journal entries noted in the initial steps have been completed and posted, verify that any new journal entries agreed upon have been posted and investigate any unexpected balances or scenarios, which could include sales increasing from the prior month while cost of goods sold unexpectedly decreases.
Share results
Finally, communicate the results and lock the financial month in the ERP system. Share updated financial statements and analytical commentary with the CFO, highlight significant variances between actual results and budget (or forecast, or the same month in the prior year, when applicable), and close the month in the ERP to prevent additional transactions from posting.
A successful month-end financial close can be defined by knowing both what your numbers and balances are and the related story or circumstances behind them. Said another way, the numbers are “the what,” and the story is “the why.”
How Can Schneider Downs Help?
To learn how Schneider Downs can support your emerging technology company’s month-end goals, contact our team at [email protected].
About Schneider Downs Emerging Technology Services
Schneider Downs understands the ever-changing landscape and business challenges facing companies focused on emerging technologies and software. Our clients represent a wide range of organizations, from emerging-growth companies to large mature companies, and we are well-versed in the unique challenges they face. Our team of seasoned professionals has experience working with emerging technology companies in all phases of their evolution.
To learn more, visit our Emerging Technology page.
