The Monthly Close Traffic JamPosted: March 17, 2014
I enjoyed the spring break (lack of traffic) in Dallas recently, but it got me thinking about the traffic jams in the accounting close process many companies face each month. How many of these exist at your company:
Too many cars, too little pavement – in accounting that is too many transactions, too few people. We are all resource constrained and while we don’t want to limit the growth of our company to limit the number of transactions, there are other ways to reduce the number of transactions touched by people. We can automate feeds from sub-ledgers to the G/L. We can put in rules that reject transactions containing errors at the source so we don’t have to spend as much time on error corrections. Think of this as the Google car solution to the roads. Cars that are automatically controlled can be packed in more tightly without causing traffic jams from the pesky human drivers that don’t seem to know how to drive.
Rush hour – in accounting terms, the first few days of the month. Roads can handle the volume 90% of the time, but they fail during those peak times in the morning and afternoon. People solve this by working different hours (going in early or late and leaving early or late – hopefully not vice versa). The same can be done for your close process. What can you move out of the month-end close traffic jam? Certain items don’t have to wait for that magic cutoff – move them out to an off-peak time!
The breakdown – in accounting terms, that 10 year (or older) system. If you don’t maintain your car it will eventually breakdown; the same with your accounting system. You have to do that periodic maintenance or the breakdown will occur at the worst time possible. And like a car, no matter how well you maintain it, eventually you need to replace it. New cars and new systems are much more efficient that old ones and often include the latest technology which can be a huge improvement over that model T you’ve been driving.
The wreck – in accounting terms, the wreck. That is someone zigs when they should have zagged and they cause a wreck. In driving we train new drivers before we let them on the road and make sure they have someone beside them during this training. The same goes for your staff. You can’t just dump someone into the job and say figure it out. They are going to cause a wreck. You need to train them and even better have someone work with them the first few times out to make sure they know how to do it.