So, why is it a tedious task? What factors make it tedious to do? If you find answers to all these questions, this article will help you know the struggle behind closing the books and how can you eliminate it? Thus, before moving on to the elimination of hassle, here are the challenges that you face.
Struggles in closing down the book: a never-ending problem
At first, it is crucial to state that although it is tedious, that doesn❜t mean unnecessary. The leadership quality of a business entity depicts when it delivers all the financial reports precisely. It also includes declarations that will decide your upcoming financial year. If you close your books without any hassle, then it is not an event to concern. But if you close your books early, and the number goes incorrect, you may find yourself in a severe problem.
Further, inconsistencies triggered by late or inaccurate closing may not create trouble in your near future, but it will affect your business❜s long-term goal. If you make mistakes in your financial statement with incomplete details, you may increase your company❜s tax bill. Further, this also may cause an audit that will lead you to be liable for the penalty. And that❜s over yet! Without complete access to accurate sales data, your bills will go overdue, and you would not be able to fulfill your contract terms.
It is easy to depict how the steps inspire more than fear, considering the vitality of accuracy in closing the books. The procedure may take a longer time. But as per recent research, the average amount of days to close the books is 7 days. Although monthly closures take ten days, reports still say that most entities fail to close the books in the scheduled time.
But the factor that is bothering most is tension and time spent in closing the books. Most of the participants will agree that closing the books is more tedious because of the time required to compete for all the steps. If you want to close your books with precisely the mentioned data, you have to spend more time. Or else it will lead you to file inaccurate data. The most devastating outcome of inaccuracies in data is it cost you a lot more than you think. It deprives your business of a chance to analyze data and make well-versed decisions.
Further, you also miss that chance to leverage your financial image. So, as it cost you a lot more than you think, you need to ensure that you eliminate all those hassles that may cost you more. If you want to fix those hassles, you need to know about those hurdles in your way. So, here is the list of obstacles that creates inaccuracies in your book closing.
Mapping the disordered month-end near cause
If you want to go to the roots that cause inaccuracies or hassles, you need to have a concealing look at what you are dealing with. And if you are finding it difficult to close the ledger, you must be happy to learn that you are not the only individual facing such a problem. Some root causes lead you to all these problems. So, here are some root causes behind the problems in book closing.
The disabled system is a significant reason behind inefficiencies
The ERPs and several other data processing suites that offer you accounting as a stand-alone service are primary reasons making it unpredictable. When you gather data from distinct sources, you will be programmed to be independent. This makes you rely on inefficiencies as you have to wait until the correct data comes to you from several departments. And this is what happens with ERPs and other suites as well. As they are technically independent, they will come up with inaccurate data.
Manual operation exposes to inaccuracies
When you hire a team of employees to work around the clock in extreme stress at month-end, you will always find many inaccuracies in the data. This is because; humans are not perfect. And when they work under pressure, there are chances that they will come up with inaccurate data. When you explain it in simple language, if your employee will run across work to get it completed in time, the result will always be unproductive. This is because; the chaos that is created will lead you to inaccuracy in book closing. So, this is one of the significant hassles in closing the book.
Limitations of time
When it comes to any business finance department, it is evident that you will have to face chaos. And the primary reason behind such chaos is a limitation in time. Inadequate time and lack of creativity are what boost this factor. So, in such cases, the latter tries to feed into the earlier. And with limited permissions to accounting rework, you will always come up with inaccuracies.
Further, when you are trying to close your books in a tight schedule, it is improbable to find a thoughtful look at everyone❜s work. So, this is what makes closing a book more difficult.
Information that Lingers Closure to Crawl
It is evaluated that a proportion of close-related steps occurs only in the minds of an individual. And if you depend on any individual or agency with your institutional knowledge, it is apparent that you will get into trouble. This is because; when a person managing your account payable takes sick leave, you will find yourself in trouble.
Book closing without losing it
It is never too delayed to initiate a significant change. And it would be best if you always push yourself to those outcomes that you expect. Although you will not get all at once, you would stay much prepared for any type of challenge.
Integrate account systems for a seamless continuation of the process
Universalization is an adequate reply to all inaccuracies. And it is expected that all the business organizations will eliminate two days from their year-end utilizing a standard chart of accounts. So, the introduction of universal reference points will now eliminate the requirement of guesswork or modifications. Thus, this is how you can have a fresh start with complete usable data-capable enough to offer you positive outcomes.
The distinction between accounting, book-keeping and automation operation
The finance teams dealing with resource and time limitations are often compelled to take strategies to help anyone quickly make it easier. But you have to make sure that you are using the right tool for the right activity. This will offer youamore enhanced view of where are the differences.
There are times when you have to conceal inaccuracies by automating the steps in book closing. But when you are integrating such advanced technology, you must be aware of everything. This is because; it sometimes becomes tedious to automate a manual task. So, you have to come out strategically, especially when your compliance enforcement is at stake.
Set up your pre-close checklist
Month-end doesn❜t mean that you have to squeeze every bit of work in the last week of the month. But conducting efficient governance at the month-end is what describes to you what steps you need to update. So, creating a checklist will always help you close your books without any hassle.
You can track all the institutional knowledge and segregate the data to avoid inaccuracies in numbers and data.
How does outsourcing eliminate problems in book closing?
If you are willing to close your books without any inaccuracies every month, you need to find an ultimate solution. And outsourcing is one of those solutions to overcome all the problems in book closing. It helps all the organizations to ensure low-risk while closing the book.
Further, outsourcing opens you up to hard-won accounting expertise who knows how to concentrate on getting the exact numbers. And the workflow documentation enables the knowledge tracking to get processed in the outsourcing directly, so it helps you ease your book closing and streamline the process simultaneously.
as your outsourcing solution is one of the most incredible moves to take. We have top-notch, skilled accounting experts who will fill in the gaps to offer you the best outcomes. Further, our highly-talented finance experts work seamlessly to help you close your books without any error. Contact Chakdebiz today to let us know how we can help you. We will help you streamline the process of your book closing
by systematizing your process.
Important: Please note that the information on this page / site is provided as general information for better understanding for the user and does not constitute tax, legal, or other professional advice and must not be used as such. Please consult your professional adviser(s) if you have any questions / doubts regarding the above.