Making month end great again
How long does your month end process take? If the answer is ‘too long’, here are some tips for speeding things up.
How long does your month end process take you? Five days? Ten days? Longer?
And more importantly, what’s the impact of that, for you, your team, and your business?
You never have enough time for analysis, insight and business improvement. Your finance team are perpetually exhausted from the monthly reporting marathon. Your colleagues worry that they can’t make the right decisions because data isn’t available when they need it.
What if there was a better way?
Taking month end from 12 days to 3 days
A long time ago - over ten years now - I was working with a senior team who faced those same issues. They firmly believed that month end had to take 12 days. Any less would mean the accounts might be inaccurate. There would be issues with external reporting to third parties. Etc. Etc…
I know there's a better way. I'm 100% with David Parmenter on this issue: completing your financial close in days rather than weeks is possible for any organisation. If you've not come across David's work on improving the effectiveness of your finance function, I recommend you check out his books, toolkits and courses.
To convince my client that three-day reporting was possible, I took the whole group along to one of David's seminars. He showed how to cut out wasteful practices, improve reporting, and STILL produce good quality data - in just three days.
I am somewhat evangelical about this approach, but that’s because I’ve seen the difference it makes. As the Chief Executive put it, he’d much rather know if the organisation was on track after three days, than have perfect accounts in a fortnight. Wouldn’t you?
Tips for speeding up your own month end
Since that workshop with David Parmenter, I’ve helped many organisations cut their financial close down to size. Here are some tactics I use all the time, that you can try in your own organisation.
Every journal is waste. Review every journal and go back to the source systems – revenue, accounts payable, payroll and fix the source information.
Good enough is good enough. Focus on what's essential to your organisation. Use the 80:20 rule and challenge every aspect of the process to make sure it’s adding value. Yes, there may be changes later - but don’t hold up the big picture because you haven’t filled in a few tiny details.
Simplify reporting to focus on exceptions. If it’s on track, don’t waste time telling someone it is. Rework reports so that it’s obvious which numbers need attention.
Compare the right things. Focus on year to date results and comparison to last year, not to the budget. Management accountants have a whole industry around explaining variances to budget. Often a budget that isn’t phased correctly anyway. It adds no value.
Nominate champions You will meet resistance, and you’ll need buy-in from the team. If you can convince the real sceptics, they tend to bring the rest of the team with them. So make them part of the process: push "poisoners" into the well by giving them specific tasks and holding them to account.
Still think it can’t be done?
I’ve recently been working in healthcare shared services. The financial processing components were completed in just two days, and the shared services accounts were delivered in three days. The customer took 12 days to produce their month-end reports – as that was the reporting deadline to the Ministry. What a waste!
We’re now helping one of these customers to challenge the status quo. I've successfully implemented three-day month ends for many organisations - in just 90 days. Trust me. It can be done.
If you need some help to streamline your month end, get in touch with me ross.chirnside@efficacygroup.co.nz
