Founders and finance teams want to keep a finger on the pulse of the company’s health. With a month-end close, they get the detailed look they need to evaluate their runway, revenue trends, and more. Plus, this regular step ensures that the financial reports investors and tax authorities require stay updated and accurate.
While a month-end close delivers a number of benefits, it comes with one big drawback: the effort required to complete it. Fortunately, a checklist and the right tech tools go a long way to ease the burden here. Similarly, taking a few steps now can help to make your month-end closes easier and more accurate as you move forward.
Specifically, we recommend that all founders and finance teams do the following:
Make your processes clear and hard-set
Your month-end close is a little bit like a dance. The first time you do it, the steps might feel confusing and you might be unsure how they fit together. By the time you finish it, you might have the sense that you fumbled your way through.
But next month, each step feels a little more familiar. You start to get a better understanding of the rhythm and the way things move in tandem.
By the six-month mark, you should be able to move through the dance with comfort and ease.
At least, that’s the case if you keep following the same choreography each time. But if you let your month-end close use different steps in different sequences, every month is going to feel just as challenging as the first.
Founders who want to enhance accuracy and speed in their month-end close need consistency. The following steps will help you leverage past month’s closing into success in future months:
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- Develop standard operating procedures. Write out all of the steps required for your month-end close, including who takes them on and how the steps move from one responsible party to another.
- Write out a checklist. Once you have a clear grasp of the required procedures to mark your month-end close as done, create a checklist to guide the process. Distribute it among the team responsible for the close so everyone gets on the same page about what needs to be done, and by whom. Ideally, this checklist lives somewhere everyone can access and update it in real-time (e.g., your workflow software, your ERP) so it’s always clear who has the ball in their court.
- Establish and publicize deadlines. Next, attach dates to each item on your checklist. Setting those deadlines helps you ensure efficiency and timeliness in your month-end close. If there are deadlines that apply to people who aren’t directly involved in the close — like deadlines for submitting employee expense reports — develop a way to keep those in front of the relevant parties.
- Provide training. If other people are getting involved in your month-end close, it’s critical that you set them up for success. Let them shadow you or the appropriate finance person for a month or two before they take the role on themselves. If they’ll be using software for their month-end responsibilities, ensure they feel comfortable with that tool, too. If they don’t, the software vendor may offer training you can tap into.
Apply a continuous improvement mindset
You might reach the end of your month-end close and have a huge temptation to cross this to-do off the list, then walk away. Because this monthly task often feels onerous — especially in the early days of implementing it — that’s understandable. But if you don’t improve your closing process, it will continue to feel like a big lift month after month.
Block out some time (even 20 minutes) after your month-end close to reflect on the process. What worked well? Where can you lean into that success to make future months easier? If automation streamlined certain steps, for example, it might be worth exploring other ways to leverage tech to support your month-end close moving forward.
Similarly, identify your biggest pain points. If pinging people for receipts so you could close out expense management was burdensome (and annoying), it’s a sign you need to fine-tune that process. Clearer deadlines and fintech that makes it easier to submit expense reports may both help there.
Ultimately, if you push your month-end close off your desk the second it’s finished, you’re probably not going to improve the process much. But putting in some time and effort now can pay off majorly down the road.
If you put in an hour to implement a new automation tool, for example, but it saves you 10 minutes at each close, you’ll see ROI within six months. And assuming your business thrives for decades to come, you’ll continue to reap that benefit many times over.
Integrate checks and balances
Your month-end close gives you critical visibility into your tech company’s financial health. At the same time, it generates the financial reporting you need to stay compliant and keep your investors informed. But you lose out on both of those benefits if the close isn’t accurate.
To ensure the accuracy you need, here are a handful of checks and balances you can implement:
- Capture the data and documentation that gets gathered for the close in your fintech solutions. This creates the paper trail you would need in the event of an audit.
- Have a human look over any reconciliations that get automated. While leveraging tech to match bank statements to internal records of expenses and invoices to payments makes life easier, it’s also key to have someone review the results. This way, if anything is being incorrectly categorized, you catch the issue early.
- Use AI-powered analytics to look for deviations from historic month-end close data.
- Schedule a meeting with key stakeholders to review the month-end close once it’s complete.
Solidifying your month-end close process, continuously improving it, and building in checks and balances will all help you make the most of this regularly scheduled to-do.
If you like the idea of these fine-tunings but you don’t have the bandwidth to take them on, we can help. As experienced accountants, we can tackle the bulk of your month-end close work so you can focus on best leveraging the results for your company’s success. Contact us to explore how we can support you here.