There’s no such thing as a single right answer when it comes to the financial close process. Every business and organization will have different priorities for their close, and even the same company will change their priorities over time. However, there are ways to make the process as close to seamless as possible.
Interested in streamlining your financial close? We’ve collected the best accounting practices for a successful financial close process below.
Effective communication makes the financial close process significantly easier. And if your communications about your financial close process only include the people closest to it, you’re not casting a wide enough net. Bring in key personnel from other areas of your organization to learn from their perspective on the financial close process and your business as a whole. Chances are, there’s a lot of value they can add to the conversation.
No successful financial close process is complete without fully-articulated goals set by controllers, accountants, and financial leadership. Once you’ve made communication a priority, turn your attention toward setting goals for the financial close. Do you want to make your financial close process more efficient? Or is it a greater priority to focus on the accuracy and reliability of data? The answers will be different for every organization, but strategic goal-setting is key to a successful financial close.
Organize the close
When you organize your financial close, the entire process becomes easier. Consider which activities conducted at close can be performed earlier in the process, such as calculating accrual rates. If you analyze which activities are performed at the end of the month, quarter, or year, you’ll find there are plenty of opportunities to move those activities up to the midpoint of the period, alleviating some of the pressure from the days of the close.
Developing consistent systems and processes makes the financial close run more smoothly. While automating which steps you’re able to is ideal (more on that below), putting in place a series of effective, efficient systems tailored to your close process for those steps you can’t automate will save you time.
Document the process
Closely document your financial close process to improve your record-keeping and make it easier to do things like set goals and priorities and organize your financial close. Maintaining this level of internal control provides you with a clear idea of where you’ve been and of what has worked and what hasn’t, which makes it easier to plan for the successes of future closes.
When reviews are incorporated into the financial close process, it becomes significantly easier to document both successes and opportunities for improvement. Conduct pre- and post-review sessions with key players before and after every financial close to ensure that the whole team is on the same page every step of the way.
Automate when possible
A growing number of businesses are turning toward automation for their financial close processes, and it’s easy to see why. Automating processes reduces errors and frees up time. It gives accountants and controllers peace of mind when reporting on the financial close to senior leadership.
Automation is no longer about using spreadsheets and updating a master Excel file. Technology has improved vastly and there’s no reason for mid-market or (especially) enterprise organizations to send spreadsheet back and forth to complete their close. In fact, it can end up costing you money and you might not even realize it. Some of the costly problems you might run into, include…
- Data consistency issues
- Inaccurate forecasting (due to data inconsistency)
- Longer close cycle due to manual processes
- No data governance
This doesn’t mean you shouldn’t use Excel. It’s an excellent for personally use and many financial close automation technologies even offer add-ins and extension specifically for Excel.
Your automation tool should be tailored to fit your needs and help improve your processes. There are many solutions out there to automate your financial close as well as other finance related processes. These include solutions that fall under the umbrella of Enterprise Performance Management (EPM), including OneStream XF and Oracle EPM Cloud and on-premises technologies. You can learn more about those here.
Choosing a solution can be a difficult and lengthy process, especially when you’re so close to the problem. Many organizations choose an EPM advisor to come in to evaluate their processes and help them choose the right vendor. It’s one of the many advisory offerings at US-Analytics. If you’re interested in selecting a vendor, now is the time act — our current offer is valid until Jan. 1, 2020 and allows you to apply the cost your assessment to future implementation projects.
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The financial close process is stressful and rigorous, but there are options for businesses of all shapes and sizes to improve their close by taking such actions like prioritizing communication, organizing the close, and automating what functions they can. As your next financial close nears, consider what you can do to simplify the process and make the most out of your data.