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Timely Close of the Financial Records

Timely close of the financial records – this is a topic every company needs to address. Whether you are a publicly traded or private company, the issue of closing the books is ongoing. Publicly traded companies usually have well established processes in place to meet the deadlines imposed on by the regulators. However, closely held businesses often struggle with this process. We see many clients that tell us it takes them weeks, if not months, to close the books and produce financial statements. This blog will discuss why it is important to close you accounting records as soon as possible. In addition, we will provide some tips on improving your financial close.

Timely Close of the Financial RecordsImportance of the Timely Close of the Financial Records

Why is it so important to close your books timely and generate financial statements? The executive team of the company must run the business, and there is no other way to run your business than to have timely and reliable financial statements.

I have met business owners that own a company with over $100 mm in revenue and no financial statements. They literally used a check book and online banking to check cash balances, pay down outstanding balances, etc. When I asked the business owner how he knows what his margins are and how he can run his business, his response was he has a“gut feeling”. I get that, and in a sector with high margins and strong cash flow, I can see where an owner gets confident about the amount of cash he pulls from the business monthly and stuffing his pockets. But that “gut feeling” will not help you when the market or economy turns. And it will one day.

A gut feeling cannot be measured or tracked. Fortunately, you can track your key performance indicators (KPIs.) Click here to discover your KPIs.

In a well run company, the decision makers must know how the business is performing by looking at the historical data. Historical data includes last month’s financials and even the trailing 12 months. With that information, the decision maker will apply his management skills and look at forecasts, then make executive decisions of what to do. The sooner the decision maker has the financial data, the quicker he can make a decision.

How to Close Your Books Sooner

How can you close your books sooner and produce financial reports? A delay in closing the accounting records and producing financial statements is very common. And sometimes, there are various causes for this.  It may be any one or several of the following:

How quick can you close the books? What is the right number of days to close the books? Well, it depends on many things. Certainly more than 10 days after the last day of the month is too long for me.


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I have always said that a well run company with the correct process and systems in place should be able to close the books any day of the month. Now with that said, the closer to the end of the month the more accurate the numbers will be because you limit the use of accruals to only a day or two. I would not suggest that it is okay to close your books too early. But your business should be able to start the close process a day or two before the last day of the month and have financial statements by the 5th day of the following month.

If your financial records are delayed by days or even months, then it will be more difficult to make any decision. Start tracking your KPIs as you close your books more timely with our KPI Discovery Cheatsheet.

Tips to Close Your Books Timely

Every company should be working toward timely close of the financial records. The following includes some tips to close your books timely:

    • Establish an accounting calendar close that includes deadlines for turning in information from operations and accounting, firm deadlines for certain activities
    • Hold people accountable in operations and accounting to meet the deadlines

There is simply no excuse to delay the accounting close and generation of financial statements. Having the financial reports completed timely and analyzed before they are turned into the decision makers of the business will make your company a much better company.

When you close your financial records or books in a timely manner, you are able to make better decisions. In addition, monitoring your key performance indicators will help you to make better decisions. Need help discovering the KPIs you should be monitoring? Access our KPI Discovery Cheatsheet and start tracking your KPIs today!

Timely Close of the Financial Records

Timely Close of the Financial Records

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The Next 100 Years: Forecasting the 21st Century

I just read a thought provoking book about forecasting the 21st century. It is titled, The Next 100 Years: A forecast of the 21st Century, by George Friedman. Friedman is the CEO of Stratfor a private intelligence and forecasting company located in Austin, Texas. Barron’s has labeled Stratfor the “Shadow CIA”. They have a web site and paid subscription news blog that post several times a day events happening around the world. I have been a subscriber for several years now and read more insight into what is happening in the world than what you get out of the best newspapers.

The Next 100 Years: Forecasting the 21st Century

Mr. Friedman has written a scenario of how the world might look over the next century. It is a very good book and will help you put things into perspective from a geopolitical basis. The major take aways for me are as follows:

First, a lot of the major issues in the news today will become background noise over the next 100 years. For example, the jihadist movement and Afghanistan.

Second, there will be a population bust in the developed countries. As a country transforms into a manufacturing and technology economy from an agrarian one, the birth rate declines. The world needs 2.1 births per woman for a stable population. Per the United Nations in 1970 there were 4.5 children born worldwide. In 2000 the number was 2.7 children born worldwide. In 2050 it is projected that there will be 2.05 children born worldwide. Less than the 2.1 births required to maintain the worlds population. For the U.S. this means that immigration will take up the slack in the low birth rates.

Third, space based weapons will be the next big thing. And finally, Mexico will be a major global power and will go to war with the United States.

All these scenarios and a few more get you to thinking about how important are the issues of the day when looked through a longer lens. He may not be right, but, he can’t be all wrong!

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Forecasting the 21st century

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Forecasting the 21st century

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