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3 Core Phases to Evaluate Your Close Process Quality

Ad Hoc, Reactive, and First-Class

There’s no doubt that accounting and finance teams are crucial to every organization; they document all data flowing into the organization and provide updates on the business’s financial health.

However, though the Office of Finance plays such an important role in the organization, its technology stack typically fails to properly align with its responsibilities. Front-office technology adoption is often prioritized over back-office teams like finance and accounting. It’s apparent that many back-office operations still stick to status quo processes and tools, like spreadsheets. Not only do those legacy tools lack the visibility and ability to scale, but they are also often susceptible to errors — significantly increasing the risk profile of the organization.

By evaluating your financial close process quality and updating legacy, manual processes, organizations can simplify and streamline back-office operations, to the benefit of the entire organization.

5 Tips to Enhance Your Financial Close Processes

Your books may be closed, but how much time and money did you lose from clinging to outdated methods? Be proactive by evaluating your financial close process now to avoid reoccurring issues later.

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Identify Your Close Process Quality: Where Do You Stand?

The first step towards your financial automation journey starts with measuring your existing close process quality. What are the current methods and technologies utilized throughout the entire close? What barriers and bottlenecks are produced from these tools as accountants progress through the close? Is your team struggling to meet deadlines? Is leadership truly confident in each financial report? Ask yourself and your team these questions to understand where your organization lies in the financial automation journey: ad hoc, reactive, or first-class.

Car Speedometer showing three phases: Ad Hoc, with speedometer in a magenta color, Reactive with speedometer in yellow color, and First-Class with speedometer in teal green color

In our Financial Close KPIs webinar, we found that 43% of attendees ranked their close process as ad hoc, while 40% of attendees rated their close as reactive — meaning the vast majority of attendees have a financial close process that does not enable them to drastically increase visibility and gain strategic value.

Without a focus on where the Office of Finance can support and enhance the business’s overall strategy, the organization will struggle to meet those future goals.

Phase 1: Ad Hoc

In the financial close process, many organizations are just now beginning the journey to standardizing and automating their financial close processes. Having an ad hoc process in place means organizations are spending a large chunk of time navigating manual methods and tools throughout the financial close. In the ad hoc stage, finance and accounting (F&A) teams are:

While this stage is heavily reliant on manual and decentralized processes, having an ad hoc financial close presents the most opportunity for standardizing and automating your month-end close.

Phase 2: Reactive

The next phase in the financial automation journey is a reactive process, meaning organizations react to any challenges, bottlenecks, and errors present in the close after the fact. While in this phase there is more visibility and standardization than in the ad hoc phase, organizations still lack a true automated and integrated solution for their financial close. In the reactive stage, F&A teams have:

  • A fragmented automation approach utilizing multiple tools, in need of a greater strategy to increase effectiveness
  • Limited visibility or standardization across processes
  • An ability to pull up metrics but only through the manual collation of multiple reporting

Phase 3: First-Class

The final stage of a financial automation implementation, the first-class phase describes an organization that has fully embraced the potentials and benefits of financial automation. Not only are the core financial close processes automated and streamlined, but F&A teams are able to strategically provide insights for financial leaders and management. First-class organizations utilize a:

“Adra makes getting it all done possible. It enables and empowers the organization to run at peak performance. With cleaner, faster data inputs comes richer, timely analysis and the ability to do high-value problem solving and strategic thinking. By allowing the technology to do what it is built to do and enabling employees to focus on more engaging and productive work, our finance team can see greater value not only from a budget perspective, but also in having a foundation from which to build or enhance a workplace culture that is more likely to attract talent and boost employee morale.” — Tom Walker, CFO of the Dallas Cowboys

Regardless of which stage of financial automation your organization is currently experiencing, it is crucial to enhance how finance and accounting teams provide strategic value to the overall business. Rather than merely providing documentation of financial records, F&A teams can go above and beyond by embracing the power of financial automation.

Written by: Alex Clem