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The Challenges of Month-End Close

Kimble’s New GM Reflects on How PSA Simplifies Month-End Close

By Steve Litsos, General Manager, Australia and New Zealand Region

In my travels as Kimble PSA General Manager in ANZ, I meet and talk with many people who work in professional services organisations. Many of the day to day challenges they face are familiar to me from my 20 years experience managing services organisations myself.

In a previous blog, I looked at low billable utilisation and how to use Professional Services Automation to improve in this important area. In this article, I will touch on another frequently-raised issue; month-end close.

I am no stranger to this one! In a previous job, I was responsible for pulling together the information required to do this on spreadsheets. It was no picnic. It often took hours of work to gather together all of the data and that was often incomplete. It could be a struggle to get hold of the completed timesheets and the expenses claims from everyone. It wasn’t always clear what projects or what milestones had been completed or where the plan was against reality.

I am sorry to say that month-end wasn’t always closed at month-end – sometimes it took up to two weeks to do this. And we were not unusual in this regard – speaking to clients, I find this is very common. Some companies take even longer – a month or so to close month end is not unusual.

Problems with late month-end close

The problem with closing month-end late is that it affects the efficient running of the business in several ways.

1
Invoicing

Firstly, it makes it difficult to send out accurate invoices promptly. And if you don’t send out invoices, you are not going to get paid. The payment terms start from the day the invoice is received – so you are compounding the problem of late payment. Adding a month to what may already be a 60-day cycle affects cash flow. That means you don’t have that money available to invest and scale – it may also mean you have to borrow money, which creates an unnecessary cost for the business.

2
Compliance

If you are leaving periods open – or worse still, reopening them after closing them, it is difficult to ensure that the data you are relying on to run your business is accurate. This problem is actually compounded if you introduce PSA. PSA is an automated system, and it builds revenue forecasts and so on from the data that has been put in. If Fred finds a hotel bill from three months ago in his jacket pocket and you go back to add that in to his expenses claim, this won’t just change the numbers from that period, everything else in the system will also change.

3
Forward-looking vision

The main issue with failing to close periods sharply, is that this affects your ability to look forward. If you don’t get the data from last month until half-way through this month, that affects your ability to affect the future. If you discover at this point that a project is now running at a loss – because perhaps of higher than expected costs – it is hard to affect that in the current month. Problems get pushed forward and only compound. It also makes it hard to share accurate and timely information with customers and key stakeholders. That affects your ability to build the close relationships with customers that you want and for key stakeholders to make strategic decisions

How can PSA Help?

There are several ways in which bringing in PSA can help. One of the important points to remember here is that this data is not the property of the finance team who want to use it for accounting purposes. It is also important for operating the business at every level.

1
Make it easier for people to fill in timesheets

At Kimble, we have put a lot of thought into this. Kimble’s latest version, Summer 19 introduces “Intelligent Time Capture” aimed at the end user, the service professional who has to use this feature on a daily or weekly basis. It is easier and more intuitive to use, giving the consultant or other employee more visibility of their own data.

his is also part of an initiative aimed at making time capture a better understood and more central part of the service professionals role. This ensures they have a better understanding of how this fits into the overall running of the business, setting them to use this task as an important opportunity to share information about how the plan is unfolding on the ground.

2
Spread responsibility through the organisation

We recommend as good practice sharpening the month-end cadence by getting project managers to close the weeks. Project managers know what is happening in their engagements. If there is a difference between what was supposed to happen and what has happened, the project manager should be aware of this.

Where project managers are responsible for closing the weeks, they will make sure that timesheets are filled in and available. The same goes for milestone dates, resourcing requirements, etc. This all means that closing the month is less onerous and can happen within a day or two of month end.

3
Share information with customers

Using PSA enables you to draw information out of the system that you know is accurate and up to date to share with customers. In this case study, Alan Crawley of Optima Partners describes how that saves him time and enables him to ensure that he is living up to his customers’ expectations.

Kimble also enables information to be made available to customers in real time automatically (through the Kimble Customer Community). This is becoming more common in many areas of life – nowadays when awaiting a delivery you expect to be able to go online and see where your parcel is right now. You may also be able to see what the driver’s name is and even his photograph. Customers like to know what is going on and it helps build trust. If you know that information is being shared with customers, it creates an added sense of the importance of getting it right!

Final Thoughts

I hope this blog has been helpful. For more on this subject, download our Best Practice Guide on Driving a Disciplined Month-End Close. If you are interested in finding out more about getting the best out of Kimble, sign up for our weekly live tour with a product expert, or contact me at [email protected]