Empower Your Business with a Streamlined Month-End Close Process
As a business owner, you face endless, competing priorities. One priority that shouldn’t be overlooked – and that can truly change your business for the better – is the month-end closing of your books.
An objective, thorough monthly review and closing process not only maintains the full integrity of your financial data, expense categorization, banking reconciliation, and visibility of cash flow and profitability, but also empowers you to make better financial decisions. Companies that promptly close their books at the end of each month reduce the risk of blind spots that can threaten the bottom line, while benefitting from insight that can be used to improve processes, avoid obstacles, and take advantage of opportunities.
Confused about Cash Flow? Start with Month-End Close
If you often find yourself asking where your cash went at the end of each month, you need a better month-end close process.
The sooner you can get a closed balance sheet at the month’s end, the sooner you can use it as a tool to help monitor your cash flow. You may know you made $200,000 in a month but not realize the money is all tied up in inventory or accounts receivable until your books are closed.
As basic as it may seem, having a consistent and realistic idea of where money is allocated will give you more control over your business and a better understanding of how much cash you have on hand. And as a business owner you know that cash flow is king: it supports the valuation of your business and gives you the freedom to explore options and opportunities along the way.
That said, the availability of funds is just one of the many metrics that you get out of a month-end close. And if you’re not looking at your books, you’re not looking realistically at your key performance indicators (KPIs).
Month-End Close Best Practices
What’s the best way to go into your monthly close? It starts with a solid checklist, flowchart or alternative visualization. Whichever method you select should illustrate what paths need to be completed and by when.
From there, clear communication and a focus on team member and departmental alignment are key. In order for a close to be successful, roles and responsibilities must be defined, and dependencies must be understood. The month-end close process is sequential by nature so, without this emphasis on orchestration, it’s nearly impossible to close on time.
Your checklist will, of course, be tailored to your business and its objectives, but three critical tasks are relevant to almost all businesses:
- Reconcile bank accounts and credit cards: ensure that all cash items are recorded in an efficient system that reconciles all bank account activity
- Reconcile all prepaid expenses: include accrued expenses and revenue that has been earned but not yet invoiced in your month-end close
- Be mindful of timesheets and overtime: account for these items carefully as they can contribute to an accounting blind spot if there are delays with entries and alert you to departments or projects that may be under- or over-performing
The Power of the Month-End Close
Closing out your month in an efficient and timely manner will enable you to manage your business in a more productive, forward-looking way. It’s much easier – and quicker – to detect red flags and address them before more time goes by.
A good process will help you identify what levers to pull to increase profitability and cash flow. It’s insight you can get just by looking at the starting and ending points of your bank accounts. Most importantly, the right process will allow you to evaluate what is and isn’t working for better short- and long-term decision making.
Streamline Your Month-End Close
Your month-end close will be faster and easier when you work with an experienced partner that knows you, your business, your industry, and has an intimate knowledge of your financials.
Kirsch CPA Group provides private, family businesses and non-profits, with month-end close services along with a wide array of accounting and financial services that eliminate blind spots and create detailed financial insights that drive business growth. Kirsch services are holistic, forward-looking and results-oriented – your financial goals become our goals.
For more information about how our team of experts can streamline your business operations through month-end close and other holistic accounting services, speak to a Kirsch CPA Group team member today.