For most people, the end of the year conjures up visions of holiday celebrations, parties, big meals, family, travel, and the chance on December 31 to covenant all the ways we'll be better in the New Year. But for accountants, it also brings all the processes and reporting involved in the year-end close process. No matter how much you enjoy accounting, year-end close probably still causes some stress. Unexpected problems and challenges always seem to pop up and get in the way of closing out the books on time.
While it may not be possible to eliminate all of these challenges, it is possible to at least manage them. Take a look at some of these common issues and ways you can combat them in your year-end close process this year.
Too Much Data
Atop most folks' list of year-end close challenges in today's data-centric age is the problem of having more data to contend with than ever before. Financial data has a way of becoming larger and more complex over time.
Fortunately, there are ways of responding successfully to the challenge of ever-increasing (and increasingly complex) data. One is to embrace financial reporting automation, which enables you to manage more data without having to hire more accountants or work overtime at year-end close. Another is to assess all of your data and determine which data is actually important. Technology has made it easier than ever to collect data in ever-more finite detail. Which means that organizations tend to collect some types of data because they can, not because they should. Reduce the complexity by determining which data actually matters—data that can be linked to a valid KPI, for instance—and which you can ignore.
Regulatory frameworks are constantly being updated. If you're not working to stay informed on all these changes, updates can create major stress at year-end close when you need to make significant adjustments to your books in order to comply with the new requirement.
Commit to staying ahead of regulatory changes. Don't wait until year-end to figure out which relevant regulations have been changed and how they impact your financial reporting. If you haven't stayed abreast of the changes in 2018, don't panic. There's still plenty of time to bring outside help in to get your team caught up on the new regulatory issues. Having an expert around for guidance is worth the cost of the consultant.
The average person changes jobs 12 times, often spending less than five years at each job. Which means there's a good chance that at the end of any given year, you won't be looking at the same lineup of colleagues you had at the beginning. The people you used to rely on for your reporting process may no longer be there, taking their experience and their knowledge with them and leaving you stranded.
Plan ahead for these situations by ensuring that team members meticulously document their processes, clearly outlining what they do for year-end close. Not only does it help keep them on track, but if they depart prior to year-end close time, this documentation also gives their replacement a detailed outline of the process and how to complete it.
It also helps to have user-friendly tools reporting tools in place. By depending as much as possible on tools rather than people, you can minimize the impact caused by personnel turnover. New personnel will also be able to get up-to-speed on reporting and accounting processes more quickly because they have tools to help manage the process.
Ready to see how the right technology can profoundly change your period-end and year-end close? Contact us today for a complimentary demo of insightsoftware.