5 Ways to Streamline the Close of Your Accounting Books

5 ways to streamline the close of your accounting booksClosing the accounting books is a very important stage in the financial reporting process. In an ideal situation, each accounting period is closed and financial statements are prepared. This will assist with tracking the operations and the financial performance of the company.

Putting steps in place to streamline this procedure will result in more timely and reliable financial statements. One of the primary ways to accelerate the close is to create standards that are easy to follow and incorporate into your normal routine.

Here are five recommendations for streamlining the close:

1. Consider switching the close process to monthly. 

Waiting to perform a close either quarterly or annually only increases the time needed to perform it. Plus, accurate financial results may not be available for the interim periods.  Switching to a monthly close will make the practice more routine and streamlined.

2. Set up standard recurring journal entries. 

For the general journal entries that are repeated every accounting period, it is a good idea to set up a standard journal entry so the accounting system will post these entries every period. Examples of these entries include accruals, depreciation charges, and allocations. Setting up recurring entries will make the close process easier and help reduce accounting errors.

3. Develop a period end closing checklist. 

A closing checklist will help standardize the close process and can also assist with transition in the event of employee turnover or absence. The checklist should include step-by-step instructions for the monthly close. It may be beneficial to list out the entries that need to be recorded and the reconciliations that are to be prepared. The checklist should also include who is responsible for each aspect of the close and a timeline for completing the work.

4. Do not wait until the end of the period to begin the process.

Certain aspects of the close can be performed prior to the actual period end. For instance, cash can be reconciled on a more frequent basis. Spreading out work in this manner will reduce the amount of time needed to close the books after the period ends.

5. Hold employees accountable.

Once a checklist is developed and responsibilities are assigned, employees should be held accountable for meeting the deadlines established. It is a good idea to assign someone to oversee the process and keep it on track. Communicate poor performance as well as reward for improvements. The goal is to keep your employees engaged and motivated.

Allan M. Sumner can be reached at Email or 215.441.4600.