No matter if you’re looking at taking time off for summer break or the holidays, it’s not only exciting but important for employees to take vacation. Yet for finance leaders, the thought of not being at work—even for something as beneficial as vacation—may feel nearly as stressful as not taking a vacation at all.
This could be for multiple reasons. Time to close at month-end can hover around 10 business days—and 58% of surveyed companies say their month-end close takes seven business days or more. Ten business days equals two full weeks out of every month, leaving only two “free” weeks to accomplish other duties and assignments. If you feel you can’t take a vacation, especially during month-end close, it may be just as stressful to think of being gone during those other weeks when you need to work on everything else that’s on your growing to-do list.
But it’s true: The beach (or the mountains, or the forests, or a new country) is calling, and you want to go. Not only that, for your own health, you should go. A study from the State University of New York found that men between the ages of 35 and 57 who were at risk for heart disease and did not take at least a week-long vacation each year were approximately 30 percent more likely to die of heart disease than their vacationing counterparts. Experts agree the statistics for women would be similar. Not taking a vacation can result in a decrease in mental focus and clarity and an increase in depression. A vacation-less schedule may also increase stress, blood pressure, and cortisol levels, increasing inflammation and decreasing immunity. Yet only 28 percent of Americans typically plan to use all of their vacation days.
Even with those hard-to-face statistics, it can still be difficult as a finance leader to feel you are able to get away and leave your team for a week, or even a few days.
The Keys to a Successful Month-End Close
Month-end close isn’t a solo show, so the good news is that you can set your core team up for success, whether you’re in the office that day or not. The more proactive you can be in building and communicating the process, however, the better.
Necessary information for closing your financial statements comes from multiple sources. Which means you’ll need to inform team members of the closing schedule well ahead of time and communicate explicit deadlines to make sure you get what you need when you need it. This is especially important for months that run into holidays at the very front or back end of the month—think May, July, September, November, and December. Since many colleagues also take additional time off around holidays, they need to know ahead of time what has to be delivered to maintain the close schedule.
Quick reviews of prior months and even prior years can also help pinpoint what was done correctly and where improvements can be made. Over the course of their experience, other CFOs have noted these crucial keys to successful month-end closing.
Collecting Financial Information
A good month- or year-end close starts with having all the relevant information collected from your ERP, accounting systems, bank statements, and even the legal team. With multiple pieces in play across various departments, consider a quick meeting with all relevant stakeholders to make sure everyone knows what they’re responsible for delivering. Set up a checklist for the finance team to use at the end of every month and fiscal year to ensure all the necessary information is on hand for completing the process.
Federal and State Tax
Taxes are another area where checklists can help speed the process, especially considering the large number of tax forms that must be completed month in and month out. ERP solutions like NetSuite can be invaluable at tracking past filings, future filing dates, and providing reminders of when tax filings are due. Other experts recommend completing tax calculations a minimum of five days before the monthly tax return is due to allow for adequate time to review tax calculations, get backup documentation in place, and make any necessary modifications.
Budget Accuracy
What happens when you close the month and there’s a significant variance between your actual and budgeted numbers? Most businesses would count budget accuracy as essential to their business. Some use flexible budgeting that allows them to adjust projections and reallocate resources as the financial situation evolves across the month. Excel’s multi-dimensional functionality can help streamline this process. Several experts also recommend adjusting forecasts quarterly to ensure your budgets remain as accurate as possible.
Planning
Your organization can’t exist month to month; it’s important to plan for the future, from looking at new tax laws and regulations to preparing the monthly budget for the next fiscal year. Many experts recommend planning the next year’s budget in Q3 of the current year so that it can be signed off on by the management team in Q4, with final adjustments made after the current year closes. Accounting teams—whether in-house or third party—should constantly remain up to date on new tax laws and regulations, and should be involved in the budget planning process to make sure those changes are accounted for.
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