For many rental companies, month-end close is a time-consuming process. Average businesses (across all industries – not just rentals) spend 6.4 days on month-end close; bottom performers spend 10 full days on the process. On the other end of the spectrum, though, top performers close their books in just 4.8 days, leaving far more time for their accounting and finance teams to work on other projects.
So: how can you bring your rental business into the top-performer range?
The first step toward improvement is understanding where you’re currently spending the bulk of your time. A typical month-end to-do-list includes:
During your next month-end close, track how much time you spend on each of these processes. From there, you can identify which tasks take up the bulk of your time and develop strategies for improvement.
Automatically running A/P and A/R reports can help speed up your month-end close process. InTempo’s accounting software for rental businesses, for instance, can automatically deliver depreciation reports after your cycle bills run. The next morning, a journal entry will be posted with the corresponding information – without your team having to create it manually.
Similarly, recurring GL batches and AP batches can auto-populate fields that you’d otherwise have to enter manually. With recurring expenses such as payroll, rent, and utilities, you can create and post the entry once, then update the dollar amounts on recurring batches each month. Or, if desired, you can have your AR batches automatically posted once it is entered and closed, saving you the extra work of posting the batches manually.
A streamlined chart of accounts can make for a faster and less stressful month-end close. This is especially true for rental businesses with multiple business units (e.g., one that recently acquired a smaller business with their own chart of accounts). If it’s been a while since you’ve reviewed yours, take some time to clean up and consolidate your options. If you’re managing multiple business units, consider implementing a standardized naming convention with unique identifiers for each location.
When you’re a small team, it’s easy to keep processes in your head. But, as your team grows, critical information can fall through the cracks. Meanwhile, your senior team members have to step away from their normal responsibilities to train (and re-train!) newer employees. Thorough documentation lets you reduce future training initiatives, more easily transfer knowledge from team member to team member, and ensure that each team member has a clear picture of their responsibilities throughout the entire process.
Pre-closing activities, such as automatically adding all accounts payable bills and accounts receivable invoices to your system throughout the entirety of the month, can speed up the final close process. So can:
Make sure these processes are part of your normal routine to reduce the burden at the end of each month.
If you’re using a third-party credit card processing program, you’ll have to manually match your credit card receipts to the corresponding transactions. Collecting this data from two separate systems is unnecessarily time-consuming. However, using a rental software system with built-in payment processing functionality keeps all the data in one place for a faster reconciliation process.
You may be used to handling the entire burden yourself – but don’t discount the impact of outside help. An impartial review of your processes can help you spot inefficiencies you might otherwise be blind to, simply because of “the way things have always been done”.
At InTempo, we’ve worked with hundreds of independent rental businesses, helping them overcome the unique accounting challenges that they face as they grow. With decades of experience in the back office and behind the counter, our Professional Services team can share meaningful improvements to help you close your books more quickly, while making the most of the tools that come with InTempo’s integrated accounting package.