Can you believe it’s already November? With less than two months left to go in 2016, it’s almost time for the most exciting time of the year. Travel managers will be diligently working on employee expense reports, finance pros will be sending out 1099s, and the annual closing process will be underway.
Highlighting Another Issue: The Monthly Close
However, while the annual close process poses its own challenges, we would like to point out a more granular pain point, the monthly close, on which too many organizations waste time, labor, and money. According to research from the nonprofit research and benchmarking firm APQC, there is a massive chasm between top and bottom performers:
- Lagging companies spend more than 18 days on month-end close. Top performers spend less than 12.
- Lagging companies spend four times as much money on month-end close as top performers.
So what’s the problem? Workflows are out of whack, reconciliation is a challenge, and collaboration is downright impossible due to outdated technology and processes.
How to Improve the Monthly Close
A TechTarget article shared some of the best tools and strategies for a quick, accurate monthly close, highlighting pain points and opportunities for organizations to improve their closing processes.
We know from practice that one of the biggest challenges of all CFOs is this notion of disjointed processes and integrations. Even with all of the technology an organization has, the closing process is just that, a process. By improving said process, you can help people access the data they need when they need it, bring it all together in one system, and shorten the time needed to finish the job.
The first step is to develop a timeline of monthly close activities, with detailed expectations for all members. This will prevent “fire drill” month-end closes, and provide a checklist for professionals during the closing process.
Satisfied Brittenford and Intacct customer Roberta Hopkins of Georgetown Visitation, who implemented Intacct and Brittenford’s proprietary SchoolConnect solution, shared this in the TechTarget article:
“You should not have a huge cumbersome process to close your books,” she said. “You should be able to hit a button, see where you stand, review it, make some adjustments and hit it again. You want all the information to be coming from one system and it should all be automated.”
Single platform and better processes combined to bring the monthly close for Georgetown Visitation down to five days. Learn more about Georgetown Visitation’s move from Blackbaud to Intacct in our case study.
How many people are involved in the close process? How many of those people are working on disparate financial documents that have to be emailed back to the manager, compared for errors, and sent back with comments, beginning a string of emails, CCs, and disparities?
This problem is twofold. A noted pain point by the Institute of Finance and Management, Financial documents (including spreadsheets) are created and stored on individual computers within and outside of finance.
Secondly, the tracking is nonexistent. According to Craig Schiff, President and CEO of BPM Partners, “There are a lot of different people involved, and each has their own assignments. And one of the challenges is tracking all of that as you’re trying to get this close done. Who still owes me what?
By adding a collaborative, spreadsheet-free layer within accounting software, leaders can implement and manage workflows, with no random, inaccessible financial documents saved on individual computers. Better yet, this collaborative layer means fewer emails and more direct closing.
Moving Ahead with the Right Technology
A CFO also needs a tool that provides a user interface with all the necessary, high-level information in real time on the first screen and the ability to drill into specific accounts or specific divisions for additional information, said Seth Lippincott, an analyst at Nucleus Research in Boston.
By taking the right steps to integrate people, processes, and technologies, you can head confidently into the future knowing that extended periods for month end closes are a thing of the past.
Learn more about how companies are making the shift to the cloud for improvements to their finance function, and how to bring your organization into the future by downloading the Definitive Guide to Modern Accounting from Brittenford Systems.
Looking to see modern accounting in action? Contact us for a free 30-day trial of award-winning Intacct Software.