Why Manufacturing Companies Should Outsource Monthly Closings

Manufacturing businesses face unique challenges when it comes to managing financial reporting and monthly closings. From tracking raw materials and production costs to ensuring compliance with industry regulations, the complexity can become overwhelming for in-house teams.

Outsourcing monthly closings offers a strategic solution to enhance accuracy, efficiency, and financial clarity.

What is Monthly Closing in Manufacturing?

Monthly closing involves finalizing financial records at the end of each month. This process includes reconciling accounts, recording revenues and expenses, closing journal entries, and preparing financial statements.

For manufacturing companies, this process may also include:

Inventory Valuation and Adjustments

Proper inventory valuation ensures financial statements reflect the true value of raw materials, work-in-progress, and finished goods. Adjustments for factors such as spoilage, obsolescence, and market fluctuations ensure more accurate reporting and compliance with financial standards.

Work-in-Progress (WIP) Calculations

Calculating WIP ensures a precise representation of partially completed goods. This process helps determine production efficiency and identify bottlenecks in the manufacturing workflow, ensuring better financial control.

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Cost of Goods Sold (COGS) Analysis

A thorough breakdown of direct production costs, including labor, materials, and overhead, helps determine product profitability. Accurate COGS reporting supports better pricing strategies and profit margin analysis.

Compliance with Financial Reporting Standards

Adhering to standards such as GAAP or IFRS ensures financial transparency and consistency. Compliance minimizes the risk of financial misstatements and penalties from regulatory bodies.

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Why Should Manufacturing Companies Outsource Monthly Closings?

There are many ways outsourcing monthly closings can benefit manufacturing companies.

1. Improved Accuracy and Compliance

Outsourced accounting professionals have the specialized knowledge required to address the complexities of manufacturing accounting. They ensure accurate WIP reporting, proper inventory valuations, and compliance with evolving accounting standards. By leveraging their expertise, businesses can confidently meet compliance requirements and maintain financial stability.

2. Enhanced Efficiency and Time Savings

Managing monthly closings internally can be time-intensive, diverting resources from core operations. Outsourcing eliminates this burden, freeing internal teams to focus on production management and supply chain optimization. External providers handle time-sensitive tasks such as journal entry postings, bank reconciliations, and generating month-end reports, allowing for smoother operations.

3. Access to Industry Expertise and Technology

Outsourced accounting firms bring not only industry-specific expertise but also advanced tools and technology. They often utilize enterprise resource planning (ERP) systems and automation to streamline financial processes and improve reporting accuracy. These firms also implement best practices for cost allocation and inventory control, helping manufacturers gain better control over their finances.

For example, a firm with expertise in manufacturing accounting can assist with implementing standardized processes for job costing or process costing. This level of specialized support allows manufacturers to stay ahead of industry trends and ensures their financial data remains accurate and timely.

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4. Stronger Financial Insights for Decision-Making

Outsourced monthly closings provide critical insights into key financial metrics. Manufacturers gain a clearer understanding of production costs, cash flow, and profitability, enabling them to optimize pricing strategies and operational efficiency. Regularly analyzing budget variances also helps identify areas for improvement and supports proactive financial planning.

Timely and accurate financial reports from an outsourced provider empower manufacturing leaders to make informed decisions. Whether it’s planning for expansion or managing day-to-day operations, having reliable financial data is essential for long-term success.

Is Outsourcing Right for Your Manufacturing Business?

Manufacturing companies should consider outsourcing their monthly closings if internal teams are struggling with errors or delays, compliance issues have arisen, or detailed financial insights are needed for strategic decision-making.

Outsourcing is particularly beneficial for growing businesses that require scalable financial support to meet increased complexity and demand.

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Choosing the Right Outsourced Accounting Partner

When choosing an outsourcing partner, prioritize firms with proven expertise in manufacturing accounting, a strong track record of compliance, and access to advanced accounting tools. Transparency in pricing and service agreements are also important elements to consider when determining a firm’s alignment with your business needs.

Ready to explore how outsourced monthly closings can benefit your manufacturing business? Contact SVA to learn more about our Client Accounting Services and how we can work together on your company’s monthly closing process.