For your industrial business financial reporting, the end of the year means one thing: closing out your finances.
As you tally up 2017 and budget for 2018, here are the three critical tasks one of our senior financial consultants, Stevency Telfort, suggests every business tackle this fall:
1. Tweak financial reporting for clarity
Financial reports hold a lot of power come the end of the year. Key performance indicators (KPIs) should clearly and accurately describe to stakeholders what they need to know about the year's successes and failures in order to make sound decisions for the future.
Take year end as an opportunity to improve your financial reporting both in terms of which KPIs you’re tracking as well as the level of detail you’re providing for various readers. “Cater to your audience, presenting detailed or abbreviated editions of your financial statements where appropriate,” says Stevency. “For example, if your profits and losses document is three pages long, it makes it difficult for those who aren't financially savvy to understand what you've prepared."
2. Rake away dead accounts
What happens once your bonds mature or your loans are settled? Well, if you manage your accounting on an opaque, outdated computer system, they could sit in files for months or years. When it comes time to validate accounts, businesses can waste a lot of time and energy validating the abandoned accounts of one-time customers that haven't bought anything recently and probably won't ever again.
everyone's roles should be defined so when you generate your numbers, they're accurate
Unfortunately, dead accounts are not only clutter. “Having dead or ambiguously labeled accounts increased the risk for account errors or potential fraud,” says Stevency.
As you validate accounts this fall, take note of dead accounts and clear them out as you go. You'll thank yourself this time next year (and every year after that).
3. Improve closing scripts
A script is a roadmap and your close date is the destination. How you get from Point A to Point B depends on how well you stay the course. Did you firm up an exact date - say, 10 days after the end of the period? Did you communicate cut-off dates to all departments so they can complete activities relevant to the closing period in time for finance to close?
"It's a collaborative effort," Stevency said, "everyone's roles should be defined so when you generate your numbers, they're accurate."
Any after-the-fact changes, however slight, require accountants to wait for the data, recalculate everything and possibly reallocate costs, which will not only delay the close for days on end but also potentially skew profit margins. That's why you should take time this fall and review how you close. Be sure to note where you struggle and how best to restructure if you want to navigate around these issues next time.
Close out the financial season with abas ERP
Are you managing your financial reporting through abas ERP? If so, you already know how easy it is to check these fall financial chores off your year-end to-do list:
abas ERP notifies departments of an impending close and guides them through the final stages.
Automatic accruals for Inventory Receipts
Having an integrated inventory management system that impacts finance eliminates the need for manual accruals and backdating late inventory invoices from vendors. abas ERP automatically places accruals into accounts payable or shipped not invoiced accordingly.
Administrators can freeze departments as they close individually to prevent late entries and errors from complicating closes.
Any inventory, shipment, expenses or payments that occur during your close will automatically trigger an update of the entire master accounting information, meaning that last-minute receipts or issues will be accounted for as long as inventory management postings have not been closed for the period. Accountants won't have to break out their adding machines and do it all themselves because someone forgot to post recount values in time.
Implement internal control processes using abas to mitigate error and fraud exposure. You can also restrict writing access by user and remove dead accounts with a single click. With abas, you can be sure your finances are as safe as they are accurate.
Your accounting team should not spend its month-end or year-end closes reconciling major discrepancies or performing rote data entry and manually verifying accounts. Give your number crunchers the respect they deserve with abas ERP.
What KPIs should the accounting team at your manufacturing facility track? Download our free e-book to find out.