Accounting Challenges that Slow Down the Financial Close
The year-end close process for accountants involves finalizing financial statements, ensuring accuracy in financial reporting, and preparing for the upcoming fiscal year. But as corporate accountants know, this is easier said than done. Especially with the rising accountant shortage that hinders progress.
Many challenges can arise during this crucial financial close period, with some of the biggest challenges summarized below.
1. Time Constraints
Year-end close comes with strict deadlines, and accountants may face time constraints to complete all necessary tasks. This can lead to increased stress and pressure to meet reporting deadlines.
Manual processes are one of the biggest culprits of that stress. Any routine accounting process that can be automated will effectively shorten your close process and alleviate stress. Check out Flexi’s suite of accounting automation solutions for ideas on how you can automate some of the tasks that slow down your year-end close.
2. Volume of Transactions
Year-end close often involves processing a large volume of transactions, which can be overwhelming. Ensuring that each transaction is accurately recorded and accounted for is crucial not only for financial accuracy, but also to prevent continued do-overs.
In the words of Benjamin Franklin, “an ounce of prevention is worth a pound of cure.” In this case, the prevention that comes by way of enterprise-strength accounting software like Flexi’s can deliver exponential returns in speed, accuracy, and productivity improvements.
3. Complex Adjustments
Accountants may need to make complex adjusting entries to account for various accruals, prepayments, and other financial adjustments. Ensuring these adjustments are accurate and comply with accounting standards can be challenging.
Automating intercompany transactions will help your accounting team achieve all of this and more.
4. Coordination Across Departments
Year-end close requires collaboration with various departments, such as finance, operations, and IT. Coordinating efforts and obtaining necessary information from different teams can be a logistical challenge.
Workflow automation software ensures that employees throughout the company, including those without accounting knowledge, can automate their tasks and contribute to tremendous productivity improvements company-wide.
5. Compliance and Regulatory Changes
Staying updated on changes in accounting standards, tax regulations, and financial reporting requirements is crucial. Accountants need to ensure compliance with any new regulations that may have been introduced during the year.
The risks associated with non-compliance are too great. To keep your business compliant, rely on a software solution like Flexi that prioritizes compliance.
6. Data Reconciliation
Reconciling financial data across different systems and ensuring consistency can be a significant challenge. Discrepancies may arise, and resolving them is essential for accurate financial reporting.
Flexi’s account reconciliation software accelerates the closing process by streamlining reconciliation activities across several broad areas – all resulting in significant time savings for your team that would otherwise be manually reconciling accounts.
7. Audit Preparation
Year-end close is often followed by external audits. Accountants need to prepare for audits, which may involve gathering documentation, responding to auditor inquiries, and addressing any potential issues identified during the audit.
Every module within Flexi’s accounting suite is tightly integrated, creating a seamless environment that is a huge time savings for our customers, like this one shared in a case study. “We can easily track thousands of fixed asset items – from purchase all the way back to the GL. When our auditors request acquisition or depreciation schedules, we can easily generate the reports or export to another system. Everything ties back to the GL so we don’t need to waste time researching.”
8. Technology Integration
Implementing and integrating new accounting technologies or software updates can be challenging, especially if the transition disrupts regular workflows. Ensuring that the technology supports accurate and efficient financial reporting is crucial.
Flexi’s software is designed to be flexible in many ways, including the ability to integrate with any third-party system. For example, our bank customers gain powerful, time-saving automation by integrating accounting data with their core bank systems. Similarly, our insurance customers often integrate not only their insurance platforms but also third-party systems like policy, billing, and/or claims systems.
9. Staffing Challenges
Adequate staffing is essential during the year-end close, and shortages can occur due to various reasons such as vacations, illness, or turnover. Properly managing workload distribution becomes critical in such situations.
On the surface accounting automation may seem unrelated to HR issues. But your choice of software has a ripple effect on your ability to not only speed the financial close, but also on employee morale and the ability to compete for top talent. Read more about the importance of accounting automation and download the eBook, Accounting Automation and AI.
10. Internal Controls
Maintaining strong internal controls is crucial for preventing errors and fraud. Ensuring that controls are effective and properly documented adds an additional layer of complexity to the year-end close process.
Flexi’s workflow automation software can help to make nearly every part of your business work better, with tight controls and approval processes that are based on your business rules. Any activity that may fall outside of those parameters is immediately flagged for review, greatly reducing the risk that errors or fraud are undetected.
Addressing these challenges requires careful planning, effective communication, and the use of technology to streamline processes. Investing in an enterprise accounting system with automation tools will help your accounting team manage the complexity of the year-end close much more efficiently and with greater accuracy. Schedule a demo and allow our team to show you the Flexi difference.