Proper closing of the books at the year’s end ensures that your finances are up to date and accurate. It’s an essential (albeit time-consuming) task for any business in order to remain legally compliant, make more informed decisions, and provide better forecasts of the company’s trajectory.
Unfortunately, closing of the books is often a multi-step, labor-intensive process that eats up key resources’ time and energy. Further, if not performed properly, it can set your business up on faulty ground for the year to come.
So how do businesses go about closing the books accurately and confidently? In this article, we’ll take a closer look at the year-end close process, and how NetSuite can help businesses ensure their books are accurate and ready for the new year.
Year-End Close: What’s Involved?
The year-end close is a daunting task for organizations small and large, and numerous steps are required to do so confidently. Some of the key processes in closing the books include recording adjusted entries, calculating net income (or loss), reconciling all accounts, updating budgets and projections, and preparing the year-end reports and tax filings.
Pain Points in the Process
With so many steps involved, it’s clear that the year-end close creates headaches for businesses and their accounting departments. In fact, according to CFO.com, only the top 75th percentile of businesses “perform the annual close in 15 days or fewer. That’s nearly twice as fast as median performers and three times faster than bottom performers (CFO.com).” Therefore, many businesses may expect to take 25-30 days to close their books at the end of each year, while still staying on top of the day-to-day accounting tasks.
While this process acts as a significant time suck for valuable resources at multiple levels of your accounting department, cutting corners is not an option. Therefore, savvy firms are left to identify areas for optimization and improvement in the closing of their books, so they can minimize the resources and risk involved.
Optimizing the Process Operationally
When looking to optimize the year-end close, you can separate improvement initiatives into two different buckets: Operations and Infrastructure.
On the operational side, you can enforce regular (monthly) closing of the books, improve internal controls on data management, and improve human capital planning to ensure your accounting staff is ready to devote weeks to the process.
While closing the books monthly is standard practice, there are a shocking number of businesses who wait until the quarter or year’s end to engage in closing. By regularly closing the books throughout the year, you can ensure that the numbers you’re dealing with at the year-end close process are accurate, properly reconciled, and accounted for.
Regarding data management, you should encourage automation and validation wherever possible to prevent issues caused by manual data entry. Having your systems tightly integrated can go a long way in preventing discrepancies, and validation protocols can help alert staff of potential issues.
If your accounting staff is dealing with other pressing items while also being involved in closing the books, unnecessary strain will be placed on the department. Make sure projects that can be moved ahead or pushed back are, allowing staff to focus on the time sensitive books.
Infrastructure is Key
Optimizing your internal processes is a good start, but your business will still be selling itself short if it doesn’t have the appropriate technological infrastructure to operate on. If you have data silos throughout your organization (i.e. data kept in multiple different systems or on spreadsheets), you’re setting your business up for a difficult yearly close.
By implementing a cloud-ERP system like NetSuite, you can mitigate many of the issues that come along with the closing process. For example, NetSuite serves as 360-degree business software that stores all of your company data in a single database. This breaks down data silos and ensures that cross-departmental information is updated in real time. This also reduces the need for duplication of data entry labor, which can drastically reduce human errors. If you have other third-party software, they can easily be integrated with NetSuite for real-time, two-way data flows.
NetSuite also has robust automation capabilities, which can streamline processes such as reconciliations. Using SuiteFlow, NetSuite experts can drastically reduce the amount of manual labor required by your accounting team to get through the closing process, allowing them to refocus their efforts elsewhere.
You’ll also gain access to compliance functionality and controls that let you validate and monitor data as well as detailed audit trails to track down the sources of discrepancies.
If your system lacks the needed integrations, controls or automations, ScaleNorth’s team of NetSuite consultants can jump in to help optimize your accounting practices and streamline your closing processes.
Outsourced Accounting for the Win
Partnering with ScaleNorth’s outsourced NetSuite accountants is a sure-fire way to streamline the year-end close. ScaleNorth’s accountants are entirely focused on the NetSuite platform, and most hold multiple NetSuite certifications, meaning they can operate extremely efficiently on NetSuite. Further, an outsourced approach means that you can scale up your accounting resources on a moment’s notice, allowing you to seamlessly manage the year-end close while remaining on top of other ongoing finance and accounting initiatives.
With an award-winning team of NetSuite certified accountants in your corner, you can close the books more efficiently and confidently than ever before.
Do you have the resources, processes, and infrastructure needed to close your books quickly and confidently this year? NetSuite ERP’s robust accounting functionality gives your business everything it needs to manage the year-end close in stride. By utilizing ScaleNorth to optimize and automate your routine accounting processes while providing fractional accounting support, you’ll maximize your ability to close the books timely and accurately.
Whether you are interested in implementing NetSuite to run your finances or would like to optimize your NetSuite instance and accounting operations, the ScaleNorth team is standing by to help. Let’s start the conversation today.