Closing the books, whether it is monthly, quarterly, or yearly, often takes much more time than companies would like. This is due to the extensive manual effort that is required to collect, aggregate, and validate data in financial systems before reports can be finalized. Lack of security, controls, and poor collaboration abilities through Excel (the most commonly used tool for closing) all contribute to delays in the process.
However, the more quickly the accounting team can close the books and produce accurate, reliable financial reports, the more time the executive team has to analyze the results and make decisions about how to guide the company forward. In fact, a zero-day close would be considered the ultimate in accounting achievement! Executives would be able to get the most immediate and accurate information to make decisions much more quickly, and accounting would be able to move past the tedious work of verifying individual transactions period after period.
Surprisingly, achieving a zero-day close isn’t as elusive as it may seem. Modern enterprise performance management systems (EPM) can make this dream closer to reality than one might expect. Below we discuss some of the steps any organization can take to reduce their time to close from weeks to a matter of days with a well-configured EPM.
Built-in Consolidation Functionality
A key component of EPM systems is built-in consolidation. This is possible through automated data integration with key systems, which bring all of the relevant financial data into a single system. This is especially relevant if your company is using more than one GL system, or if it is using other external solutions for processes like tracking expenses, time off, purchase orders, etc. Make sure your EPM system is capable of integrating with your various systems and that it can pull the data frequently, even nightly, so that you always have a single source of truth for your business.
Once all of the data is captured in one place, EPM systems are designed to organize financial data based on the organizational structure of your company and handle complex transactions such as intercompany and international transactions. Industry-leading financial close solutions can even categorize data by accounting properties, so data is always structured and presented in the way that your financial professionals expect it to be.
Your EPM system should also be able to validate transactions based on configurable rules, so you can be alerted if anything appears questionable or off. If run every night, errors can be caught in real time rather than later on when it becomes more difficult to recall the facts around the discrepancies. This built-in consolidation capability can alleviate much of the manual labor that is often part of the close process while at the same time building confidence in the accuracy of the data and final results.
Security and Audit Trails
Examine your EPM system’s audit trail capabilities. Audit trails can help track down the right people when an issue is identified. Rather than scrambling to figure out where a transaction originated from or who is responsible, you can utilize audit trails to quickly hone in on the appropriate owners and resolve discrepancies quickly. This too can help reduce the amount of time it takes to close your books.
Data governance and security controls should also be a key consideration to your EPM configuration. This is an important factor to ensure only the appropriate people can access sensitive data in the system.
Automated Reporting Capabilities
The primary deliverables of the close process are the reports that go out to the stakeholders of the business, which may include public investors. Designing reports can sometimes be a menial and thankless job, especially if reports are produced and reproduced individually as data is corrected, or the number of recipients increases.
Modern EPM systems offer capabilities that dramatically reduce the manual and repetitive work of generating reports, especially when corrections are made. Reporting templates can be defined for different types of audiences and should be able to handle the formatting and layout options that you prefer. Additionally, substitution variables in reports allow corrections to be dynamically cascaded to all the other reports to ensure accuracy across the board without manually applying the change individually for each report.
Another useful feature is workflow management to automate reviews and approvals of reports before they are published. Eliminating the reliance on paper printouts or emailing reports back and forth is another way EPM systems can reduce the time to close.
Leaving Finance to the Finance People
Best of all, depending on the features of your EPM system, the entire process from start to finish can be handled directly by Finance, without burdening IT or waiting on IT availability. Less sophisticated systems often depend on IT to generate financial reports with requested data or even input changes as they are discovered. With a modern, easy-to-use, SaaS-based EPM solution, Finance can self-serve when they see errors. No more waiting for IT to find time, or trying to explain what or why certain data is required. This too can help reduce your time to close.
Closing the books doesn’t have to be a stressful, drawn-out process of hunting down discrepancies, printing reports, and chasing approvals. With a strong EPM system and smart configuration setup, your organization can dramatically reduce your time to close.
Planful has empowered numerous customers to go from closing the books over the course of weeks to closing, reporting, and disclosing their data on the same business day. With Planful’s built-in consolidation capabilities, reporting features, and ownership and usability by Finance, your company can also take dramatic strides to achieve the elusive zero-day close.
For more best practices in financial consolidation and reporting download this white paper to learn how to evaluate modern finance solutions to meet your needs.