Optimizing the financial close: Uncovering more timely and actionable data
WHITE PAPER |
For many middle-market companies, the financial close process represents a missed opportunity, mistakenly viewed simply as a low value-added, recurring requirement. However, as more emphasis is placed on profitability, cash flow and risk management, companies are under pressure to improve financial planning and analytics. Reducing the time to complete the monthly, quarterly and year-end close process enables management to be more proactive and make more informed business decisions.
With tighter budgets, fewer external regulations and less formalization of financial processes, middle-market companies tend to have less accountability in the close process. Organizations also often invest heavily in enterprise resource planning (ERP) systems to process transactions, yet rely on spreadsheets to translate transactions into management reports. In other cases, disparate ERP systems slow data flow, lower-value activity is performed during the close, and companies fail to monitor process performance to identify issues.
However, companies can implement several strategies to introduce improvements to the close process. Closely evaluating people, processes and technology can help to understand current gaps and how to address them. Optimizing the close process can result in several key benefits, including:
- More informed decision-making
- Cost savings
- Stronger company morale
- Improved use of technology
A robust ERP platform is a key tool to strengthen the financial close process; however, finance leaders must understand the capabilities of their system and ensure available functionality is utilized to unlock the tool’s full potential.
Instead of considering the financial close process as a burden, organizations should leverage the function as a catalyst for process improvements. Implementing changes to people, processes and technology can reveal the untapped value of the close process, yielding more timely and actionable data.