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Fiscal year-end closing best practices — From stress to success.

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A new fiscal year is a time for setting goals and celebrating progress. But before we can crack open the champagne and start looking forward, we have to tackle year-end closing.

For many finance and procurement teams, year-end is a daunting prospect. It can be a time of early mornings and late nights, scrambling to get correct reports, fixing errors, and an abundance of manual processing.

Sound familiar? If so, keep reading. I’ll share the best practices we’ve implemented at Connecticut College that have profoundly changed our end-of-year closing for the better.

Don’t worry — there is light at the [year-] end of the tunnel.

Why is fiscal year-end so stressful?

The end of the fiscal year involves reviewing and reconciling transactions from the last 12 months and making sure that everything adds up. This can be a huge job and, unfortunately, daily operations don’t stop to let you focus on this work. Wouldn’t it be nice if they did?

For procurement, this means a balancing act between closing out the old and managing the new while requisitions, invoices, and bid requests keep rolling in. And if your team is trying to handle all the year-end processes in a few short weeks (or even days), it’s no wonder year-end is such a dreaded and stressful time.

But there are a number of things you can do to make fiscal year-end less overwhelming.

4 best practices for a successful close

Here are the four best year-end closing practices we employ at Connecticut College. As you read through you will hopefully see ways to improve procedures within your own organization.

1. Develop a monthly order-closing process

Regular order closing is a critical component of a successful year-end. Doing this eliminates the need to close page after page of orders at the end of the year. The sweet spot for us is weekly, but we try to avoid going more than a month without going through this order-closing process.

At the end of each week we review all open orders in our Unimarket eProcurement solution (which we’ve branded internally as CTW OneSource). We filter those that have been invoiced and received and then determine what should be closed.

Then, using our ERP, we auto-close anything under 99 cents. Finally, we use Excel’s VLOOKUP function to compare our open orders report against the list of orders remaining in the ERP after the auto-close process.

It’s also possible to automate the order-closing processes in systems like Unimarket and that might be a great choice for you, especially if you’re at a larger organization with a huge number of orders.

Whichever way you determine is best, making order closing a part of your recurring routine processes all year round is key to a successful fiscal close.

2. Practice monthly order life cycle follow-ups

A common end-of-the-year issue is discovering orders that are held up somewhere. Maybe a PO is stuck due to a missing address, or there’s an invoice error resulting from an incorrect vendor ID.

Rather than uncovering a long list of order issues at year-end, we do a monthly order life cycle follow-up. This involves four steps:

  1. We filter and categorize errors: Our eProcurement solution alerts us to any errors via email and we use filters to categorize these error notifications by type. We then review these errors and resolve any issues before our weekly check run.
  2. We reach out to end users and suppliers: We run three reports from our eProcurement solution: Open Orders, Goods Received Not Invoiced, and Invoiced Orders Not Received. We follow up with end users and suppliers to resolve any issues with orders identified in these reports.
  3. We review old orders: We either note why an old order is there (there may be a good reason) or we uncover an issue that is keeping the order from closing.
  4. Accounts payable conducts a supplier statement reconciliation with our ERP: Supplier statements should match the details in our ERP. If they don’t, we may be missing an invoice or there may have been a processing error. Comparing the supplier statements to our ERP data helps ensure we aren’t missing anything and better prepares us for a smooth year-end transition.

These four simple steps make a remarkable difference in our daily procurement operations and contribute to a stress-free year-end closing.

3. Engage your organization with consistent communication

American industrialist Henry Ford said, “If everyone is moving forward together, success takes care of itself.” The most effective way to make this happen in your organization is to effectively communicate the what, why, and how of the goal you’re trying to achieve.

In this case, the goal is a seamless fiscal year-end, and achieving this requires everyone to play their part.

At Connecticut College, to help get everyone on board and ensure they know what they need to do, we notify users across campus of requisition, invoice, payment, and bid request deadlines in the following ways:

  • We post an announcement on the campus intranet.
  • We add a notification to the homepage of our eProcurement solution so users see it anytime they log in.
  • Using our eProcurement solution, we generate a list of all users who need to be informed of year-end deadlines and email those users.
  • We include an alert in our quarterly procurement services newsletter.

Sure, there are some exceptions, but for the most part people across an organization work hard to meet these deadlines. It can be helpful to make these publicly announced deadlines a little earlier than absolutely necessary to account for those who might fall a little behind.

4. Invest in an eProcurement solution

Standardizing and optimizing procurement processes all year round can be hugely helpful for a successful year-end close, and for us, an eProcurement solution has been the most effective way to do that

ERPs are powerful tools, but they are usually robust financial systems that don’t cater to the unique needs of procurement. Finding and buying items is also usually more complicated and less intuitive for end users.

In contrast, eProcurement platforms are built specifically for procurement needs and are designed to be easy to use as standard.

We’ve experienced many benefits since introducing the Unimarket eProcurement solution a few years back, and one of them is undoubtedly a cleaner and more streamlined year-end close.

Preparation is key

It’s common for finance and procurement professionals to feel stressed by the thought of another grueling fiscal year-end. But with preparation and foresight, you can be ahead of the curve and ensure your procurement team is ready to tackle it while minimizing disruption.

I hope the practices described here help you enhance your preparations and ensure an easier and less stressful fiscal year-end.

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