Accelerating Month-End Close for an Early Stage Startup

Introduction

Closing accounting books quickly is crucial for every business, offering visibility and the data needed for timely decision-making. The gold standard for closing books is 5 business days (BD) post-month-end, but achieving this can be challenging. Benson Street Advisors recently worked with a Series-A tech startup that faced significant delays in their month-end close process.

Objectives

• Reduce the time to close books from 15+ business days to 10 business days or less.

• Improve financial data quality and visibility.

• Enhance the working relationship with the outsourced accounting team.

Approach

To address these challenges, Benson Street Advisors conducted an in-depth review of the startup’s accounting processes, workflows, and resource allocation. This involved understanding the current process:

• Documenting the systems, people, and operations involved in the month-end close.

• This provided visibility into process gaps and bottlenecks. 

• Holding detailed discussions with accounting partners to pinpoint where the most time was spent.

• The biggest offenders:

• Organizing and labeling expenses correctly.

• Performing AP/AR reconciliations.

Implementation

Armed with these insights we designed and implemented low-effort interventions to systematically increase the accounting data quality, dramatically reduce time spent wrangling information internally, and cut external back-and-forth communication in half. These low-effort interventions included:

• Expense Labeling and P&L Mapping:

• Weekly Monitoring

• Adding a 30 minute weekly review of expenses.

• Manually correcting misclassified entries to their correct P&L account

• Custom Mapping Scheme:

• Creating and implementing a custom mapping scheme using the documentation from weekly expense reviews.

• Uploading the custom mappings into the accounting system, ensuring correct future categorization.

• AP/AR Reconciliations:

• Increasing the frequency of weekly checks to twice a week (30min) for both AP and AR.

• Ensuring timely customer payments and maintaining steady cash flow.

• Ensuring vendors were paid on time, fostering strong business relationships and goodwill.

Results

• Improved Efficiency: Reduced back-and-forth communication with the accounting team.

• Enhanced Data Quality: Increased accuracy of financial data and better business visibility.

• Faster Month-End Close: Reduced the time to close books from 15+ BDs to 10 BDs.

• Stronger Vendor Relationships: Timely AP processing improved vendor relations and facilitated better negotiation terms.

Conclusion

By partnering with Benson Street Advisors, the Series-A tech startup significantly improved their month-end close process. The implemented solutions not only reduced the time to close but also enhanced data quality and operational efficiency, providing the startup with the timely insights needed to drive business growth.

Ready to streamline your financial processes and drive business growth? Contact Benson Street Advisors to schedule a free consultation and learn how we can help your business achieve its goals.