It’s that time of year. The leaves are falling. The temperatures are dropping – reminding us all that year-end is approaching rapidly.
With that comes rising stress levels for those in the accounting and finance profession, given all of the work that’s ahead. So what should accounting and finance executives be doing to get ready for the financial year-end and reduce some of that stress? Here are a few suggestions.
Finishing Up Strong
For those companies on a December 31st fiscal year, the last month of the year is a good chance to focus on maximizing revenue while managing costs and improving the bottom line. In a prior article titled “Getting to the Finish Line,” we shared the recommendations from a panel of CFOs who spoke about delivering for current customers and executing on existing contracts, especially in services businesses.
For a consumer business, the holidays are a big focus for closing out 2016 strong while also planning and designing products for next year. Of course, this must be balanced with controlling spending and managing headcount going into the new year.
Understanding Upcoming Regulatory Changes
The last month of the year is also a good time to focus on any upcoming regulatory changes that may impact planning for the next year. While many companies were bracing for the new overtime rules to take effect on December 1st, that now appears to be on hold. But there’s plenty more to think about – such as the upcoming changes in revenue recognition and lease accounting.
Wrapping Up 2017 Budgets
While some companies may have already finalized their 2017 budgets, most are still in the throes of budget reviews and negotiations – and for many, this process will extend into the next fiscal year. The emerging best practice is to put less focus on annual budgets (since they’ll be obsolete quickly) and more focus on rolling forecasts as a more dynamic approach to planning. That means reducing the amount of time and effort spent on the annual budget, getting it finalized before year-end.
Experts recommend working at a more summary level and not getting bogged down in too many details – set your targets and start executing. Then start implementing a rolling forecast process, where you revisit budget assumptions quarterly or monthly. Make adjustments to your plans throughout the year. Running a 4-6 quarter rolling forecast also provides a head-start on next year’s budget as you get later into the year.
Preparing for Year-End Close
While the FP&A team is wrapping up the 2017 budget, the Controller’s department should start preparing for the year-end close and reporting. This can be made less stressful with some pre-planning and preparation. That involves, among other steps, identifying any filing deadlines, then developing and communicating the closing and reporting calendar to all the participants.
Make sure employees know they need to get their expense reports filed on a timely basis. Make sure all 2016 vendor invoices are received and processed, or that accruals are made where needed. And if you can get a head-start on year-end reviews, audit preparation, and analysis, that will help save time and effort at the end of the fiscal year.
Set Your Process Improvement Goals
While wrapping up 2017 budget and getting ready for year-end close and reporting are important, this is also a good time to analyze what’s working and not working in your finance processes. That allows you to identify areas for improvement, maybe even transformation, in the new year.
- How efficient is your annual budgeting process?
- Are you managing based on outdated budgets throughout the year?
- How fast can you close the books, monthly and quarterly?
- Are line managers getting the right information at the right time?
- How effective and accurate is your external reporting?
- How can finance be a better business partner to the CEO? Line of business executives?
- How well are you able to assess the financial impact of new business opportunities?
If you identify weaknesses in a number of areas, don’t try to solve all of them at once. Prioritize the issues, and identify the ones that can be addressed quickly – and will create the most impact.
Upgrade Your Software Tools
Going hand-in-hand with process improvements should be system modernization opportunities. Some of the process issues you identify may be a result of reliance on outdated technology.
- Is your reliance on spreadsheets and email bogging down planning and reporting?
- Have you outgrown some of your legacy software applications? Are some of these no longer supported by the vendor?
- Are line managers’ information needs being fully addressed by static reports?
- Are your operational plans and models stuck in silos and separated from financial plans and forecasts?
As you’re identifying process improvement opportunities, consider the software (or lack of) that is supporting the process. Take the opportunity to upgrade the process – and the system supporting it – to get maximum benefit.
Leading companies are taking advantage of modern, cloud-based enterprise performance management (EPM) software solutions to replace spreadsheet and legacy systems that no longer meet the needs of the business. The cloud makes more powerful software solutions more readily available and affordable to small- and mid-sized organizations. And they can be implemented in a fraction of the time and cost.
To learn more about cloud-based EPM and how it can help transform your financial processes, check out this white paper titled “EPM in the Cloud.”
In summary, you don’t have to spend all of your nights and weekends closing the books or finalizing budgets. With the right advanced preparation – and the right tools in place – you can automate and accelerate these processes and hopefully spend more quality time with family and friends over the holidays.
'Tis the season!