How CFOs & Accounting Ensure a Successful Year-End Close

The end of any fiscal year is always a busy time rife with competing priorities and overworked employees.

There are finance projects to wrap up, key organizational milestones to tackle before the holidays hit, new regulatory requirements to meet — and of course, business budgets to handle.

There are, however, some smart ways you can close out your year successfully and set your organization up for success in the new year.

What is year-end closing in accounting & finance?

Year-end closing involves identifying a cutoff point to your fiscal year in which you will calculate all transactions including balances and deficits in order to prepare finances for the following year. Year-end closing allows you to conduct budgeting with better insight into when, where and how much money was spent in the last year.

4 Smart Ways to Ensure a Painless Year-End for your Accounting Team

1. Confirm the major revenue assumptions in your fiscal year budget
2. Re-examine pricing with vendors and service providers
3. Set your reporting and forecasting functions up for success
4. Use a consistent message and tone in your communication

1. Confirm the major revenue assumptions in your fiscal year budget

Business risk related to revenue concentration among major clients can be lurking below the surface during the budgeting phase.

Unfortunately, it usually comes in the form of unchallenged assumptions from prior budgets and analysis.

Take the opportunity to shore up any of those weaknesses by verifying directly with your account managers (or other internal owners), if there are any risks associated with each client and their potential to churn.

Catching these risks before your budget process wraps up will give the organization the opportunity to address these potential budget bombs, using measures that prevent major rework, such as applying a broad hedge to your revenue and/or your operating income.

Avoid financial surprises during year-end review by double-checking key assumptions in your budget where you have material revenue concentration.

2. Re-examine pricing with vendors and service providers

Cut the bloating and get lean by renewing the effort to evaluate your major contracts with vendors, suppliers and service providers.

Follow up on your key action items related to your major contracts, and make sure those are being renewed or renegotiated. Additionally, if the contract is being cancelled, make sure it is being replaced with a new vendor that is priced right.

Moreover, legacy service providers and software programs always seem to slip in under-the-radar and into the budget. Some of these underutilized programs can be expensive to maintain. Therefore, cutting them can result in real savings.

Putting together a running list of programs, with their license count, can help identify these expense leaches.

3. Set your reporting and forecasting functions up for success

Most organizations have software programs and ERP systems that are severely underutilized, and have capabilities that are strangely hidden out in the open.

Take advantage of the slower business cycle to explore additional functionality of your current ERP and forecasting system, to determine if there are more efficient ways for your team to operate.

Online research from web searches and forums, as well as conversations with subject matter experts and consultants, can uncover substantial efficiencies that were previously unknown.

4. Use a consistent message and tone in your communication

There is no better tip to orient the direction of your organization, than consistent messaging and respectful tone in communication to all employees.

Implementing any of the above tips will be made more difficult if the overall message changes or is inconsistent.

This will cause confusion between the employees in charge of implementing such changes, and inevitably lead to the unraveling of any efforts.

At its core, implementation of a new product, policy and/or procedure is a messaging campaign that should come in two forms:

• First, have readily available documents that employees can see, with an overall objective, as well as a list of benefits that can be explained in doing the new implementation.
• Secondly, ensure that common talking points are used by the leaders who are implementing the change. This will help to prevent any messaging inconsistencies from occurring.

Why Ensuring a Successful Year-end is Important for CFOs and Finance Execs

Without proper year-end preparation, your financial statements will not be accurate, meaning your finance team will be flying blind when it comes to budgeting for the next year. Plus, inaccurate financial statements means investors and stakeholders won’t have proper insight either, which can lead to a lapse in funding if problems progress for too long.

Put your best foot forward with year-end preparation by turning to a trusted partner to allow you to foresee potential issues well before they arise and charge into the next year with confidence.