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Your Close Checklist: What Has It Done For You Lately?

March 16, 2010

If your close the books process is exceedingly long, this is a question worth pondering.  So, what has your close checklist done for you lately?  Its main job, probably, is to verify that all close tasks are completed before finalizing the books each month.  Every time someone finishes a task during the close, the checklist item gets signed off.  Right before finalizing the financials, someone in charge makes sure all items are checked off.  No doubt.  The checklist is a great tool to do just that—help ensure a complete close.  But know that it doesn’t have to be just a catalog of close activities.  Rather, tweaking the checklist even a little bit may help you speed up the close.

What’s the tweak?  Add a field on the checklist to record each item’s actual completion date and time.

Record the actual completion date and time for each activity during the next close (e.g., Payroll journal entry – Day +2 at 2pm).  Then, review this information after the close.  You will find three types of activities:

  • Activities that are completed timely.  No action on these.
  • Activities that can be completed sooner, but are not—often because there is no requirement to do so.  This is an easy fix.  Require more aggressive completion deadlines for the next close.
  • Activities that truly hinder the close process.  Whether it is a hairy inter-company reconciliation or the deferred tax calculation, they hold up the close every time.  They cannot be sped up easily because of their complex and/or manual nature.  Take time (can be months) to find and address the cause of these issues.

Why close faster?  A substantially faster close can improve the business in at least two ways:

  1. Boost morale and avoid burnout – I have not met one accountant who looks forward to the close each month.  The longer the close drags on, the more burdensome the experience for those involved.  Working toward a faster close is a goal that will benefit everyone.
  2. Increase speed to analysis – The faster finance can finalize the numbers, the more time and data there is for analysis.  Finance’s role is more than just producing and then explaining the numbers each month in hindsight.  It must help the business make strategic decisions with the data it has.  Top-tier finance functions close in three days or fewer, which in essence buys them more time and more data to do that type of work.

So, let the close checklist show you what is holding up your close.
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The Back Office Mechanics Blog by Nancy Wu is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.

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