The month-end close process refers to a set of accounting processes to review, record and reconcile accounts. In order for this to happen each period, it’s required that information be collected from various sources and that records have been properly kept.
This includes information such as fixed assets, inventory, payroll, and general ledger data to name a few examples.
At first glance, this sounds like a straightforward task with a clear objective. Yet in reality, the month-end process is often a chaotic period where manual processes and a lack of standardization means tracking and recording is time consuming and prone to error.
Apart from the immediate stress, poorly managed financial tracking can store up problems for the future.
For instance, discrepancies in the data could affect tax returns which means the business has to be audited. In 2024, audit rates, particularly for corporations, saw significant increases.
It also means that companies can’t benefit from the positives of financial reports. The ongoing data from these processes should help to guide other business decisions. For example, tracking inventory means that executives can better predict whether the company will close the quarter at a profit or loss, and that appropriate adjustments can be made.
This challenge is being compounded by high turnover within finance teams.
The Journal of Corporate Accounting & Finance estimates that a typical accounting department loses a quarter of its staff in a given year, estimated to cost businesses an average of $32,500 per employee.
For small companies that don’t warrant a finance team, many often delegate month-end processes to a general administrator without proper expertise. However, new data shows that a lack of skill-set in this area is having a negative impact on financial resilience, with only 44% of SMBs report having access to financing and working capital solutions.
The role of flux and variance tools at month-end
Balance sheet flux and variance analysis are a set of tools that are often neglected during month-end close.
Headquartered in New York City, SkyStem delivers a month-end close solution for organizations seeking to streamline their financial processes. On May 27th, the company will run a webinar for CPAs and finance professionals to share advice on the role flux and variance analysis plays. In addition, the session will cover how best to perform them and the best ways to utilize these tools for maximum impact. The one-hour training session will be led by Nancy Wu, who currently leads sales and customer success at the company.
Wu has spent most of her career working in consulting and auditing various accounting departments’ financial close processes for public and private organizations.
Her published work around leveraging user behavior to design internal controls is archived in the Cornell University Library. She is also the author of a white paper that discusses management standards around the balance sheet reconciliation process.
As an experienced subject matter expert, she has helped hundreds of accounting professionals each month to hone their skills on topics such as internal controls to month-end close infrastructures.
Keeping up with the industry
According to recent reports, the outlook for the accounting industry in 2025 is promising. Changing regulations and increasing interest in specialist services will keep these enterprises busy in the year ahead.
Perhaps most importantly, integrating automation and new technology in accounting processes will present opportunities and challenges for these companies. HSBC’s Accountancy Sector Outlook Report recently reported that 75% of firms increased technology investment this past year. As important as the adoption of technology is, a key component will be that the right exercises and processes are implemented alongside these investments.
