The Financial Close is a Journey - Own It

What do you call a financial controller who works nights and weekends, doesn’t go out for lunch, and rarely takes a vacation? Lazy.

While this is a classic industry joke, it’s all to relatable for many finance professionals, who are often tasked to do more (in most cases a lot more) with less. Over the last 2-3 years, there has been an upward trend of CFOs resigning, in part due to these increased pressures.

However, there is good news. Most finance organizations have a common goal - the production of accurate financial statements in an expedited manner. They want to reduce their risk and time cost. Successful financial organizations have begun to change the paradigm surrounding the close process; they understand that it is a necessary means to an end. Just as important, they see it as a journey – one that they can embrace and own.

Easier said than done, right? Wrong – it’s easier than you think.

However, you must first understand the stages of the close process and then identify were your organization is on its journey. Once those two steps are accomplished, owning the journey becomes easier.

Here is a quick overview of the 3 stages that constitute the Close Process:

Stage 1 Manual & Siloed – Your close process is overwhelmingly manual. Your team has an over-reliance on spreadsheets, binders, and highlighters. Some of the downsides associated with this stage include diminished transparency into processes and controls, lengthy close periods, and reporting risks.

Stage 2 Consistent & Documented – Your close process is about 50% manual, but you have started to add more structure and centralized processes for greater visibility and control. Downsides in this stage relate to reduced time for value-added tasks and (while you are moving in the right direction) a lack of complete accuracy and trust in your financial statements.

Stage 3 Enhanced & Automated – Your close process leverages technology to optimize results and effectiveness. There are tremendous upsides in this stage that include high trust in your financial statements, scalability, and high visibility into processes and controls.

If you are in Stage 3 (or a derivative thereof), you are reaping the benefits of an optimized close process and delivering accurate financial statements in an expedited manner. Congratulations, you are trending ahead of your peers. Now, you are tasked with sustaining growth and improvements moving forward. This sustainability can only be achieved with periodic evaluation of your tools, processes, and people.

If you are in Stage 1 or 2, your goal should be to implement changes that will help drive incremental improvements and move you along the continuum in the right direction.  It can be as simple as creating a process that identifies owners, tasks, and status. This can provide immediate insight and control, as well as reducing the number of days in the close process.

Don’t think the number of days it takes your team to close is a problem? Think again. The finance team needs to be a platform for company growth – not an obstacle. In today’s business environment, your team is expected to identify growth opportunities, improve analytic capabilities, and help drive company strategy. In a recent CFO study, the top three finance team priorities included:

1. Budgeting and forecasting;
2. Identifying opportunities to improve the business; and
3. Executing company strategy.

The financial close process is a journey. If is not optimized for improvement, the end result can yield more time, more frustrations, and more errors. Own your close. Interested in learning more about owning your close process? Register for FEI's upcoming webinar, The Financial Close Process is a Journey-Own It on October 23 from 2-3pm (EST).