Accounting teams are always in favor of a way to speed up the monthly closing process, but it’s difficult with so many moving parts to consider. The challenge has contributed to the rise of continuous accounting, an approach that aims to take advantage of modern technologies such as AI to automate processes and optimize resources while providing better accuracy in real time.
Most organizations are in the early stages of adopting the principles of continuous accounting. But there are a number of accounting-centric solutions on the market that help teams automate large processes, the idea being to eliminate mundane tasks so teams can focus on more valuable work and speed up time. Month-end.
For most businesses, monthly closing is just too long. A survey of 2,300 organizations performed by the American Productivity & Quality Center, the median time to close books each month is 6.4 days. The lowest 25% of respondents said it takes at least 10 days to close the books each month, while the richest 25% get the job done in about 4.8 days.
This five-day gap between the best and the worst performers is significant. Five days is basically an entire work week, so imagine having an extra week each month to focus on strategy, financial forecasting, and helping move the business forward.
That said, accounting teams understand Why behind the time it takes to close the monthly books. This can be a tedious process with many factors to consider, and maintaining full visibility and accuracy is a huge challenge. Dedicated accounting software helps ease the pain, but more and more teams are starting to realize that continuous accounting is a secret weapon for saving hours, if not days, every month.
Three Ways Continuous Accounting Speed Up Monthly Closing
Closing books manually is not only time consuming, but can also create even more confusion and inaccuracy. When this is the case, accounting teams spend hours and even days each month on the closing process instead of focusing on more specific and pressing business challenges they might encounter. By adopting the principles of automation and continuous accounting:
- Expenses are updated and tracked in real time. When a modern business spending strategy is in place, every business and employee expense can be recorded and updated as it goes. This makes it much easier for accounting teams to confirm all transactions for the period, including accounts payable and recurring invoices such as SaaS subscriptions. Automating the mundane and repetitive parts of the process also allows organizations to set pre-defined rules for expense approval, meaning unapproved expenses cannot and will not happen. This eliminates confusion because accountants do not need to sift through transactions and determine which are approved and which are not.
- A centralized system ensures that the potential for errors is eliminated. When automation is used to record and track all company and employee expenses, it eliminates human error as there is no need to manually enter data to track each individual transaction. In turn, this dramatically reduces the time it takes for teams to cross records and verify transactions. They know every transaction is accurate because it was recorded automatically at the time the purchase was made. A broader benefit is the ability for decision makers to view and analyze spending patterns in real time and assess the company’s position against its goals and forecasts.
- Reconciliation speeds up with automatic receipt of receipts. Another welcome side effect of automatically recording transactions as they occur is that it eliminates the need for accounting teams to search for receipts. Not only does this make the reconciliation process much more efficient, it also improves the employee experience at all levels as team members no longer have to worry about saving receipts and reporting expenses on. on a monthly basis. Expense management is a tedious reality for most businesses, but automating the process takes the mundane part of that exercise for employees.
While savvy businesses are already using AI technologies to automate various accounting tasks, most could do more to help ease the pain of the monthly close. Deploying a continuous accounting strategy is one avenue that does this while providing many other business benefits and making life easier for employees.