An acquisition can pose a significant challenge to a month-end close schedule. After an acquisition is closed, there is usually a lot of pressure to see what the results look like. Management, investors, creditors and other stakeholders want to know how an acquisition is working. Delays in closing, even if there are good reasons, are not well received. Here are some suggestions on how to have a smooth month-end close after an acquisition.
If you had smooth month-end closings before an acquisition, you probably used a well-designed month-end close schedule. Closing schedules, whether they are for month-end closing, quarterly closes or year end, are the foundation around which to plan. A close schedule should include tasks, dates and the positions responsible.
If you don’t do a “soft” close in the first two months of the quarter, and a “hard” close at quarter and year end, you may want to consider adopting that practice. The time you save in a soft close, by not truing up every accrual and reserve balance, should make closings smoother.
After an acquisition it is imperative that any people who are new to your closing process are thoroughly trained and understand what their responsibilities are.
Having well-trained, competent people in the right positions is key to smooth closings. Carefully review any people who will be new to your closing process. Make sure they are the right people for the jobs they are in and provide appropriate training.
If your company routinely closes on a tight schedule but the company acquired has a more casual attitude toward closing schedules, you may have a cultural barrier to overcome. Cultural differences can be very difficult to resolve. You may need to have additional training, change personnel, or find a happy medium which still allows you to meet your closing requirements.
POLICIES AND PROCEDURES
It is essential to identify differences in accounting policies and procedures prior to closing. The differences need to be assessed and decisions made as to how they will be handled post acquisition. Any changes should be clearly communicated and explained to all concerned.
Communication channels and devices should be checked ahead of time to make sure there is compatibility and access when needed. This can be particularly important if the acquisition is outside your country or located a number of time zones away.
The company you acquire may operate on different business systems, and for various business reasons it may make sense for them to continue using different systems. Consideration needs to be given to how to sync and pull financial information from their business systems.
Data for accounts receivable and other accounts needs to be pulled from the disparate business systems. Consolidating software is available which can seamlessly pull the data you need. The software is cloud based which can help to facilitate your closing process.
Lockstep Collect is a leader in cloud-based and premise based software solutions, and an experienced software partner that can sync information from virtually any business software application.