The month-end close is an accounting safety net that, when not done properly, can leave a company in a dangerous free fall. Just ask Enron.
Sherron Watkins, a whistleblower that helped bring Enron’s issues to light, recently said that she warned one of Enron’s chairpeople about her fears that the company would “implode in a wave of accounting scandals.” As it turns out, she was right. And most—if not all—of the issues could have been prevented using the month-end close process. For example, the company was claiming profits from power plants that didn’t yet exist.
This kind of fraud is low-hanging fruit for a comprehensive month-end closing system. And even though most companies may not need their month-end process to catch rampant fraud, nearly all accounting teams can streamline this critical measure using the following steps. Whether you’re trying to prevent fraud, tighten up lax accounting practices, or just hit the road a little earlier Friday evening, these measures can save tons of time and effort on your month-end close.
Problems Affecting the Month-End Close Process
The close process is fraught with obstacles that, given infinite time, may not be a big deal. But in reality, they can make a smooth close really hard—if not impossible. Here are some of the primary problems:
- A lack of collaborative mechanisms to help team members work together
- A reliance on labor-heavy, manual tasks that consume time and cause frustration
- A dependence on certain people's knowledge, and when they leave or go on vacation, elements of the month-end close take off with them
- A lack of advanced planning to accommodate audits or business analysis
Whether you’re facing the scrutiny of an audit or a regular month-end close, these issues can each be a cog in your accounting machine. Here are five steps you can use to avoid them.
5 Steps to Streamline Your Month-End Close Process
Here are five steps you can use to streamline your month-end close.
1. Automatically Import Journal Entries
By automatically importing journal entries, you can check off two boxes with one stroke:
- You save the time it would normally take to copy and paste critical journal entries during your month-end close process.
- You help reduce the possibility of human error because the system automatically aligns entries correctly.
NetSuite makes it easy to automate journal entry imports in your reconciliation process, and GSI can show you how.
2. Automate Recurring Transactions
Many businesses have recurring transactions pop up month after month. With NetSuite, there’s no need to enter these manually or painstakingly copy and paste them again and again. Instead, you can automatically set up your system to incorporate these transactions for every month-end close.
For example, you may choose to have your ERP automatically enter loan payments or salary expenditures.
3. Use a Collaborative Close Checklist
A collaborative close checklist is a great tool to help get everyone involved in your process on the same page. Using this feature of NetSuite, you can send all stakeholders the same checklist, complete with details regarding who’s responsible for what. As an action item gets checked off, the whole team is alerted. This also makes it possible for team members to quickly identify items that are taking longer than they should and lend a hand to help someone who needs a little assistance.
4. Use a Cloud Storage System for All Documents
A cloud storage system for your documents makes it easy for everyone using your ERP to see the documentation they need as they ensure your month-end close is air-tight. As long as they have an internet connection and a device, they’re just a few clicks or taps away from the data they need.
Using cloud storage also frees you from the manacles of an on-premise server, which could go down in the middle of your close, causing an avalanche of issues.
5. Use Data Classification Codes to Streamline Closing Tasks
By classifying the different types of data you need to process as you close your accounts, you can color-code accounting data and adjust permissions as you see fit. For example, with guidance from GSI’s NetSuite managed services, you can use data classification to:
- Restrict editing privileges to certain people in your organization, which can improve the integrity of your data
- Assign color codes to indicate to different team members the lines of data they’re responsible for working with or verifying.
- Automatically identify problematic, time-sensitive purchase orders. GSI’s experts can set up your NetSuite implementation to color-code orders that haven’t been fulfilled in time for your month-end close, clearing up possible confusion during the close and down the road.
Use GSI’s NetSuite Managed Services to Streamline Your Month-End Close
With GSI’s SuiteCare, you get NetSuite managed services that can help you avoid wasting time and resources, expending excess energy, or becoming the next Enron due to laborious month-end close procedures. With detailed knowledge and years of experience working within the NetSuite ecosystem, GSI’s professionals know just how to make sure it meets your accounting team’s needs. Unleash the possibilities by connecting with GSI today.