Thinking ahead can take the sting out of the year-end process.
- Collaboration is key, and the success of your year-end process depends on having the support and buy-in of the rest of the organisation.
- Getting a head start on everything from resource planning to preparing your template financial report can ease the burden closer to year-end.
While year-end may officially wind up on 30 June, for many CAs the process starts long before – and finishes months later. From planning to publishing the annual report, not to mention the all-important debriefing stage, the year-end process can be a long, busy and often stressful period.
So how can you take the pain out of that process?
Lincoln Tong FCA, Finance Director at payroll solutions firm ADP Australia and New Zealand, says much of it comes down to thinking ahead.
“By adopting a planning mindset, you can take some of the sting out of year-end,” he says. “Try to address issues around resourcing, stakeholder management and any technical problems early to save yourself trouble later on.” Also, it’s all about collaboration.
“The reality is that while the year-end process falls on the finance team, that team alone cannot get the job done,” says Tong. “The team needs to interact with – in fact, it depends on – other areas of the business.”
Related: Business Insight guide to managing the year-end process
The Chartered Accountants ANZ Victorian Corporate Advisory Panel share more tips for managing the year-end process in this Business Insight guide.
So what are Tong’s tips for a good year-end?
1. Let’s talk turkey: the year-end instructions
Think of the year-end instructions as your one-stop shop to explain the process to everybody in the business. “The year-end instructions are the way to describe what the finance team is doing and, more importantly, how it will be done.”
The instructions should include only the most vital details – such as desired outcomes from the process, and the requirements that need to be met – and should be available in one easily accessible place. “The year-end instructions are about finding common ground across the organisation,” says Tong. “We’re talking year-end 101.”
Everybody has a slightly different role to play during year-end, and people will come to the process with different backgrounds and contexts. “The year-end instructions allow you to bring everyone in the business on the journey. This is key to achieving full engagement from all your stakeholders.”
2. Draft disclosures: preparing the template financial report
The template or draft financial report is an internal document that is signed off in the months leading up to year-end, and includes any new disclosure requirements or alternatives.
It’s also a report that often gets overlooked, explains Tong: “The template financial report is one thing everyone acknowledges should be done – but not everyone gets around to doing.”
In practice, it can be difficult to prepare the draft report in advance because the wording often depends on the business’ final numbers. Yet Tong urges perseverance. “You’ll feel the benefit later on if you get any disclosure updates prepared ahead of time.”
The reality is that while the year-end process falls on the finance team, the finance team alone cannot get the job done
3. Get a head start: resolve issues early
It may take months to resolve a key technical issue, so the sooner you come to grips with it the better, says Tong.
“The significance of the issue will dictate whether it requires sign-off from the CFO or the CEO, or maybe even the board,” he notes. “The higher the decision goes up the chain, the more background material is required and the more preparation of information needs to occur. Be aware that that can be a very long process.”
4. Whole business buy-in: stakeholder engagement
Think of the year-end process as being like a wave that passes through the organisation. Tong says not everyone appreciates how big that wave will be, so it’s up to the finance team to get this message across to the rest of the organisation.
“Finance is dependent on other areas of the business to contribute to, or provide information for, the year-end process. It’s all about trying to get their buy-in so they can help the finance team meet shared deadlines.”
Related: More resources for members working in business
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5. Your dry-run: a hard close
A hard close is your practice run of the year-end process and it allows you to trouble-shoot any issues you’re likely to encounter, and get some of the big decision-making done ahead of schedule. “It’s only when you actually have to close the numbers that some of the real issues around year-end become apparent,” says Tong.
“Having a hard close forces you to work through the process and hopefully iron out any unexpected surprises. Because you’d prefer to have an unexpected issue come up a month early rather than in the middle of year-end, wouldn’t you?”
6. Count your chickens: resource planning
Resource planning is all about thinking ahead and deciding well in advance if you need the help of contractors (or others) during year-end. Ask yourself what capacity you’re likely to need during the year-end period. “Finance teams are generally leaner these days, so if you have particular issues around year-end, you might want to consider bringing some extra people in.”
Then, factor in that it may take up to two months to sort out recruitment. Similar organisations may also be looking for talent at the same time, so it really does pay to try to get a step ahead when recruiting contractors.
7. Learn from your mistakes
Finally, the last word in year-end planning is: experience. “No doubt the best way to learn is through experience,” notes Tong. “There’s no better teacher than the process of going through a year-end procedure where something’s gone wrong, so that you know what to do differently next year. “So at the end, always have a debrief and document your learnings.”
The guidance in this article has informed by members of the CA ANZ Victorian Corporate Advisory Panel, including Lynne Connell CA, Matt Harrington FCA, Mark Ellul CA, Dominic Staropoli CA and Lincoln Tong CA.