A solid close process, system, and team provides value to an organization that is significant and should be appreciated beyond the “just a cost-center” mentality.  A solid close provides insight, visibility, confidence in the health of the organization, and the direction of where it is headed. Accurate and timely close reporting can add immense value to your organization.

Close reporting: close the books quickly, but accurately

It’s important to have an effective and efficient close. You must get the Actuals out to the business users in a sustainable and effective manner. Trust me, your analysts will thank you!

It would surprise no-one that cost-cutting efforts have impacted most organizations, especially in predominantly “cost” center departments. These cost-cutting efforts leave behind a thin team to manage the work of reporting Actual results, despite additional complexity and reduced bandwidth. Our clients have fewer resources yet they are: trying to do more, attempting to react nimbly to answer rapid-fire questions, and providing insight into results. All while working around systems not scaling or adjusting well for changing business needs. Leadership wants answers, but the means to gather them using aging systems rife with “band-aids”, is a challenge.

Many corporations struggle with how to reduce the manual efforts of their Accounting team, despite new and differing systems, or changing business needs. One of the most common statements we hear is concern about how to incorporate disparate systems without the need for additional manual efforts, or a major rehaul of their ERP system.

A common theme of concern for our clients, “We can’t just bring that data in, they are on version blah-blah-blah and we are on yada-yada-yada, and so we just give them an Excel template to capture…[insert data request here].” As a result, there is receipt of “information” but less-than-informative data for downstream analysis. Common issues:

Common Concerns

Many corporations struggle with how to reduce the manual efforts of their Accounting team, despite new and differing systems, or changing business needs.  One of the most common statements we hear is concern about how to incorporate disparate systems without the need for additional manual efforts, or a major rehaul of their ERP system.

A common theme of concern for our clients, “We can’t just bring that data in, they are on version blah-blah-blah and we are on yada-yada-yada, and so we just give them an Excel template to capture…[insert data request here].”  As a result, there is receipt of “information” but less-than-informative data for downstream analysis.  Common issues:

  • Information is Too High-Level: Excel templates are used to capture data and incorporate it into consolidated financial results, often at a level too summarized to provide informative data at a consolidated or corporate level. Sometimes this is because the templates must be “easy” enough to be filled out by teams not familiar or close to external reporting activities.
  • Communication Disconnect: Time zone differences, language barriers, and other general communication and business disconnects result in delays to obtain this data when it is most relevant to the close process (Day 1 or 2, anyone?)
  • Quality: There are often concerns around how data should be aligned to a template input cell and what is actually provided, which is further used in close/consolidation reporting at the highest levels of an organization

Mapping Technology

There is a heavier demand and reliance on technology to address nuances between different country reporting, departments, and operation needs. Today’s technology has advanced to address necessary SOX and other control requirements, while reducing manual efforts to prepare and provide external and management reporting to the organization and stakeholders.
Mapping technology allows the local or in-country GL ledgers to remain in place to address statutory reporting, while still feeding data for external/corporate reporting. We have a client with multiple versions of JD Edwards GL systems. Rather than try to undertake bringing a newly acquired entity onto JDE, a process that can take several months or more to complete, we helped our client utilize mapping technology to feed the trial balance from these systems into the corporate chart of accounts. This is a mapping exercise that is sustainable by the business, and provides the confidence that values included in Revenue really did come from source revenue accounts. It also provides an audit trail, which begins the path of data quality and confidence, not to mention reduces questions during an audit review.

Manual Effort Reduction

Consolidation systems that provide consistent elimination and translation functionality also greatly reduce the manual effort accounting teams go through to bring all source data together, without overstating the results. Several of our clients have successfully implemented consolidation solutions that ensure all currencies are translated according to an appropriate source, at the proper rate (end of month for Balance Sheet or average for P&L), and further provide elimination details with visibility into that black box of intercompany out of balance values. The reduction in manual effort over the close allows that team to provide insight into the results in a timely matter, not just prepare reports.

Conclusion

On the next installment…the value of timely feedback and just how necessary a smooth and less-manual approach to the close process and close reporting provides support to the Analytics and management.  We will discuss how to keep your finance teams from taking data out of the system to prepare off-line analysis.


A solid close process, system, and team provide value to an organization that is significant. And it should be appreciated beyond the “just a cost-center” mentality. It is the backbone of providing insight, visibility, confidence in the health of the organization, and the direction of where it is heading. Now, add an acquisition or divestiture and this throws a monkey-wrench into an already taxed close process with no room for margin of error, delays, or inaccuracies in the best of situations.

GET THE EBOOK: THE VALUE OF A SOLID CLOSE

Carolyn Faeth

Carolyn is evangelical in helping her clients align “the right tool for the job” to help your company achieve strategic goals. Whether the need is related to process improvements, technological solutions, or resource alignment, she helps her clients leverage attainable successes as part of a larger, and more cohesive global solution with measurable results.

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