The Invaluable Benefits of Transparency in the Financial Close

Blog post

As a corporate finance leader, you regularly strive to deliver useful, timely data to support decision makers inside and outside your organizations. To that end, the close process must be robust and controlled to provide a reliable snapshot of company performance. Yet how much do you really know about your month-end close process? About the details and due dates and deliverables? How much can you really see?

Lack of Visibility is a Big Concern

A recent CFO research survey of 158 U.S. senior finance executives found that hitting deadlines and identifying and addressing workflow bottlenecks are the biggest concerns keeping them up at night.

At many small- to medium-sized companies, the financial close process has evolved organically from, shall we say, humble beginnings. As a result, the process often lacks rigorous definition or documentation—living only in the institutional memory of longtime employees who “just know how things get done.” Worse yet, any attempt to make improvements to this mission-critical function is thwarted by a lack of real-time visibility into its inner mechanics. Despite the best efforts of daily calls to harmonize the close process,  checklists remain scattered throughout the department and status updates arrive in asynchronous emails—if they come at all.

It’s hardly surprising, then, that accountants tend to sleep fitfully, if they sleep at all, during period end. After all, when your process is a “black box,” what you don’t know might hurt you. Undetected bottlenecks could interfere with an important deadline. Overly rushed tasks might go unnoticed, compromising the accuracy of results and leading to ineffective decision making, material misstatements, or audit adjustments. A combination of opaque practices, poorly defined controls, and impeded oversight could even result in fraud.

Let There Be Light … In the Financial Close

It’s bleak stuff, but as the old saying goes, “sunlight is the best disinfectant.” In other words, improving transparency around your close management is essential to improving the process itself. The benefits of a well-defined, end-to-end process include:

  • Timeliness: Closing the books on time every month improves the efficiency and effectiveness of the finance department.
  • Coordination: Ensure the entire team’s efforts are in sync and on target, with the right people executing the right tasks in the right order.
  • Accountability: Create ownership and responsibility with enforcement of a close calendar.
  • Control: Continuous monitoring of tasks means you’re always ready to respond as challenges and opportunities emerge.
  • Accuracy: Automating transaction matching improves accuracy of numbers and balances, boosting trust in the financial statements. Read how one customer gained more visibility and control over the financial close.

Don’t Lose Sight of The Big Picture

Of course, shining a spotlight into the dark, cobwebbed corners of your close process isn’t just about enhancing oversight; it’s about delivering insight. Today’s finance functions are under increasing pressure to bring added value to their organizations, while doing more with less. Where timely, accurate data was once enough, they’re now expected to provide analytical understanding and strategic vision.

A highly disciplined and coordinated close management process can liberate the office of finance from the minutiae of the daily grind to focus instead on the big picture. Instead of processing transactions, enforcing controls, driving compliance, and churning out historical reports, they can focus on helping the company improve financial results and attract capital. What a concept!

As your company continues to grow, it will be critical to strike a balance between responding to immediate demands and thinking more strategically about how to create sustained value over the long-term. As a finance and accounting leader, your expertise in not just producing but interpreting data will be invaluable. You’ve been in the dark long enough. Let there be light.

The Adra Task Manager software solution brings visibility and control to your close management. For more information, read more about the Adra Suite of Solutions.