If there's one hallmark of the digital age, it's a need to get things done quickly. Think about every incremental advancement in technology over the past decade - whether in computers, mobile phones or media delivery services like Netflix, consumers are always demanding faster access to whatever content they are interested in. In business, the executive team, board and investors are no different.
The quicker your various operations and processes are, the sooner you can move on to other concerns that need to be addressed. That means a more efficient overall workflow, and potentially better financial results.
Speaking of which, it's those times of year when more financial reporting is required that things can really slow to a crawl. Whether monthly, quarterly or annually, speeding up the close is likely to be on the minds of finance departments.
Companies unable to identify incoming challenges in advance may not have the time to adapt.
Why is closing the books faster so valuable?
Those who manage financial consolidations for a living know how challenging and complex this iterative process can be. Every organisation can benefit from saving time and streamlining here and there, but as far as financial reporting is concerned, there can actually be significant effects from any errors or missed deadlines. According to PricewaterhouseCoopers (PwC), demands for speedier reporting can come from both external stakeholders - regulatory bodies for example - and internal.
Should your finance department be equipped to deliver accurate information faster, there's greater potential for the company's decision makers to leverage that data into their decision making. As PwC notes, companies unable to identify incoming challenges far enough in advance may not have the time or ability to adapt, leaving them vulnerable.
By speeding up the close, employees in the finance department will be able to move quickly onto the next task, and those in the higher levels will be able to adjust strategy with greater agility.
How can organisations speed up financial close?
Given the relentless progression of the year, with one financial deadline after another, allowing your finance department to put each reporting period behind them sooner can be hugely beneficial. So, how can your business make the leap to more efficient closing?
The first step in shortening the financial close is to make it a priority. To speed the close, begin by examining the existing process to identify opportunities for improvement. Process rationalisation, staging of the process and simplification are keys to a faster process. Studies from Ventana Research suggest, however, that the secret to speedier financial reporting may be found in an organisation's software solution used in this process. In fact, their findings show that 53 per cent of businesses using effective finance analytics software manage their quarterly close in six business days or less, compared to just 38 per cent still using a traditional spreadsheet process.
Similarly, Ventana also found that only 32 per cent of finance departments using spreadsheets were happy with their current system, while a comparatively impressive 78 per cent of dedicated software users were satisfied. That result can likely be attributed not just to the speeding up of the closing process, but the ease-of-use and accessibility inherent in modern finance analytics as well.
BPM Partners suggest that there are several indicators that your organisation will soon need a more robust and reliable financial consolidation and reporting solution. These are:
- More than one general ledger, transactional system or ERP system
- The possibility of acquiring another company
- Currency conversions and/or subsidiaries with partial ownership, intercompany transactions
- Alternate organisational hierarchies or rollup structures
- Preparing for an IPO and/or external audit
