New Year’s Resolution – Year-End Review and What’s Next for Financial Close & Consolidation

This year has been truly unprecedented.  While there’s no need to name some of the events, suffice to say they’ve been significant and life-changing for many people, companies and even countries!  The many organisations closing out the year thus have a lot to be positive about.  And now is a good time to not only reflect on the past year but also look ahead and determine what actions today will help the organisation streamline financial close and consolidation processes to weather the storms ahead.

Year-End Challenges

Many Finance organisations are still bogged down by inefficiencies in routine processes within the period-end financial close and reporting cycle.  And that situation makes it difficult to shift time to value-added analysis and decision support.  In fact, many organisations are still closing the books much in the same way they did 10-15 years ago.  Even those organisations that have changed and updated over time can still struggle with routine period-end processes.

Here are some of the reasons organisations are still struggling with financial close and consolidation processes: 

• Outdated Finance Processes – Too many manual activities and not enough automation
• Increasing Complexity – More regulation, including ESG, growth and a changing competitive environment
• Management of increasing volumes of data – Data-driven decision-making, now critical, requires more granular details and increased focus on cost containment to drive deeper analysis
• Shifts in business strategy – M&As or leadership changes that impact reporting and KPIs requires accommodating strategy shifts
• People Management – Retaining talent and motivating people to be more efficient are both becoming increasingly challenging
• Silos of Systems and Tools – Lots of moving data around, investing in multiple software tools and synchronising/aligning creates fragmentation (see Figure 1)

Collectively, the above aspects dilute the ability of Finance teams to focus on driving performance and supporting critical decision-making.  These problems are then only further compounded when key functionality isn’t in place to deal effectively with the increasingly complex requirements and common challenges across the financial close process.

An inefficient financial close process can have a material impact on Finance team members or – worse – negatively impact organisational performance.  How?  Here are just a few examples:

1. Delays in the release of financials
2. Issues identified during internal or external audits that must be resolved
3. Finance staff working very long hours and/or weekends
4. Significant manual activities (journal adjustments, moving data or copying/pasting to reports)
5. Lack of adherence to any kind of financial close calendar
6. Lack of a standard chart of accounts across divisions/business units
7. More time spent on talking about the past than the future
8. Continued discussion about the prior month close to the end of the current month

And the best way for organisations to avoid those pitfalls year after year? 

Make New Year’s resolutions related to financial close and consolidation processes.

New Year’s Resolutions

A good way to define such New Year’s resolutions is to focus on the desired outcomes.  These outcomes could include the desire to react faster to changes, increase visibility and transparency, save time through automation, or reduce the cost to report.

While those outcomes can change from one organisation to the next, successful organisations will have adopted many of the following outcome-based New Year’s resolutions:

1. Define a close calendar to orchestrate and monitor the process on a day-by-day basis
2. Provide clear audit trails and visibility to ensure accuracy and consistency
3. Focus on an efficient repeatable process to eliminate risk by reducing manual movements of data and automating data feeds/validations
4. Eliminate errors and drive standardisation by fully automating processes & reporting
5. Take advantage of built-in financial intelligence to handle complex financial consolidation (e.g., intercompany eliminations, foreign currency exchange [FX], accounting for partial ownerships)
6. Improve resource management by keeping a close eye on people-related issues and avoiding burnout by reducing and evenly distributing workloads
7. Reduce silos of systems by adopting a modern, cloud-based solution such as OneStream for the financial close

The benefits of such New Year’s resolutions can be significant.  How?   Well, when more reliable financial information is available earlier, management can make prompt, informed and effective decisions.  The early, effective external publication of financial results also indicates strong financial management and positively impacts the external stakeholder view of the organisation. 

With a streamlined financial close and consolidation process, organisations can then better align Finance and the business with actual results and forward-looking strategies – opening-up significant new opportunities.

Organisations that successfully automate their financial close, consolidation and reporting have, in turn, been more successful at driving financial performance and delivering value.  And perhaps most importantly, such organisations have gained the agility required to lead at speed, adapt to changing business and industry requirements, and weather whatever storms lie ahead.

Learn More

To learn more about how organisations are conquering the complexity in their financial close and consolidation processes, click here to read our whitepaper.  And if you’re ready to take the leap from spreadsheets or legacy CPM solutions to start your Finance Transformation, let’s chat!

Download the White Paper