Stress less at EOFY and every day: The case for continuous accounting

With the rise of the ‘always-on’ business model and the myriad ways accounting processes and requirements such as payroll change year-on-year, many smart businesses are making the switch to the ‘continuous close’ method of keeping their business accounts in order. Jason Toshack, VP and GM at Oracle NetSuite ANZ, explains how continuous accounting could work for your business.

Whether you outsource your accounting or manage it in-house, the end of the financial year can easily become a time of stress and long hours. And it’s no wonder – a lot of planning and preparation goes into the financial close process. For a start, you need to sort all receipts and invoices, reconcile and balance transactions from different credit cards and accounts, make sure all tax deductions and records are in order.

And this is just basic accounting hygiene; the to-do list in reality is much longer.

Pair this with the fact that most Australian SMBs already work longer hours than they would like and feel constantly stretched for time – and it’s easy to understand why some are jumping ship on legacy accounting methods to seek out a better way.

The case for Continuous Close

This is where some growing businesses are turning to a ‘continuous close’ approach. Also known as ‘continuous accounting’, this method involves processing and aggregating financial information in what is essentially real-time. So instead of reconciling potentially hundreds of items at once at the end of each month, these items are reconciled daily on an ongoing basis.

On top of reducing the burden come month end, this approach also has the added benefit of offering real-time insights into financial information, helping aid better – or more accurate and timely – business decisions.

Here are three reasons to consider a continuous close approach.

1. Open the door to automation

Automation is on the rise across Asia Pacific. A global survey found that more companies are pursuing automation now than two years ago, while a recent Deloitte study found that Australia, Singapore, Japan and Korea are in the lead when it comes to automation preparedness.

Why is this timely for a conversation about continuous close? Well, a true continuous close approach doesn’t mean simply load-sharing your manual accounting processes across the month. Automation is what makes a continuous close approach most successful.

The financial close process can be long and tedious, and the more tasks within this process that are performed manually, the longer it’s going to take and the more likely it is that errors will pop up.

Automation and accounting software reduces the need to rely on these manual workflows, and opens the door to some other pretty remarkable benefits for your business as well – from reducing costs and streamlining operations, to having greater visibility.

2. Let accountants add real value

With a continuous close approach, a financial close doesn’t become a huge drain on your accounting team’s time every month. If you outsource to a bookkeeper or accounting firm who charge by the hour or day – this saved time quickly becomes saved money.

But there are gains to be realised besides simple cost savings. With capacity freed up, your accounting team will have more time to help make more financially strategic business decisions. Research from McKinsey has found that finance leaders spend 19 per cent more time today on value-add activities than the typical finance department did a decade ago. While this trend may currently be primarily seen in the enterprise space – there is no reason smaller businesses can’t take advantage of this too.

For companies of all sizes, involving more people in high-stakes business decisions can bring great benefits – from diverse thinking to identifying issues before they arise. As a business owner, you could do with all the resources at your disposal.

Accountants and finance teams have a lot of value to add – so why not bring them into the fray?

3. More informed, timely business decisions

The biggest drawback with closing the books once a month is you get access to critical financial information potentially weeks after it is most useful.

For example, a product ordered at the beginning of the month may sell out very quickly due to higher than forecast demand. Only having access to transaction data and related information at the end of the month means that you lose the opportunity to review the pricing strategy in real time – and adjust it to make more margin. It also means you could sacrifice sales due to unforeseen product shortages.

Adopting a continuous close method means that you can act on what is essentially real-time financial data. Immediate access to critical financial information and basic KPIs like revenue, only leads to better, more strategic decision making that can ultimately set your business up for long-term success and growth.

It’s clear that, no matter the size of your company, a continuous close approach comes with many advantages. If and when you decide to make the shift, it could have more far-reaching impacts on your business than you may have realised.

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