There can be two days that can be particularly important in your accounting process. These days could help you determine how quickly and how well you get some of your month end work done.

What are those two days?

1. The last day of the month.

2. The first day of the following month.

It’s important to know what you have going on in accounting during those two particular days. You want to make sure things are moving through as quickly during those timeframes, so you can move along quickly and get your month end flash report developed as well as move towards a fast close on your monthly financial statements.

For example, suppose you were a manufacturing company. Here might be some things to be concerned about with the month end:

1. Finishing manufacturing batches. You want to have a fast close on any manufacturing batches being produced during the end of the month. Ideally, you’d like to have the information in right at the end of your day on that last day of the month or certainly by the very first thing the following morning, so that whatever accounting will need to do to complete the batch and close the batches out are completed. You should close out any batch you finish during the month and not leave them hanging as batches open going into the next month. You want any variances (inaudible) final action done with the batches closed out during the month.

2. Inventory receipts. You want to have a pretty good cutoff on your inventory information and get all the inventory receipt information to come right in as quickly as possible. Any receivers on goods that came in right at the end of the month should get right up to accounts payable for matching and be in their hands right by the end of the month.

3. Invoicing. Any final invoicing for goods shipped out right on that last day of the month should either get done right on that day or very first thing the next morning.

There can be other examples of things you are looking for related to your sales or merchandise or services for both the cost side and the billing side. You want that information in as quickly as possible, so you can close out these key areas in revenues and cost of revenues as quickly as possible.

If you have a service business or a different type of business, you might have other factors that will be important to you for your month end close. The point is to know what’s going on right at the end of the month and get your people on a fast timetable to get this motored through. It might be worth some overtime right in that last day of the month or certainly get people in promptly the following day and be ready to get these things cleared through before other activity begins for the new month.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value