Irrespective of the company size, closing the books at the end of a monthly, quarterly or yearly reporting period is a vital activity for accounting professionals. It is also voted as one of the most dreaded work tasks to get done, but you have a chance to remediate them through NetSuite Financial Management. End-of-month activities such as paying bills, invoice payment, reviewing intercompany transactions and other additional adjustments that need to be fulfilled in accounting processes could easily eat up long hours of schedule.

Similarly, the Finance team also carries a heavy load to complete these activities in a “timely manner” without any “risk of error” to distribute the financial statements and financial reports. The balancing act of being fast and free of errors is difficult under certain circumstances. Especially when dealing in real-world scenarios, it gets even more rigorous to meet constraints in a flawless manner. Speaking of achieving perfect outcomes, on the contrary basis an Accounting department usually survives on manual processes, minimal resources and uses software that is outdated.

There is a learning curve to admitting if your existing systems don’t produce desired outcomes and if the indications have been going for a while now. Humans are often resilient to changes so even when processes are burdensome we let them be as is because they’ve always been done that way. As a result, many people see errors, reporting delays and other headaches as “normal”.

1. When you don’t practice regular documentation

The steps of any process should be clearly defined in the order they should be followed, and with a timeline for their completion. If the process isn’t structured, it is difficult for Accounting to see if it is running smoothly or to identify potential issues without using them to full efficiency. There is almost no documentation regarding a company’s financial close process within many organizations.

In our experience, we’ve noticed that the Accounting team uses age-old methodologies, which makes them think documentation is unnecessary. Without laying out a foundation new team members would not know what they need to do which makes them omit business processes and execute them incorrectly. Alternatively, they might also lack the administrative resources to keep processes detailed for their current period.

2. Lack of automation in your traditional accounting system 

 The accounting team records all financial transactions in the general ledger (GL) and is also responsible for ensuring that they are done appropriately. The traditional method of managing financial records has always been a manual process, as the accounting team delegates most of their time reviewing paper documents and doing journal entries. This can often lead to Accountants making more mistakes in the accounting books.

While it may be possible to automate many aspects of closing, financial close is still a predominantly manual process in many organizations, which is simply time-consuming. On top of that, manual processes also result in inefficiency, which will affect the quality of the business decisions due to delayed access to critical management and custom reports.

3. When spreadsheets are no longer your best friend 

A flawed financial close is evident when you’re using spreadsheet applications to handle routine accounting cycle activities, debt expenses, revenue recognition or tracking depreciation. It is ultimately necessary to input the information contained in these spreadsheets into the accounting system, which poses an additional risk to the financial close process.

In spite of their financial management capabilities, spreadsheets shouldn’t be used to manage important accounting period information. It can be a risk to share them, especially if they are insecure, and can be modified unintentionally due to lack of control, leading to accounting errors. Due to the absence of audit logs, spreadsheet applications cannot keep track of changes or determine when the changes were made.

4. When you don’t have your data in a centralized location

Many departments are involved when it comes to the financial close process. For example, sales and project management may provide information to accounting that is needed to prepare customer invoices. Other functions like vendor payments or tracking inventory data for the balance sheet may also require a confirmation that the goods have been received from the warehouse team. Receiving such updates may pause the formal closing process for the accounting team and they end up becoming infuriated with additional delays.

Preferably this information should be present in hand, in real-time. This will help to steer through the month-end close process, which is often non-existent in many companies. Most of the time companies run on disjointed multiple applications to help manage various business functions like sales, inventory management, customer relations, support and more. In some cases, those who operate as a parent company might even have other accounting solutions or multiple ERP solutions.

Extracting information from multiple locations rather than a central one is time-consuming. Remaking and uploading each entry specifically to a general ledger (GL) requires more technical knowledge as well. Data that is moving between multiple systems can lead to the risk of errors on financial reports if they don’t have an automated clearing house like NetSuite.

5. When you lack complete control of your month-end closing process

If a company’s financial month-end close process lacks adequate controls, it is likely that things are not going well. As Financial Accounting Standards Board (FASB) has defined the Generally Accepted Accounting Principles (GAAP), it has to be a part of publicly-traded companies’ compliance requirements in the United States. Privately owned businesses are also subject to these standards but they have a choice whether or not to comply if there is no compulsion.

By having a good compliance program in place, you can ensure such rules are applied consistently, as well as prevent internal fraud. Adherence to policies and leading practices are also an important part of good corporate governance. The approval process for purchase requests and vendor invoices should be declared by a defined hierarchy within a company. No exceptions are considered in the approval requirements and authorization limits. Separate duties must also be maintained between Accounts Payable (AP) and Accounts Receivable (AR) personnel by Accounting Managers. Accounting controls are not only important for protecting a business but are also crucial for ensuring its financial statements’ integrity.

Future of Finance with NetSuite Financial Management 

Automating the closing process, including financial reporting, is made possible by NetSuite financial management and accounting software. Accounting organizations can stop depending on spreadsheets thanks to NetSuite. Instead of using a variety of different tools, accounting systems can manage revenue recognition, depreciation, and other accounting processes saving time and reducing risk. As regulations, operational requirements, and industry mandates become more complex day by day, NetSuite’s Governance, Risk, and Compliance (GRC) capabilities can help companies better manage this with built-in processes.

On a Final note, NetSuite’s unified business management platform allows accounting, sales, and shipping departments to be integrated into one system. This eliminates the obstacles, frustrations, and delays associated with storing information in individual departments. Together, these capabilities can speed up your month-end closing process by ensuring tasks are completed accurately on time.

Partner with ERP Buddies, a NetSuite Solution Provider

    Organizations are now able to check off each item on their month-end close checklist and present comprehensive reporting on time by implementing NetSuite Financial Management. ERP Buddies has had the experience to implement the NetSuite Financial Management for many businesses who have experienced 60% lesser time to perform their month-end closing process.

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    ERP Buddies is a North American Official Oracle NetSuite Solution Provider with diverse experience in implementing and Supporting NetSuite ERP for many industries.

    With operations in the U.S, Canada, Europe, India, and the Philippines, our Expert Team is accessible globally and makes it their priority to create a smooth and positive experience for clients. Our experts assist clients throughout the entire implementation process, with on-site support and consultation, along with additional assistance in customizing your system to guarantee it meets your business needs