Getting the Basics Right

“Critical” doesn’t have to mean “painful”

The consolidation and close process is one of finance’s most important functions. How you manage the close has a direct influence on reporting, planning, audit and compliance. With so many areas of the business impacted, it’s critical to get it right. Bottlenecks and errors can lead to long nights in the office, not to mention late reports to executive management.

But if every organization knows what’s at stake, why do so many still suffer through painful, inefficient closes with excessive manual processes and tedious spreadsheets? Many accountants spend most of their time simply preparing data and resolving anomalies in transaction and accounting processes – meaning they spend much less time generating reports and analysing results. In fact, Deloitte states that controllers spend 70 percent of their time on traditional tasks, such as closing the books, but would like to double their time spent strategising and driving execution.

A better way to consolidate and close

Mastering finance’s traditional responsibilities is essential to becoming a more strategic partner to the business. When you eliminate bottlenecks and reduce errors for each period close, you can free up time to support larger, value-adding initiatives, such as:

• Thinking critically about how to apply new accounting standards accurately and efficiently

• Providing meaningful insight to your business partners throughout the period and at period-end

• Driving strategy and enabling the execution of the business’s primary objectives

As finance’s role continues to gain prominence across the organization, selecting a technology partner that offers a seamless, comprehensive and smarter period close process is a sure-fire way to help elevate finance’s role across the organization.

Here are 10 steps to mastering the period close with help from the right technology.

1. Set controls up-front

Much of the close process is fixing errors and making adjustments. Setting the correct controls and approvals up-front helps to reduce that. Modern cloud ERP systems provide approval workflow and controls and security at the foundation, which drastically reduces errors. You can be more confident in your numbers – and audits become easier, too.

2. Adopt a onesystem strategy for subsidiaries

Shuffling data back and forth to account for subsidiaries in different systems wastes time and increases your risk of making errors. But a single finance system eliminates the need to move data, allows for standardised controls and gives you one data source for reporting and analysis. Only having to run processes such as allocations, accruals and consolidation once for the entire organisation saves you time and reduces errors. And preparing reports in one place means you know the business is always looking at the same up-to-date numbers.

3. Simplify your chart of accounts

A streamlined chart of accounts can improve the close in multiple ways. On the front
end, it reduces errors in transaction coding that require reclassification during the close.
It also eliminates the need to manage accounts with insignificant balances and makes it
easier to understand the business when viewing your financial statements.

To keep your close agile, look for a system that enables you to modify your chart of
accounts, organisations and consolidation hierarchies as your business needs change,
and immediately reflects those changes across processes and reports.

4. Automate your allocations and recurring journal entries

Run allocations in pro forma status based on pre-configured definitions without having to post/unpost prior to the close. Automating allocations in a core general ledger helps to ensure your allocation basis is correct and eliminates the need for manual journal entries and spreadsheet calculations. Investing in a system that allows you to run allocations in draft form allows you to view the potential results in the context of your financial statements at any point of your close.

5. Configure rulesbased bank reconciliation

Reconcile bank activity to financial transactions with embedded rules rather than manually matching transactions to bank statements. With one cloud ERP system, you can import and automatically reconcile bank activity with flexible user-defined rules and delivered workflow for managing exceptions.

6. Create a checklist

Formalize the close process with a workflow that defines a standard set of tasks, deadlines and responsible parties. Automate the period close workflow by using a system that can send notifications and report packages to appropriate stakeholders at the end of the process.

To read full download the whitepaper:
Getting the Basics Right

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