End-of-Year Tech Health Check: How to Optimize Your Financial Systems

Principal Alanna Abreu was recently featured in CFO.com about how CFOs should ensure a smooth close process and improve operational performance as the year ends.

As technology and financial processes continue to evolve, conducting an end-of-year “health check” on your financial systems is critical for maintaining efficiency and preventing issues. This review ensures a smooth close process, improves operational performance and helps position your business for success in the year ahead. Being proactive in maintaining and optimizing your systems is key to staying agile and responsive in an ever-changing financial landscape.

Whether you use Netsuite, QuickBooks or similar solutions, ensuring these tools are performing effectively is essential for closing out the year efficiently and preparing for the next. Below are key areas to focus on during your year-end review.

Leveraging automation in your close process

Automation can significantly reduce the time it takes to reconcile accounts and reduce mistakes. Many systems include automatic matching functionality, allowing you to streamline the reconciliation of bank statements, accounts receivable or accounts payable. Instead of manually matching transactions, auto-match features identify-and-process matches, speeding up the close process and reducing the risk of human error. Implementing or enhancing automation in this area can significantly impact efficiency. An accurate and efficient close is essential to ending the year and beginning the next in a good position.

Data cleanup, maintenance, and archiving

Although this should be an ongoing effort to minimize duplication and errors, year-end is the ideal time to clean up and organize the data in your system. Purging outdated records such as old customer accounts, vendors or inactive records can improve performance and reduce the clutter employees (and systems) face when processing information. Tools like Netsuite’s Application Performance Management Suite App provide performance metrics and logs, helping you evaluate system health. Running these checks and cleaning up unused data ensures faster processing times and a smoother close process. With data, you get out what you put in, maintaining clean data in your systems is a critical component of efficient accounting and financial software. 

Streamlining workflows

Complex or inefficient workflows, especially in approval processes, can create unnecessary delays in closing the books. If multiple approvals are required after receiving the invoice and before finalizing transactions, the year-end close can be inhibited significantly. Implementing streamlined procurement or purchase order processes allows accruals and expenses to be recorded when goods are received, rather than waiting for final invoices or multiple approvals. This reduces bottlenecks and ensures a more efficient close process. Review approval processes to identify needlessly complex workflows and alter them to save time during the close. 

Real-time financial reporting and analysis

Fully integrated systems can provide real-time financial information, allowing you to make informed decisions without waiting for manual data reconciliation. By using APIs to automatically transfer data between different systems, real-time access to key performance indicators, profit margins, and cash flow projections becomes available. Ensuring these integrations are functioning properly during year-end allows for quicker decision-making and more accurate reporting. Fully utilizing APIs will allow users to gain additional value from their systems and maintain a competitive advantage with timely data. 

Using AP and/or AR automation

Automating accounts payable and accounts receivable processes can minimize manual entry errors and increase efficiency. Automation not only eliminates the need for manual data input but also speeds up payment processing and receipt, automatically posting payments and deposits to the system. This reduces the time spent on follow-ups and improves cash flow. Implementing AP/AR automation is an excellent way to streamline your financial operations. 

Conduct a data integrity audit

Data accuracy is critical, especially during the year-end close. A data integrity audit allows you to identify any missing entries, inconsistencies, or incomplete transactions. Saved search functions in systems like Netsuite can quickly generate reports that highlight potential issues, ensuring nothing is overlooked during the final stages of closing the books. Conducting this type of audit in advance helps avoid costly errors and delays during year-end.

Ensure compliance with applicable regulations

Regulations evolve frequently, and it’s important to ensure your system is updated to reflect the latest changes. A review of tax laws and nexus obligations is essential to remaining compliant. Many financial solutions provide built-in compliance tools or updates, but it’s critical to double-check that everything is up to date and functioning correctly. Staying ahead of regulatory changes can prevent potential penalties and ensure smooth compliance moving forward. It’s always prudent to remain somewhat skeptical and not rely fully on the machines but use your knowledge and expertise to enhance their functionality. 

Review cash flow projections

Year-end is the perfect time to reassess your cash flow projections for the coming year. Customizable reports can provide insights into operating cash needs, helping you allocate funds for growth initiatives and new projects. Having a clear picture of your cash flow helps ensure that you can invest in new opportunities without disrupting your regular operations. This is especially important when there is a high degree of uncertainty or you are preparing to weather a storm. 

Originally published by CFO.com