The Ultimate Guide To Financial Close

7/25/22, 2:56 PM The Ultimate Guide to Financial Close | Vena
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The Ultimate Guide to Financial Close

October 19, 2021
Zach Bailey
Reading time - 10 min
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The financial close process is essential to understanding and verifying your company’s
true financial position.
https://www.venasolutions.com/blog/platform/fix-financial-close-process 1/15
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While that sounds simple enough, the year-end financial close process DEMO
has the
potential to bog you down on many fronts. If you don’t know what’s working, what’s
not working and—most importantly—how to fix it, you’ll continually head down the
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same path.
On the plus side, there’s no shortage of steps you can take to improve your
company’s year-end financial closing process. It all starts with a thorough review of
your current month-end and year-end closing processes. This gives you all the
information and insights you need to take the appropriate action.
1 2
Month-End vs. Year-End Close: How
What Is Meant by Financial Close?
They Work
3 4
Typical Issues With the Financial
How to Improve the Closing Process
Close Process
5 6
Closing Out the Financial Year With
Financial Close Process Checklist
Excel
7
Vena in Action: Cut Month-End Close
Times by 50%
What Is Meant by Financial Close?REQUEST DEMO

Financial close is exactly what it sounds like. It’s a recurring process during which
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accounting teams “close the books” on a specific period of time, such as a month or
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fiscal year.
During this process, account balances are thoroughly reviewed and reconciled in
order to identify any irregularities and errors that need to be addressed. Financial
statements are then produced in order to provide a detailed look into your company’s
financial position for key decision-making stakeholders such as investors, lenders,
and management-level employees.
Ultimately, the financial close process tracks the health of your company through the
aggregation of the data produced by these financial reports.
Month-End vs. Year-End Close: How They

Work
As previously mentioned, accountants typically perform the financial close process at
the end of every month or at the end of a fiscal year. In each of these scenarios, your
company may create different reports, depending on the stakeholders receiving
them. The two closing processes are very closely related, with each month-end close
feeding into the accuracy of your year-end procedures.
There is the option to reconcile accounts on a quarter-end basis, however this

method of managing accounts can lead to missed The month-end financial close
process allows you to catch errors before they turn into major dilemmas down the
line. By making this a monthly process, your close is not extended and your company
will benefit from timely reports.
The closer you’re able to complete the closing process at month’s end, the better off
you will be when year-end closing rolls around. Otherwise, you will likely set yourself
up for troubling reconciliations—specifically with intercompany and interfund
transactions.
Establishing a set of rules for your month-end vs. year-end financial close process is
essential to accurate and consistent reporting, as each process impacts the accuracy
and efficiency of the other. A fast close is possible
👋on a monthly
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Typical Issues With the Financial Close

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Process
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The way you close out the financial year is unique to your company. However, some
basic issues have the potential to cause trouble for every business, regardless of size
or industry.
Here are five typical issues with the year-end closing process:
1. No Defined Process
If you’re going to close out the financial year the right way—and that’s your hope—
you must have a defined process. Even if the process isn’t perfect, it’s a starting point
to build from and you can make any necessary changes moving forward.
In some companies, there is not a seamless or well-established closing process.

Instead, it comes down to nothing more than a group of employees relying on their
memory and knowledge to make the best of the situation.
That’s not a viable, accurate, or long-term approach. That’s a cluster of people who
are scrambling to collect documents, rushing others to provide the applicable
information, and hoping that everything comes together by the deadline.
2. No (Or Little) Automation

There used to be a time when the year-end closing process relied solely on human
input. And while that’s still necessary to a certain degree, there are more tools than
ever before for automating the process.
Without automated capabilities, you’ll continually run into issues such as:
Delays completing tasks, such as collecting expense receipts from salespeople

Two or more people working on the same task(s)
Working extra hours in hopes of meeting key deadlines
Greater number of mistakes
Automation is no longer the future. It’s the here 👋

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less stress on yourself and your team. your growth journey.
3. Scrambling To Find Data REQUEST DEMO
This issue can take time to fix, but the sooner you address it, the sooner you can find
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The year-end closing process is full of data, data and more data. But if you don’t have
access to what you need when you need it, it’s a challenge to efficiently move through
the process.
Let’s assume that you have to collect expense-related data from several departments.
While it sounds simple, that’s only the case if you have a standardized system in
place. Without this, some employees and departments will forget to send the data.
Additionally, those that do will share the data in different formats, making it a
challenge to organize.
4. Too Many Cooks in the Kitchen

This doesn’t mean you should tackle the entire process on your own. But it does
mean to beware of having “too many cooks in the kitchen.”
The more people involved with the year-end financial closing process, the greater the
chance for mix-ups and time delays.
You know how many people you need to get the job done. Assign them tasks and
deadlines, track their progress and manage the process as a whole.
When you have unnecessary people in your “kitchen,” it’ll only complicate matters.
5. Lack of a Post-Close Review

The last thing you’re thinking about during the year-end closing process is what will
happen next year. And once the process is behind you, you won’t want to think about
it for quite some time.
That’s a big mistake. A post-close review is just as important as the process itself. This
is what you’ll use to fine-tune your approach for the following year.
During your post-close review, you can address questions such as:
What went wrong? Vena? I'm here to guide you on
What went right?
What types of changes are necessary?

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Do you need more help? Less help?
Were there any delays? What was the cause?
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Even though it’s not your idea of fun, conducting a post-close review will benefit you
in the long run. You’ll thank yourself for it 12 months in the future.
How to Improve the Closing Process

At this point, you have a clear understanding of typical issues associated with the
financial closing process. But that’s not good enough. You need to implement a
solution (or solutions).
The good thing is that there are many ways to address the issues above while also
improving your closing process as a whole.
Here is a solution for every problem listed above:
1. Define a Process
If you don’t have a defined process, now’s the time to create one. Here are the basic
steps for doing so:
Decide who you want to involve in the closing process

Make a list of tasks and responsibilities by mapping workflows
Build stable internal controls to prevent miscues
Implement technology to save you time and reduce headaches
Remember this: Every step during the financial closing process should add value. If it’s
a time-waster or something that doesn’t move the process forward, eliminate it.
2. Automate as Much as You Can

Automation technology is available in almost every industry imaginable and that
definitely holds true for financial professionals.
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This Deloitte’s report touches heavily on automation and Want to chat about
its benefits.
“Automation brings clear benefits to the close process in terms of efficiency,
transparency, and speed. In finance organizations that are lacking automated
capabilities, tasks are often delayed simply when a key member of the team is on
vacation or out sick.” REQUEST DEMO
It’s natural to hide from technology, especially if you’re used to the system that you
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have in place. But if you ever want to take a step forward in regards to efficiency,
transparency, speed and accuracy, automation technology — powered by Vena — is a
must.
3. Implement a Standardized Data Collection

System
Scrambling at year-end to collect data is no fun. You’re under a tight deadline so you
don’t have long to wait around. The problem is that the people who have what you
need may also be working on year-end projects.
The solution to this problem is implementing a standardized system for data

collection, such as providing the necessary employees with access to a shared
spreadsheet. In other words, you want everyone in your company—from top to
bottom—to provide data in the same manner.
You don’t want one person sending you an email, another sharing a spreadsheet and
others using Slack. This puts pressure and stress on you as you then have to collate
the data before you can do anything else.
4. Set a Defined Team

Help is a good thing when it comes to your year-end financial closing process. But
remember this: more is not always better.
If you have too many cooks in the kitchen, disagreements are more likely to happen.
Also, this increases the odds of overlapping work, which eats into time that could be
used to complete other tasks.
All key players — primarily accounting personnel — should have a clear set of tasks
and responsibilities. Everything they do should add value to the process.
Should you find that there are too many people pulling the closing process in
different directions, review your team to pinpoint
👋the key players.
Hi there Want to chat about
5. Create a Post-Close Review Process
You spend so much time working through the actual closing process that it’s easy to
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overlook what comes next. The post-close review process is essential DEMO
to your future
success. Without this, you won’t know what went right, what went wrong and how to
make
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Customize your post-close review based on your team’s performance and future
goals. Here’s what the process might look like:
Determining when to start the closing process in the future

Understanding what type of data you do (and don’t need)
Deciding who should and shouldn’t be involved in the closing process
Reassessing and reassigning responsibilities
Organizing closing documents for future reference
A comprehensive post-close review process will help you better prepare for next year
by ensuring that you have an accurate and stable foundation to build from.
Financial Close Checklist

You must customize your financial close checklist to match your business. There’s no
one-size-fits-all solution.
Adding to this, the month-end financial close process and the year-end financial close
process will share some differences.
The primary difference is that the month-end closing process only takes into
consideration one month of business. Conversely, the year-end process brings
together 12 months’ worth of data.
Here’s a good start to any month-end or year-end financial close checklist:
1. Gather Financial Statements

Your financial statements give you an in-depth look at the overall health of your
business. And with that, executives can make more informed decisions.
At the very least, you should gather the following financial statements:
Cash flow statement Vena? I'm here to guide you on
Income statement
Balance sheet
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Not only are financial statements important to the month and year-end closing
processes, but they’ll come in handy during tax season.
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2. Collect Past Due Invoices

This is a particularly important step during the year-end financial closing process. Do
your best to collect money that’s owed to you before the calendar turns.
Some steps you can add to your collection strategy include:
Setting up payment terms

Sending out regular payment reminders
Establishing a payment plan
Offering to accept different forms of payment
The longer past due invoices linger, the more difficult they are to collect. Also, when
you carry these invoices from year to year, it can cause confusion on the accounting
front.
3. Collect the Necessary Forms and Data

The forms and data you need depend on the size and type of business, as well as
company structure.
In regards to forms, be sure that you have a W-4 on file for every employee. And if
you use contractors, they’ll need to complete a W-9.
Note: This article explains the difference between W-4 and W-9 forms.
Data includes things such as employee expenses, revenue numbers, the value of
assets and liabilities.
4. Review Payroll
Accounting and payroll records are a big part of any financial closing process,
regardless of the time of year. 👋 Hi there Want to chat about
Your payroll records must be accurate and up to date, allowing you to continue
seamlessly into the next month or new year or.
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Total payroll
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The total cost of benefits

Withheld tax amounts
Year-end bonuses
Take this one step further by creating a year-end payroll processing checklist.
5. Reconcile Bank Accounts

Reconciling bank accounts is the process of cross-checking your accounting records
against your bank records for accuracy.
The best way to do this is by comparing the information on your bank statements to
your accounting records. Does the balance on your bank statements match your
accounting records? If not, what’s the reason for the discrepancy?
If you take the time to reconcile your bank accounts monthly, there’s less chance of
running into a complex problem at the end of the year.
Closing Out the Financial Year With Excel

There are many ways to close out the financial year, but it’s critical to choose the
approach that’s best for your company. Using Excel for financial close
management is an option to strongly consider as it provides benefits such as:
Familiarity: You already use Excel for day-to-day operations.

Technology can complicate things: Your focus should be on business insights, not
complex technology. Excel is a program that you know and understand.
Accuracy: For more than 35 years, businesses have been using Excel for everything
from tracking data to accounting—and that’s just the start. With a long track
record of providing accurate results, you’ll have peace of mind.
Scalability: A system that can’t easily scale is a system that’ll eventually let you
down. Vena can scale alongside your company’s growth, including revenue and
employee count. 👋 Hi there Want to chat about
With Vena, you can scale and transform your close
yourprocess without abandoning Excel.
growth journey.
If you want to close your books with confidence—and it’s safe to say that you do—
with Vena, you can manage the year-end financial close process with the flexibility
and familiarity of Excel while gaining trust in your numbers. REQUEST DEMO
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Vena in Action: Cut Month-End Close Times

by 50%
As we’ve discussed within this guide, an efficient and accurate financial closing
process is essential for every finance team. However, reconciling accounts and closing
the books can be a sluggish and difficult process when reporting on multiple business
units each month. That’s the problem Capstone Infrastructure had before getting
introduced to Vena.
Capstone Infrastructure is an independent Canadian power producer, serving the

clean energy sector with 24 facilities across the country. They were dealing with
significant quality control issues, data integrity, and a lack of standardization.
Completing the financial close process using offline spreadsheets didn’t help the
matter.
After implementing Vena, they were able to focus on improving data accuracy,
reducing the amount of time spent on reconciliation, and standardizing the month-
end financial close process—all in one central database. Vena’s capabilities
empowered Capstone to reduce their month-end close times by 50%, decreasing
from 10 days to just 5.
“Vena has truly transformed our financial reporting capability and significantly
reduced our errors and the time it takes to complete our financial close process. By
setting up standardized and largely automated templates in Vena, we have cut our
monthly close process in half.”
Devendra Kalwani (Finance Manager, Capstone Infrastructure Corp.)
Read the full case study here.
RECAP
The Ultimate Guide to Financial Close

Vena? you
A tight month-end financial close process enables I'm here to guide you
to fast-track on
other
reporting procedures that typically take moreyour growth
time, suchjourney.
as the year-end close.
Standardized monthly processes provide more accurate reports to key
stakeholders in an efficient manner so that they can make informed decisions

regarding the company’s future. REQUEST DEMO
Keeping up with your month-end, quarter-end, or year-end close requires

auditingBrowse
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Blog of your processes. The ability to improve on financial close methods

that may no longer be the most effective for your finance teams is vital to stay
ahead.
The right tools empower companies to take the necessary steps to streamline
their financial closing processes. Vena integrates seamlessly with Microsoft
Excel, utilizing familiar technology to grow alongside you as you grow. With us,
there is no need to eliminate Excel from your accounting teams in order to
scale.
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7/25/22, 2:56 PM The Ultimate Guide to Financial Close | Vena

👋 Hi there Want to chat about

What Is Meant by Financial Close?REQUEST DEMO

Month-End vs. Year-End Close: How They

There is the option to reconcile accounts on a quarter-end basis, however this

Typical Issues With the Financial Close

In some companies, there is not a seamless or well-established closing process.

2. No (Or Little) Automation

Delays completing tasks, such as collecting expense receipts from salespeople

Automation is no longer the future. It’s the here 👋

3. Scrambling To Find Data REQUEST DEMO

4. Too Many Cooks in the Kitchen

5. Lack of a Post-Close Review

What types of changes are necessary?

How to Improve the Closing Process

Here is a solution for every problem listed above:

Decide who you want to involve in the closing process

2. Automate as Much as You Can

3. Implement a Standardized Data Collection

The solution to this problem is implementing a standardized system for data

4. Set a Defined Team

Determining when to start the closing process in the future

Financial Close Checklist

Here’s a good start to any month-end or year-end financial close checklist:

1. Gather Financial Statements

2. Collect Past Due Invoices

Some steps you can add to your collection strategy include:

Setting up payment terms

3. Collect the Necessary Forms and Data

Pay close attention to details such as: REQUEST DEMO

The total cost of benefits

5. Reconcile Bank Accounts

Closing Out the Financial Year With Excel

Familiarity: You already use Excel for day-to-day operations.

Vena in Action: Cut Month-End Close Times

Capstone Infrastructure is an independent Canadian power producer, serving the

Devendra Kalwani (Finance Manager, Capstone Infrastructure Corp.)

Read the full case study here.

The Ultimate Guide to Financial Close

stakeholders in an efficient manner so that they can make informed decisions

Keeping up with your month-end, quarter-end, or year-end close requires

Blog of your processes. The ability to improve on financial close methods

Vena Launches Connector for Power BI

How To Simplify FP&A With Finance-Led Planning

👋 Hi there Want to chat about

Wednesday, September 1, 2021

Subscribe to Our Blog

Email Address SUBSCRIBE

Agile Planning and Reporting Blog

Customer Stories Become a Partner

© 2022 Vena Solutions. All Rights Reserved.

👋 Hi there Want to chat about

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