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Some companies feel like their annual closing takes an eternity. Others have their financial statements ready one month after the balance sheet date—often even audited by their public accountant. A "fast close," meaning the rapid preparation and—if required—auditing of financial statements, provides stakeholders with timely information on the company's assets, financial position, and earnings. Whether for banks, suppliers, or management, up-to-date reporting is a competitive advantage and a vital topic for mid-sized businesses. How can you achieve high speed for your annual closing?
The principle is: It's always time for the annual closing!
Preparing financial statements early requires both speed and quality. This demands clarity in accounting processes. How do the relevant data for booking, accounting, and valuation reach the right place? What measures can you take to optimize document processing times? And who is responsible for forwarding the relevant information? In accounting, the scope of work for month-end or quarter-end closings must be defined. The closer this scope comes to the standard annual closing, the more "closing-ready" your accounting department is—and the shorter the path to the final annual report. The scope varies from company to company. The valuation of assets and liabilities is particularly important. Here, too, you should develop a clear concept for how processes, especially for provisions, depreciation, and write-downs, should be structured. For a fast close, your tax advisor and, if applicable, your auditor must be involved early on so they can schedule their work accordingly.
"Stupid accounting—my tax advisor handles that!"
Many companies outsource their accounting to bookkeeping firms or tax consultancies. The same rules apply to this collaboration as to in-house accounting. You shouldn't settle for a "that's how we've always done it" mentality; instead, clearly communicate your requirements to achieve your goal of a fast close. It is your accounting department, and it must provide the information you need to manage your company.
Success shows in the coming year!
The necessary adjustments require some lead time. If you currently feel that the preparation of your annual financial statements isn't going quite right, it's a good reason to think about changes so that the next closing runs smoothly and is ready one month after the balance sheet date.
THE MAK’ED TEAM has long been involved in establishing professional accounting in mid-sized companies, as well as in restructuring and rehabilitating accounting departments. We don't judge your past work; instead, we work with you to change processes and definitions to establish fast, high-quality accounting. A possible approach would be:
• Review of accounting and its processes
• Understanding the company's situation and its challenges
• Creating a gap analysis and a catalog of measures
• Proposals for change, potentially incorporating digital tools
• Mapping the interface with tax advisors and auditors
• Defining the changes
• Implementing the changes
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