As we are all painfully aware, the month-end and year-end closing processes can be tedious and time-consuming tasks for AP professionals. Closing out business from the previous month or year, carrying forward balances, and opening posting accounts for the upcoming period is a lot, especially during the holidays, when AP staffers take much-needed time off. As the session comes to a close, every AP clerk approaches the month-end or year-end closing process with a healthy dose of apprehension. Tracking down invoices from the previous month or year and closing them out can be a tedious and time-consuming task.
To ensure that financial statements are accurate and timely, most companies utilize journal entries and detailed checklists for the various tasks that must be completed during the month-end or year-end period. It’s crucial that statements reflect only the transactions and entries relevant to the month’s revenues and expenses, and end-of-the-period assets and liabilities. In an article by Maria L. Murphy, the author concludes that “inadequate systems and system constraints, including lack of general ledger interfaces, inadequate tools for querying and reconciling data within the system, and the need for manual journal entries due to lack of automation,” contribute to lengthy close times.
Many of these manual, paper-based processes can be streamlined with AP automation. With improved controls and approval documentation, historical data, and regular approvals, there aren’t any surprises at the end of the month or year. There’s no need to hit the panic button because you have 24/7 access to invoice and payment status with approval rerouting functionality. In an automated system, all invoices are automatically stored in a centralized, searchable database so you can quickly reconcile invoices, quickly satisfy vendor requests, and produce management reports on demand.
The AP team can track the status of any invoice, anytime anywhere, giving you the ability to track critical metrics like approval cycle times, approver productivity, and month-end accruals. And with one-click accrual, you’ll see what’s pending approval, how it’s coded, and the dollars outstanding in an easy-to-use journal entry format. To illustrate how AvidXchange’s AP and payment automation streamlines processes, we asked our customers about their year-end closing procedure before and after automation.
How Has AvidXchange Helped with Year-End Closing? Before using AvidXchange, what did your year-end process look like?
Valerie V.: “Before AvidXchange, our year-end process looked like lots and lots of boxes. Everyone would be running around like chickens with their heads cut off. We were stressed out, working long hours and people were not happy.”
Suzanne C.: “Our year-end process was mostly manual in nature. We would utilize our Yardi accounting system for accounting year-end close activities. The process for 1099 generation, however, was manual and very tedious. It often involved figuring total payment amounts to vendors through Microsoft Excel and hand-populating 1099 forms to vendors – a process that was both frustrating and time-consuming.”
How has AvidXchange’s products and services improved your year-end process?
Valerie V.: “It’s rare to see people working long days now, and it’s much easier to find information. We added the approval process in AvidXchange with Journal Entries, and that has helped so much. All the information is right there inside AvidXchange!”
Suzanne C.: “We anticipate this year’s year-end closing process to be much smoother and more efficient. The automation of vendor payments through AvidXchange allows us to digitally reconcile vendor payments. Through our upgraded Yardi system, we will be able to generate 1099 documents in a matter of minutes instead of the week-long process we conducted before.”
In Closing Excellence, a study published by Ernst & Young, the international financial services firm recommends automation processes as a way to improve month-end and year-end closing. “Automation of existing processes in the form of IT integration or automation of manual procedures and controls increases the speed of the process and reduces the risk of financial reporting errors,” the report states.
We’ve seen companies dramatically improve their year-end close by automating accounts payable processes. A stressful, weeklong ordeal can quickly become an organized, efficient 1-2-day process. Who doesn’t like the sound of that?
eBook: Automate Before It’s Too Late
It’s hard to believe, but we’re heading into year-end already for 2017. It’s tempting to hold off on implementing new technologies before the end of the year, but automating your invoice and payment processes before 2018 will create so many amazing benefits for you and your team in the new year. Instead of coming back to paper and inefficiency, you could walk back in from your holiday vacation with a wholly automated invoice and payment process.
In our free eBook, Automate Before It’s Too late, you’ll learn how a cloud-based AP automation solution can improve audits, month-end and year-end closing, and the approval process by allowing AP professionals to approve invoices and payments anytime, anywhere! To download this eBook, click (or tap) the image below!