Year-end close is a stressful time for accounts payable (AP) staff. In addition to an increased workload, they must coordinate adjustments with other departments, ensure tasks are properly documented for audits and compliance, and adhere to tight deadlines.
We tapped into Rhonda Greene, AvidXchange’s principal solutions consultant, to break down the top seven tips to help AP pros navigate a successful year-end close. Greene has decades of AP experience. She served as an AP manager for many years, and now she helps companies streamline and modernize their AP processes.
1. Execute Against a Year-End Close Checklist
Greene says AP teams must be as organized and regimented as possible during year-end close. “If you’re not prepared, if you don’t have a checklist or some sort of guideline to follow, there’s going to be some chaos,” according to Greene. “That’s the main thing, dedicating yourself to a strict regimen and sticking to it.”
Spending a holiday at the office is not ideal, but Greene’s been there. “I remember spending my New Year’s Eve in the office many times. I was there until 8 or 9 p.m. to make sure everything was wrapped up. Let your company know when the AP deadlines for entry and accrual are via calendars and checklists to make your life easier.”
2. Recognize Your Team’s Hard Work
Greene acknowledges that year-end close is tough for finance teams. “You’re working long days, overwhelmed by deadlines and sometimes morale can get pretty low,” she said.
Little treats can go a long way towards improving the mood. “We would have a pizza night and things like that. We’d throw a ‘We Survived Year-End’ party as a way to wrap up the whole experience. One year we even got T-shirts! You’ve got to laugh to get through it, you know?” said Greene.
3. Maintain Your Master Vendor File
When it comes to the master vendor file, according to Greene, “If you stay on top of it, you shouldn’t have any problems.” She recommends creating entry standards to ensure formatting is consistent and matches vendors’ W-9s.
“I always advise folks to clean their file regularly throughout the year to avoid issues during year-end,” she added. “Check out the TIN Matching program that the IRS offers for free.”
4. Read Up on 1099 Requirements
“Do your homework and stay on top of any changes made to the 1099 maintenance process. The government sometimes tweaks the procedure for 1099s.” Greene said.
“Again, I can’t stress using the IRS website enough. I advise people of that all the time. There are so many resources available for free, so why not take advantage of that?” she said.
5. Organize Accruals
Greene believes AP pros have to stay organized when doing accruals. “When you receive invoices, let’s say it’s January 5, you really have to look at the invoices to determine if they’re for the previous year or if they’re for the New Year,” she said. “If they’re for the previous year, you need to accrue them. It’s just a matter of being organized and making sure you’re submitting invoices to the proper periods.”
Greene suggests running a report that shows invoices that have been received but haven’t been coded yet to determine accruals. “I can run a report, export that to Excel, tailor it to my journal entry template and get it into the general ledger,” she said.
6. Get Rid of Paper
While it may not be possible to revamp your systems in time for this year-end close, start thinking ahead to next year. Automated invoice management solutions like AvidInvoice help AP departments eliminate paper and streamline year-end close.
Greene explained, “The AP department is tasked with accounting for every single invoice for the calendar year and ensuring they are entered correctly into the accounting system. When you’re working with paper, that becomes a major challenge. I used to have piles of invoices sitting around that I would have to account for and accrue in a spreadsheet,” she said.
“With automation, all the invoice images are available in the portal. You no longer have to run around the office, chasing down approvers, to see who has what. You can tell exactly where an invoice is and we can easily ensure that they’re all getting synced back over to our accounting system,” Greene continued.
“Paper adds all kinds of inefficiencies to the process. When you’re trying to manually route invoices for approval – walking them down the hall or sending a scanned copy in an e-mail – you’re adding a lot of time to the process and increasing the odds of a document getting misplaced. It’s critical they’re all accounted for, so having everything in an automated system where you can see where they are at all times has drastically changed the year-end process.”
7. Reallocate Your Team
Greene is a believer in automating AP processes. Doing so helps speed year-end close processes, as teammates can focus on tasks beyond data entry and filing. “With automation, you’re able to take people who are doing mundane tasks and give them an opportunity to do things like account reconciliation or analysis. Instead of spending time stuffing envelopes, mailing checks and hunting down approvers, automation makes the process efficient and frees up an accounting team to focus on high-level tasks that help the company,” she explained.
From time-savings to cost-savings to a more engaged team, automation offers numerous benefits to AP teams all year long. To learn more about automating processes in your AP department, click below to connect with one of our experts.