Does it take over a week to complete month-end close?
Still, doing things ‘the way they have been done for years’?
These days, stakeholders expect near real-time information on a company’s performance and the demand to publish accurate and timely accounts brings enormous pressure for finance professionals.
The month-end close is a process which verifies all relevant transactions and ensures that assets, liabilities, expenses and receipts are included in the relevant period. This ensures managers have a complete and accurate picture of the company’s actual performance, compared with their forecasts and allows them to steer the business in the right direction.
As well as internal executives, many external parties such as investors, lenders, and regulators are also interested in the month-end reports. In addition, public companies have a statutory obligation to publish quarter-end financials which are scrutinized in great detail by analysts whose opinion on those financials can move the share price.
This means accuracy is just as important as timely reporting if the numbers are wrong the implications for a company can be catastrophic.
With the increasing use of software and technology in finance, you would think the average time to close should be reduced but in fact in recent years the opposite happening. Company executives blame these longer financial close times on the increasing levels of internal checks and reviews they want doing prior to any publication. Also, the financial technology hasn’t lived up to the needs of Financial controller or director who requires a consolidated platform for holistic corporate performance management.
Why is Financial closing so time-consuming?
Typical month-end procedures include depreciating fixed assets, valuing work-in-progress, accruing all relevant expenses and raising invoices to reconcile intercompany accounts. These adjustments cause masses of manual journals which need to be processed, checked and then reversed after the month-end close. Processing such large volumes of transactions manually is laborious and working to tight deadlines only adds to the misery and pressure of a busy finance department. Manual processing under stressful conditions is highly likely to result in errors. Deploying technology can help elevate this issue but without process improvements, it’s not an easy fix.
Efficient monthly closing needs the right systems in place
There are several areas where financial closing strategies fall down:
Limited defined processes or procedures
Doing things ‘the way they have been done for years’ doesn’t mean they are the most efficient or they can’t be improved. Documenting processes and protocols will help to highlight any system deficiencies or inefficient closing processes.
A lack of standardisation across the business.
This is especially significant when an organisation has multiple branches or subsidiaries and financial consolidation is an issue. Standardised processes, templates and procedures will minimise the duplication of information, how it is processed and presented.
Not having access to real-time data. Using automated transaction software will speed up the month-end close as items are allocated and posted in real-time. Typical time-consuming tasks such as processing employee expense reports or bank reconciliations are done instantaneously and reduce the possibility of errors.
Automated processes help business close faster:
The technology exists for companies who want to streamline their close process.
Automation can speed up the month-end close but companies should ensure they use the right kind of technology for their business and make sure it is properly implemented.
Benefits of automating your financial closing process:
- Real-time visibility overall income and expenditure
- Standardised process used by the entire company, wherever the geography
- Minimal data entry for finance teams
- Data is all in one place and one format
- Assurance of regulatory compliance at all times
Financial Technology can help any company looking for a faster financial close but executives should fully investigate all the automated solutions and all the suppliers thoroughly to help them work faster, deliver better quality data, and comply with all regulatory requirements.
CCH Tagetik not only meets all the 5 pillars of Financial Close (Reconciliation, Data loading, Consolidation, Reporting and Adjustments, Disclosure) in one single solution but also addresses FP&A needs for finance and operations in one single application.
With CCH Finance Transformation Platform you can also streamline all your financial processes including budgeting and planning, reporting and disclosure, profitability analysis and regulatory requirements.
- Align finance and operations. CCH Tagetik promotes control and collaboration with built-in workflow, communication tools, and an audit trail.
- Choose your deployment. Whether you choose the cloud or on-premises solution, you get the same functions and capabilities.
- Manage financial and non-financial data. Expand your insights by exploring financial and operational results across unlimited dimensions.
- Get ready for the future. CCH Tagetik sets a foundation for artificial intelligence, machine learning, and predictive analytics.
To find out how you can reduce time spent in month-end close, contact us using the form below.
About CCH Tagetik
CCH Tagetik is a financial and regulatory reporting tool that has been adapted for lease management. Over 200 global organisations already use the CCH Tagetik solution. It empowers decision-makers and business users across all departments, helping them work smarter, streamline business collaboration, and make insight-based decisions with confidence.
CCH Tagetik is the expert in CPM best practice and we have continuously invested in talented experts to help companies support their growth, enable their finance transformation and optimize their business value. Our 500 certified consultants, across the globe, are ready to support business innovation journey and help our clients migrate quickly.