Ah, the end of the period. It’s time to report the true standing of the business at the end of the month, quarter, year, or other markings.
Having books that establish a true report is crucial for a business to convey to investors, shareholders, and other important personnel where things stand.
This process is sometimes lengthy, with daunting tasks that could be much easier to accomplish if your business were to integrate an automation of the financial close.
There could be common mistakes your accounting professionals are making during the lengthy process that can come to an end with the correct software implemented in your business.
Here are the five common mistakes accounting professionals should avoid during the final close for a smoother transition and truer report.
5 Common Mistakes Accountant Should Avoid During The Financial Close
1) Wrong or Too Many Platforms
If you are a larger corporation, you have witnessed this mistake firsthand.
Financial closures are lengthy. If you are using the wrong platform for storing information or using too many platforms, your closure could be delayed. It can be delayed because of trying to integrate the several platforms and make them compatible.
What these mistakes cause are errors in the information that your accountants are left stranded to figure out.
If your system has not been updated to the latest regulations or undergone a basic update, this could also cause a delay in the financial closure.
Using platforms to store information is a good strategy to keep important numbers within reach. Still, it’s crucial to be on top of things and prepared by keeping your platforms up to speed to have things run at a smoother pace.
2) Not Backing-Up Data
Besides making sure your systems are prepared and up to date, one more delay in the financial closure process can come from not having your data saved or backed up. This can be a big no-no.
A rule of thumb to always keep in mind is that every transaction or important figure needs to be kept safe in an online cloud or system that does not lose this valuable information. It’s also good practice to ensure your online storage is backed up regularly and everything is safe.
Losing important data can cause tremendous errors in the figures that need to be accurate. Having multiple places where information is stored is wise, like having data stored in an online cloud and flash drive.
There are even cloud storage platforms that can integrate with your accounting software and other apps to help ensure the safety of this information.
3) Not Consistently Reviewing Data
One basic practice to make sure everything runs smoothly and quickly during a financial close is to make sure the numbers and data look correct and are all ready when things begin.
You should constantly be looking at your virtual accounting service or bank accounts to see if the cash flow matches the financial data recorded in your books or software. If something looks off, it is better to catch it early to find the misplaced information than to figure it out down the road during a closure.
When accountants fail to keep up with their bookkeeping, they run the risk of having inaccurate figures and errors show up on reports that will take more time to solve.
4) Forgetting The Smaller Transactions
It is always easier to forget the things that seem minor and irrelevant, but there is nothing too small that should not be logged when it comes to your business.
Keeping up with all receipts for business purchases, even if the items purchased are small, like office supplies, is still a practice that should be a habit. You still need a record of all business expenses that can be presented during an audit later on.
When an accountant forgets to log small purchases, they can add up over time. It is never a good idea to think the small things do not count and forget about them. Log them! Keep up with your receipts in case you need the data later on for gaps during your reports.
Failure to keep up with the “little stuff” can be costly. Do not lose money—or stress—over the small stuff.
5) Not Having Organization
A trick to running a smooth and quick financial closure is being on top of the game. Meaning, everything is recorded, in folders, and ready to be pulled out if need be. When you are prepared, you get the job done easier.
Accounting is a profession that runs on efficiency. Like double-checking figures once a week, little tasks are not something anyone wants to do but should do to make sure things are where they need to be financially.
Accountants should be organized where they have every document held in their possession. Their data is highly organized by being up to date. Having unorganized records and receipts or data misplaced can cause errors and more delays in getting the financial closure completed as quickly as possible.
When records are not organized, they can be misplaced, or worse, thrown out. Keeping up with reports and papers is a practice that should be completed weekly to be on the safe side.
Have a Smooth and Accurate Financial Close
Mistakes are inevitable for everyone, but there are times when mistakes can be costly.
The five common mistakes accounting professionals should avoid during the financial close can be avoided using an automation system.
Modernizing the way financial closures are done is a step up for your business. You no longer have to rely on the manual work it takes or the risk of inaccurate data.
Your data reports will be accurate with financial closure automation systems and take less time to complete since information will already be housed electronically. The most it will require is your accountant becoming acquainted with the system.
Make the switch today to an automation system for your financial closures to ensure you get the most accurate data as possible.