The financial close process is often slow and error-prone for large enterprises due to challenges like siloed data, manual tasks, and complex workflows. Here are six ways to overcome these financial close bottlenecks.
Financial close is a critical, recurring process that involves reviewing and reconciling key financial reports, such as cash flow statements and balance sheets, to provide a comprehensive view of a company’s fiscal health. However, the pressure to close on time while ensuring accuracy and compliance makes this process complex and challenging for enterprises.
With multiple departments and stakeholders involved in reviewing and approving financial data—often across various legacy systems and ERPs—large enterprises often face critical challenges, such as:
- Over-reliance on legacy systems, increasing the risk of errors and anomalies.
- Siloed data and a lack of dynamic tracking solutions, making documentation management inefficient.
- Absence of standardized workflows, leading to misalignment and communication gaps between teams.
To help large enterprises streamline their financial close process and mitigate these challenges, here are six effective strategies to improve efficiency and accuracy.
Ensure Consistent And Accurate Financial Data
Accurate, consistent and up-to-date financial data across departments is one of the critical elements of a faster close. The best way is to have an integrated system that will easily integrate with existing source systems. This will not only help businesses gather and sort information but also remove all siloes, ensuring complete visibility and easy access to anyone whenever needed.
Dashboards in advanced financial close software ensure accurate, consistent, and up-to-date financial data by integrating with existing systems, eliminating siloes, and providing real-time visibility across departments. Automated tracking and proactive alerts help teams identify bottlenecks, resolve delays, and maintain data integrity, driving a faster, more efficient close. With centralized dashboards, finance teams can take immediate action, ensure accuracy, and accelerate financial close with confidence.
Build A Robust Close Checklist
The financial close process is extremely tedious, given time-consuming, error-prone tasks and complex workflows. This, coupled with the intense pressure to close books on time, often leads to businesses missing out on major elements, reviewing critical transactions, and discrepancies in financial reports. The only way to eliminate this is to have a comprehensive close checklist that will help businesses keep financial close on track, simplify workflows, schedule journal entry posting, reconcile accounts, flag errors or anomalies, and complete close without delays.
Additionally, automated workflow accelerates continuous close by streamlining task approvals, enforcing accountability, and eliminating bottlenecks. With a customizable approval process, tasks move seamlessly from Preparer to Reviewer to Approver, ensuring accuracy while reducing manual follow-ups. By streamlining approvals and ensuring every task is reviewed and validated before posting to the ERP, businesses increase efficiency, minimize rework, and drive a faster, more controlled close process.
Consolidating At One Place For Better Collaboration
By consolidating trial balance data and general ledger numbers in one system as a single source of truth makes reconciliation and reporting a lot easier. Businesses can ensure that their financial information is complete, thereby saving time from checking and fixing data.
Automated financial close software eliminates manual work, ensuring real-time accuracy, and enhancing collaboration. With pre-configured integrations, teams can seamlessly pull data from ERPs, CRMs, and other systems, ensuring computations are always based on the latest figures. Task tracking, real-time notifications, and integrated workflows keep teams aligned, reducing delays and errors. By streamlining data processing and team coordination, businesses achieve a faster, more accurate, and stress-free financial close.
Improve Reconciliation And Transaction Matching
The role of transaction matching and reconciliation goes beyond being a mere accounting process. Accurate and consistent reconciliation is critical for faster close, ensure error-free transactions, and ensuring transactions correspond to invoices and purchase orders.
To achieve this, businesses need solutions that will not only automate reconciliation and transaction matching and journal entry posting but also detect errors as and when they arise. Features like account reconciliation, cash accounting and journal entry posting automation helps them reconcile in no time while ensuring accuracy and efficiency across the process.
Automated journal entry preparation, posting, and approval workflow streamline the entire financial close process, ensuring faster, more accurate reconciliations with minimal manual effort. By automating routine tasks, it eliminates errors, accelerates journal entry posting, and maintains seamless integration with ERP systems.
Similarly, features for cash-based accounting reduce manual work, and ensure accurate reconciliation. By seamlessly tracking cash inflows and outflows, it eliminates errors, reduces delays, and enhances visibility into cash positions, supporting faster close cycles. With real-time updates and automated journal entries, it minimizes discrepancies, enhances cash flow accuracy, and ensures compliance.
Ensure Complete Compliance With Accounting Standards
Ensuring complete compliance with regulatory requirements like GAAP, IFRS and SOX ( Sarbanes-Oxley Act) is key in accounting. It helps unlock transparency and visibility while increasing investors and stakeholders’ confidence in financial reports.
The right financial close software comes with features for robust SOX compliance, providing right controls with SOX checklist and testing. It streamlines the documentation, approval, and audit processes, reducing manual oversight and minimizing compliance-related delays. Automated controls and real-time tracking of transactions ensure transparency and accuracy, eliminating bottlenecks and enabling faster close cycles.
Identify And Remove Discrepancies Early On
Identifying and resolving discrepancies in financial reports is crucial for a faster close as they lead to delays, inaccuracies, and further inconsistencies in final audit. When ignored or left unnoticed, these errors result in incorrect financial statements, misstatements, and loss of investors’ trust, thereby complicating the close process and extending timelines. It’s immensely critical for enterprises, therefore, to ensure their financial reports are free of anomalies and align with the ERP systems, reducing the need for back-and-forth corrections.
Features like variance analysis helps resolve discrepancies quickly by providing real-time insights into variances between actual and expected financial results. By automating the analysis of financial data, it identifies anomalies or unexpected fluctuations, enabling finance teams to pinpoint discrepancies early in the process. This allows for immediate corrective action, reducing the time spent on investigating and rectifying issues.
Accelerate Continuous Close With The Right Financial Close Software
Despite sophisticated and advanced accounting software, enterprises still struggle with streamlining the financial close process. Businesses need solutions that will not only automate critical processes but also integrate with existing legacy systems, ERPs, current dashboards and other data resources, making accessing and arranging financial information for reports easier. By building a robust financial close infrastructure, businesses will enable their accounting and finance teams to benefit from a centralized, single source of truth while managing crucial accounting functions like automating journal posting, identifying errors, and updating accruals.
This is where automated financial close software comes into play. A right financial close solution is designed to create detailed month-end close plans with specific close tasks that can be assigned to various accounting professionals, reducing the month-end close time by 30%. The workspace is connected and allows users to assign and track tasks for each close task category for input, review, and approval with the stakeholders. It allows users to extract and ingest data automatically, and use formulas on the data to process and transform it.