The Three Key Components of an Efficient Monthly Financial Close Process
Speed is a result of innovation. After all, if no one had invented the wheel, humanity would be getting around much more slowly today. Similarly, in the world of Finance & Accounting (F&A), you need to innovate to move toward a more efficient final close process.
The faster you close your books, the sooner you can move on to higher value-added tasks, such as data analysis and strategic planning for new opportunities your business wants to pursue. To that end, this blog covers the three components needed to achieve an ideal monthly financial close process: people, process and technology.
The Right People
Today, one of the hottest buzzwords being discussed is automation. Automation ensures everyone is using the optimal processes and you have the right controls in place to streamline compliance. This allows your personnel’s skills and strategic capabilities more time to flourish instead of being used to simply process data.
Remember, when selecting your team, choose those who possess not only optimal skills, but also the ability to adapt to change.
As your organization continues to grow and mature, your team’s processes will need to be ready to adapt. Standardized workflows enabled through automation grant you more agility and scalability in times of organizational change, like upcoming mergers, acquisitions or a department reorganization. For innovation to be successful, you can never rest on your laurels.
In addition, each successive working generation is motivated differently toward completing their goals. In fact, a Hackett Group study states that with an automated financial close, you are able to return 65% of their time by empowering them with a solution that allows them to focus their time and effort on the value-adding activities we identified earlier. Since the right people make any transition smoother, let’s move on to the framework needed to achieve efficiency in your monthly financial close process.
The Best Process
Trying to leverage technology to enable a flawed process is a common mistake organizations of all sizes are making today. Specifically, many companies are trying to deploy automation for simplicity and expediency. However, the majority are just making a bad process run faster – exposing them to severe financial risk.
You need to walk well before you can run, or you’ll just end up tripping over your own feet.
For this key step to be accomplished, it’s important to look for an automation solution that encompasses all critical components of the financial close process, such as general ledger and operational reconciliations, also known as matching or, journal entries, close management, compliance and disclosure management. A comprehensive tool allows you to address all key areas, and completely move away from an ad hoc process to a well-defined, controlled and compliant period end. When the books are closed, this is the only way you be confident that your financial statements are reliable.
The Best Technology
As the office of finance rapidly moves from a back-office function to a strategic force in the business, it is critical that the technology deployed allows them to better help drive the strategic direction of the organization. Without a holistic technology solution integrated with your ERP to enable transformation today and tomorrow, your finance organization will face severe risks due to the lack of visibility, standardization and control.
And, by leveraging an automation solution coupled with RPA, you can effectively manage and view a single source of truth for your company’s financial performance.
F&A teams are too well-educated today to be simple number crunchers. Still, their heavy and repetitive workload around the final close has contributed to this view. Now with automation, you can eliminate low-value, menial work to free up your high-value resources to become strategic accountants that drive the business forward through insights into your financial performance and future. Once you have these three components in place, you can begin to realize efficiency gains from an improved monthly financial close process.
To learn more about automating your month end close, check out our solutions.
Written by: Chelsea Downey