Why you should adopt a faster and more cost-effective financial close and reporting process

Increasingly stringent requirements and deadlines from the stock exchanges around the world. Rapidly changing economy and surge in business complexities. Deadlines are shorter. Manpower is leaner. But the bar is high and there’s a need to produce more accurate, reliable reports that are compliant with ever-changing standards.

Keep reading to find some tips and tricks for helping your organization leverage faster and more cost-effective financial close and reporting processes to keep up with the changing business landscape.

What are the benefits of fast close and reporting?

Forget how the saying goes—slow and steady doesn’t always win the race, especially when it comes to financial close and reporting. From a company’s perspective, there’s better data integrity, quality reporting, and faster information available which propels management to make smarter decisions and think strategically when forecasting.

A faster close and reporting process offers a competitive advantage in the market, enabling you to respond more quickly to business needs and conduct more value-added analysis.

In any case, with a faster close, fundamentally good processes and systems, you can rest assured that you will be ready—and maybe even “fearless”—for what the future holds.

A process built for problem-solving

Groups struggle with intercompany reconciliations, along with the extensive number of adjustments that are seemingly becoming more complex over time due to changes to local and group reporting standards, late submissions by local entities, and incorrect data.

The root cause of late and incorrect submissions from entities lies in insufficient guidelines and tools for the entities to perform their close process in a more effective and automated manner. The good news is that there are real opportunities for improvement you can jump on.

How to optimize the financial close process

Here’s a list of some real actions you can take to optimize your financial close process, starting from the entity level, moving on to the group, then wrapping up with the reporting stage. As a framework, all the proposed actions can be categorized into process-driven, people-driven, or technology-driven steps.

From the entity’s perspective:

• Setting up roles and responsibilities, assigning more transparent KPIs to people, and rewarding them accordingly (for example, based on their successful submission).
• Streamlining group-wide policies and procedures for the entity to follow, such as how to handle reporting standard differences, how to treat intercompany differences, and defining a materiality threshold.
• Reducing manual work and automating some manual entries on recurring items such as your depreciation, payroll, and accruals within your ERP system.
• Shifting as many activities as possible to the pre-closing stage. Solutions like the Intercompany Reconciliation tool will help you automate your intercompany matching, and ease the reconciliations of AR, AP, and accruals.
• Creating a clear close calendar—then sticking to it.
• Communicating proactively to all parties involved in the close process.
• Creating a checklist that should be updated by all stakeholders as a form of communication.

From the consolidation perspective:

• Taking a deeper analysis on and standardizing your chart of accounts across the organization by considering all parameters required for consolidation and group reporting.
• Streamlining the group structure--don’t keep dormant companies for long.
• Adopting more centralized data submissions of all entities and avoiding unnecessary sub-consolidations.
• Setting strict materiality guidelines with the agreement of auditors.

From the technology perspective, the following is just a snapshot of some of the automated tasks a consolidation tool can support your efforts with:

• Automating controls from entity submissions to consolidation level with validation rules.
• Monitoring workflow, status, and validation results along with exception reports.
• Automating reconciliations for intercompany balances and transactions, as well as errors/warnings.
• Automating financial and management reporting with built-in analysis, user-defined and Excel-linked reports.
• Automating currency conversion.
• Automating eliminations and adjustments.

With all this in place, your financial close can be done more efficiently. But most of all, because you have a system and method in place, you won’t have to wait until the 12th month and can start preparing ahead in month 10 or 11.

With a system and a centralized database, you can pull any data across different periods easily in a few minutes time and transform them into reusable templates. This is something you only need to do once: simply change the period, refresh all the templates, and you’ll be good to go.

Optimize your group close and reporting process

From a technology standpoint, there are tools available to help you achieve the group close and reporting process optimization, from end to end.

At the end of the day, technology helps you better manage your financial reports and disclosures, providing a complete solution to effectively help people design processes and deliver a faster financial close and reporting for your organization.

Note: this article was originally published on LinkedIn.