028: Improving the Monthly Close Process

Transcript

WEBVTT

00:00:07.139 --> 00:00:10.169
I'm talking about monthly close on the episode this week.

00:00:12.609 --> 00:00:33.789
I am passionate that our processes never become complacent that we continue to improve and ensure our monthly closed process and briefing products or value added and that we help our senior leaders do their jobs better, because we provided value added analysis that gives everyone an improved picture of last month's performance. Enjoy the episode.

00:00:33.939 --> 00:01:05.079
Welcome to the finance leader, podcast or leadership is bigger than the numbers. I am your host Stephen McLain. This is the podcast for developing leaders in finance and accounting. This is episode number 28. And today I will discuss the importance of improving the monthly closed process. And I will discuss three areas. Number one, does the process Make sense? Number two, let analysts be analysts.

00:00:59.380 --> 00:01:19.569
And number three, your briefing slides should tell a story. This episode will not be a technical lay down on monthly close but where leaders need to step up to make sure that monthly close is value added. It's about leadership and making sure our processes make sense.

00:01:19.599 --> 00:01:31.840
Tillman Fertitta, the owner of the Houston Rockets said, Don't ever let your business get ahead of the financial side of your business. Accounting, accounting, accounting know your numbers.

00:01:31.870 --> 00:02:32.289
Now I definitely have strong opinions about monthly close in any of the financial or accounting processes that we have, they must be value added, they must be accurate. We must spend the majority of our time building the business and helping senior leaders do their jobs better. And we need to ask ourselves how can we add more and better value to what we do every day. It's not just about doing this report or pulling this information or doing this journal entry or cutting and pasting this report. It's about ensuring that our team both on the accounting side and the financial side know our role so that we add value to the process. This is not just an event on the calendar. And I do hope that it is scheduled on the calendar in your company. But it's a process to make sure we understand where our business is going to make monthly clothes effective. It requires leadership leaders set the vision and then steer the organization toward that vision as finance and accounting leaders.

00:02:32.659 --> 00:03:18.349
We get to be the trusted business adviser assisting senior leaders in the C suite to ensure that the organization is doing its best and understanding what performance it had in the last period and the same period last year, the monthly close process must be streamlined and effective, the actual numbers in the system you are using must be accurate. And the final briefing product and any other published material must be value added and helpful to decision makers. The great leaders understand when change is necessary monthly close can often be considered very sacred within an organization. And then we become complacent because we aren't doing the necessary change and improvement. To make it better.

00:03:14.900 --> 00:04:04.219
We need to lead change in our monthly close process when the process is no longer helping us add value when we continue just to produce the same reports, the same slides, the same tables, same graphs, and we're not adding any kind of value or any kind of analysis, or we're not helping our senior leaders move forward than we are failing our organization. We don't just close the books and make slides we highlight what we did. And how we did it. We have to ask ourselves, are we on track? What didn't go well? And what could we do better? We should be telling a story that adds value and guides decision makers on what the numbers mean, where we are going, what is the role of monthly close? Monthly close helps us measure performance and make decisions about the future?

00:04:04.280 --> 00:04:20.329
And what metrics did not do well. And what metrics did well, we must ensure our records are straight according to what the business actually did. And we also must communicate with stakeholders about performance and how the business met or missed expectations.

00:04:20.360 --> 00:04:36.649
Now there are three areas that I would like to discuss further about what I believe we can do to make monthly close a better process. Number one, does the process Make sense? In our organization, what I want you to do is map out that process.

00:04:36.680 --> 00:04:39.980
Where do you start the process?

00:04:36.680 --> 00:05:01.069
I want you to put that process on paper or even on a whiteboard that's even better. I want you to map it out. I want you to list out how the data and information is moving along the process and figure out how you can streamline it, make it easier, make it better figure out your roles and responsibilities as you go through the process each month who's doing what Who is pulling?

00:05:01.069 --> 00:05:04.939
What piece of information? Who is putting together the report?

00:05:05.000 --> 00:05:08.120
And who is doing the analysis?

00:05:05.000 --> 00:06:18.470
And who is providing the information that helps our senior leaders? How are you sequencing, the reporting? And how are you sequencing? The journal entries? A big question that I want you to ask yourself as a leader in finance and accounting? Is that do your financial systems contribute or hinder the monthly close rocess? Are your financial ystems helping you understand he data? is it helping you ollect the data better? is it elping you with recording the ata are you able to pull the ata that you need so that you an create information that akes sense and where you can ather insights to help your enior leaders need to ensure ou publish the process and that veryone understands their role n what metrics they are easuring and analyzing, we must ontinue to train our team to ull the right data and format he data in a way that creates reat insights, knowledge and lso powerful wisdom for our enior leaders. I like mapping ut the monthly closed process ecause you get to see where hings work. And when they don't ork and get to see where nformation is moving. And where t gets kind of clogged up in he process and it gets stuck.

00:06:18.949 --> 00:06:22.220
aiting on other processes.

00:06:18.949 --> 00:09:37.549
ou'll see once you start utting your process on paper on whiteboard, you can start to ee where information gets tuck. When you're waiting on ther people to funnel nformation and and maybe omewhere along the process, you ight have one accountant or an nalyst may be waiting on ultiple pieces of information, nd then it builds and then it's his continually circle process ovement of information to eally talk to your team. And hey will tell you where the nformation gets stuck, and here it's really making their ob hard if the process isn't ffective. So once you map it ut, you put it on paper, and ou kind of see the information low and what reports get pulled rom what system, you can then tart to see where you can make mprovements and make things a ot better. And you continue to alk with your team and you efine the process and ontinually make it better, so hat you're moving the process long smoother and touches fewer eople. Maybe you have all the nformation coming into one ource, or coming from one ource, and just making it a lot moother and streamlined. And lso when are the due dates, hen are the deadlines for nformation being submitted, specially once the reports from he information is all run and omplete? And you're starting to se some of those reports to uild some of your monthly close lide products? What are the eadlines? And do those eadlines Make sense? And as you uild these metrics? Who needs hat, from home? And can you ake that easier? And can you ake that better? And are you iving yourself enough time to o the analysis to do that story uilding that I was talking bout? does all of this makes ense? Do you need more time uilt in and also really hallenge yourself. And this may ake a commitment of a long time nd also commitment of esources. But do your systems ake sense? Do the systems eally do support what you need o accomplish for monthly close, nd that's going to be a really ong in depth analysis if you elieve it isn't. So continue to alk with your team because they now where it's getting stuck nd what works and what doesn't ork and start to pull those nsights together so that you an come up with a better rocess. I'm challenging, you an do it, you can get it done, nd you can make your rganization much better. Number wo, I want analysts to be nalysts, our analysts and staff ccountants need to spend more ime on adding value to the usiness instead of just report ormatting and cutting and asting is nothing more that ill get me upset or get me othered where I see our finance nd accounting team doing more utting and pasting than they're ctually doing their jobs. And hat is properly recording what he business did properly doing nalysis and putting information ogether in a usable format and n a usable way that our leaders an then use that to make ecisions. I continually see our eam members doing more cutting nd pasting moving data around ulling a report putting that ata into another report. And hen that data moves to another ccount or a financial analyst.

00:09:37.580 --> 00:12:18.080
nd then they start doing utting and pasting from that eport into another report. Can e streamline this process? Can e make it better? Can we give ore time back to our team. So hey're actually trying to igure out what the numbers ean, so that we can continue to dd value. This is a very assionate topic of mine. If ou've been listening to the odcast at all, I talked about his especially in the early pisodes. I believe that our taff, accountants, and our inancial analysts are wasting oo much time on formatting, and utting and pasting, instead of ctually thinking about the etrics and thinking about the erformance that the rganization did, and for the etrics that they are esponsible for, and wasting too uch time. And it's also emoralizing as a team member, rying to work the numbers when ou're really passionate about he fields and passionate about he profession. And then you ust spend all your time moving umbers around and not really etting a chance to understand here the business is going and nderstanding what these numbers ean. And I think it's a failure f our leadership is that we on't work more on trying to nsure that our process is etter, and our systems are etter. And that we are raining. And we are moving our eam in a direction, where they re spending more of their time n analysis. And also a lot of heir time talking and iscussing the metrics with eaders in the organization, here they're building artnerships. And they're uilding a really effective ollaborative team and getting o know what their metrics eally mean in the organization ontinue to be that expert. And now, when a metric changes from onth to month, especially a rastic change, that they can xplain it. And then they can igure out who to talk to, and ry to figure out what really appened. And then you can onvey that information on the lides that you use to the enior leaders, so that they can ffect start thinking about it nd maybe make an adjustment to he strategy. If that metric was considerable metric that would ake a vast change to the trategy. It's all about trying o figure out what happened in he last month in comparison to he previous month and in omparison to what happened last ear, so that we can provide the ery best information, very best nsights, and the very best ecommendations to senior eaders, so that they have a ery clear picture of what we id. And they can start to think bout any kind of changes, nsuring that we are moving in he right direction. And number hree, I believe that our riefing slides should tell a tory or briefing slides houldn't just be a table with ust blank information, just be briefing table with just a unch of numbers on it that on't really make any sense.

00:12:18.110 --> 00:12:33.500
t's just tables, columns, data oesn't really give any kind of nformation. Now sometimes in our monthly closed process. And n your briefing slides, there ay be attendance or additional ata that you provide that ou've been asked to provide.

00:12:33.500 --> 00:13:36.049
hat just may be a table. And hat's all they really want. And hat's fine. But what are your ey metrics, I'm really asking ou to tell a story about what appened, especially the change rom last year in the same eriod, start to really ask ourself, how can you help the C uite executives and the senior eaders do their jobs better, we ave to continue to build ositive relationships with our enior leaders. So you know how o add value, we're really ooking for what really helps hem see the big picture, what re some insights you can rovide them in the information nd in the metrics that you're esponsible for what kind of nformation and insights and nowledge that you can start to iece together and help them do heir job a lot better, I ontinue to encourage you to ecome a partner to help them chieve the strategy and also to dapt and develop the future trategy. And in this artnership, continue to Ask and nquire and make sure that hey're getting the right nformation in a timely manner.

00:13:36.080 --> 00:13:45.710
nd sometimes you have to become teacher and advisor for senior eaders. That means you've got o really know your craft, ou've got to know your metrics.

00:13:42.740 --> 00:15:26.029
ou've got to know your job, ou've got to spend time nderstanding and knowing how to resent the information that can ommunicate the best story, and ou got to work on your nfluencing skills, and knowing ow to communicate and using the ight verbiage within the ompany. And what are the key ords and key issues that our enior leaders are really ooking for telling a story elps us understand what we did nd where we need to go. And hat's really what it's all bout is being able to tell a ery more simplified story so hat everyone can understand nstead of just putting numbers n a slide and saying, Hey, we ent up 5% on this metric year ver a year, and what does that eally mean? And that's, and hat takes time really starting o work with maybe a program anager or department head or omebody that really works, hose metrics actually on the round. So you understand all he moving pieces and the parts hat go to that. So that one hing changes and affects nother part of the metric, then ou can communicate what really appened and maybe we can make ome adjustments that we can ake some recommendations to ake the organization even etter and that we have erformance. moving in the right irection, or according to the xpectations, and also the redictions and the annual plan hat we put together and and efinitely our projection that e did for the quarter and for he year so that we can answer ll the stakeholders, including nvestors, our suppliers, our ustomers, and any kind of other aybe government entity or nybody else that's involved in nderstanding our numbers a ittle bit better.

00:15:26.090 --> 00:16:13.220
Now, I have created an example slide that you could download, it's a PDF, you can find the link to download in the episode description. Or you can go to my website, Stephen McLain dot com, go to resources in the main menu, and then you can select a monthly close slide. And you can see the slide that I put together. And that shows how you can tell a story just using some metrics from a make believe company that I did. It's a freight company. And I just put together some numbers from available days for a trucking company and just see how I try to tell a story on that one slide. And maybe that can inspire you to figure out how you can tell a better story on the slides that you are putting together each month.

00:16:13.309 --> 00:16:19.730
Now I was with a company that had a desire to change the briefing slides for the better.

00:16:16.370 --> 00:16:53.120
But some of the C suite executives were a little reluctant, because they still wanted to do the comparisons to previous months using the old slides that they had been using for a long time. And any change to the format seemed to make it harder for them. I understand that. Now this is where leadership happens convincing those who you advise that change will add incredible value, we must continue to strive for change and improvement, no pushback against change will always happen, we have to ensure that the briefing product that we use is not static, that we're always striving to help understand the business better.

00:16:53.149 --> 00:17:03.769
And this is where leadership and influence can really lift your organization to a new level. So don't give up trying to make it better. And don't give up keep improving and no complacency.

00:17:03.799 --> 00:17:29.539
That's always going to be something where I come from, I don't believe in complacency. I don't believe in just doing the same thing over and over again, we need to continue to find ways that we can improve, make our processes better, make our team better, make our organization even better. Now for an easy win today. Number one, if you are involved in monthly close is your monthly closed process effective in your organization.

00:17:29.569 --> 00:18:23.960
Now I want you to write down a few ideas and how you can improve the process. You can start simple just a couple of things, maybe how we pull some information, and how that information maybe moves around the team if it does. And you can bring up these ideas with your supervisor or start to build a consensus with your peers and how to improve the closed process. Now I want you to really use your influence skills to make this process a lot better and start putting your ideas on paper and start mapping it out and showing a some type of plan or some kind of product that shows how the monthly closed process can be just a little bit better. We all must be committed to leading change where it is necessary so that we add value. We support the strategy and we continue to grow the business. I have a free guide for you. It's called the leadership growth blueprint for finance and accounting managers.

00:18:24.500 --> 00:18:41.990
In the guide I talked about three leadership areas communication, team growth, and empowerment. Plus a few recommendations around challenges with the systems you are probably using to complete your work. The link to the guide is in the episode description.

00:18:38.960 --> 00:19:07.220
Or you can go to Stephen McLain Comm. Please use it to help you with a few leadership wins today. Thank you. This episode is sponsored by my new online course offering through finance leader Academy. It's called advance your finance and accounting career developing a promotion strategy that will set you apart. Are you having difficulty getting recognition from your leadership, despite all the hard work you pour into your job and your organization.

00:19:07.789 --> 00:19:24.500
This course helps you analyze what you bring to the organization, how you can set yourself apart from your peers to high visibility work, and developing your leadership skills. Plus how you can devise a strategy to move ahead, you can go to Stephen mclain.com for more details.

00:19:24.559 --> 00:19:48.349
Today on this episode, I talked about how we can improve the monthly closed process and I talked about three areas. Number one, we should be mapping the process to understand it better number two let analysts be analysts. And number three, we must improve our monthly close slides so that they tell a story next week the episode is going to be about overcoming in decisiveness.

00:19:48.529 --> 00:20:16.700
I hope you enjoyed the finance leader podcast I am dedicated to helping you grow your leadership. I hope you enjoyed the show. You can get this episode wherever you find podcasts and now the podcast is available on Amazon, you can go to their music app and you can find the podcast there. Until next time, you can check out more resources at Stephen McLain calm and sign up for my updates so you don't miss an episode of the show. And now, the lead your team and I'll see you next time.

00:20:16.880 --> 00:20:17.329
Thank you.

028: Improving the Monthly Close Process

Listen On

Recent Episodes