Every CFO would like to believe that they consistently maintain tight control over the accounting team and their accounts and reconciliation processes. But in reality, this control can be extremely limited.
In our recent market survey, we discovered that most CFOs admittedly continue to struggle to gain control over their monthly close process. In fact, an overwhelming 92% of finance staff surveyed in America and Europe said that they were not satisfied with the quality of the month end close process.
Additionally, the survey results identified five key areas where CFOs and financial departments continue to lack full control:
Complete Visibility of the Financial Close Process
Largely because of the increased scrutiny in the wake of the financial crisis, CFOs are now expected to have not only high-level but complete visibility over the close process. However, according to our financial close benchmark survey results, only eight percent of finance staffs are satisfied with the visibility they have to their financial close. This means that the vast majority of CFOs continue to be plagued by delays, errors or non-compliance.
The accuracy of your reported numbers is the biggest part of compliance. Laws, such as Sarbanes-Oxley, HIPAA and more, demand it, businesses can’t reliably make decisions without it and everyone takes it for granted.
However, in our survey of financial professionals, we found that only 28% of CFOs trusted the accuracy of their own reported numbers due to the flaws in their month end close process. Even worse, the staff members who are actually executing the reconciliation process trusted the resulting numbers even less.
All CFOs aim for comprehensive compliance with internal and external regulations, but achieving it is very rare. For example, a quarter of all finance teams have no secondary approval process. This leaves the door wide open for errors, material misstatements and fraudulent behavior. Coupled with a lack of both visibility and real-time information, CFOs will repeatedly struggle to have their finance team fully compliant throughout the financial close process.
CFOs understand the importance of improving the bottom line to drive growth more than most. Increased focus on the bottom line usually means trimming all unnecessary expenses and improving productivity and efficiency. However, this can seem like an impossible task.
The majority of financial professionals already work overtime during the monthly close process and typically do not close the books within the first three days, well past its due date. Both the efficiency and effectiveness of this process must be improved to create a smooth and reliable month-end close.
Faster Financial Close Process
Currently, a massive 79% of finance teams are under pressure to complete a faster close process. Astonishingly, nearly two thirds of finance departments are using only spreadsheets to complete their account reconciliation process. Spreadsheets may be a useful and relatively cheap tool, but they are certainly not the swiftest or most reliable way to reconcile thousands of accounts by the end of each month.
When equipped with a faster close, CFOs can then focus on achieving complete visibility and compliance and their finance staff can be more productive overall, supplying real-time information to their executive teams.
By being open to new solutions for addressing these five areas, CFOs will be able to ultimately achieve a faster, more reliable, and comprehensively compliant month end close process. It’s time to identify which, if not all, of these five challenges holds you back from seizing control of your own close process.
Written by: Ashton Mathai