Year-end simply presents the bill

When I took over the group’s financial reporting following a major acquisition, the year-end close was taking more than six months to reach signed accounts.

Not because December was hard. Because the eleven months before it had no calendar, no reconciliation discipline and nobody who owned the balance sheet. The reconciliations I inherited existed on paper, not in substance. Year-end simply presented the bill.

We did three things to turn it around, and none of them was a system.

We wrote the close process down and gave every month a timetable. We reconciled every balance sheet line at month-end and explained it: what it is, why it is there, how it clears. Nothing rolled forward unexplained. And we stopped treating the auditors as a January event. We walked them through our positions during the year, so by December there was nothing left for them to discover.

The next year-end closed, audited and signed, in two months.

That is the part people expect. The part they do not expect is what a clean balance sheet gave us afterwards.

Revenue reconciled by client became a monthly revenue forecast by client, which became the budget basis for every entity I ran. Once the formats were fixed, producing the reports was automated, because there was nothing left to correct by hand. The same reconciliation format served as the working paper for the financial statements, so balance movements went straight into the cash flow statement. Group, department heads and General Managers started getting insight instead of explanations.

Cleaning, then automation, then clean financial statements. In that order. Automation did not fix the close. The clean close is what made automation cheap.

If your December needs extra people every year, the question is not how to speed up December. It is what happened in March.