7 Steps to Speed Your Financial CloseResources
7 Steps to Speed Your Financial Close
By Paul Johnson
CPA, CGMA, MBA
The accounting function tells the financial stories of your business—stories that influence management decisions. Problem is, executives need financial information almost on-demand. To meet this need, CFOs and controllers must evaluate their financial close process, and find a way to do it faster and better. These seven steps can help.
1. Begin with “why”
Identify why you need a fast close, and what stands in your way of achieving it. John Kotter, a leading change management expert, notes that half of change initiatives fail at the start because people misunderstand the need for change and the urgency for doing so is not well established.
Some legitimate business reasons why you need a faster close process may include:
- The need for more timely information
- Better access to financial resources Lower costs, including reduced audit and compliance costs
- Freeing finance to work on higher-value tasks to support the business
2. Find the right “who”
In this case, it’s a guiding team comprised of a cross-section of key stakeholders who have the drive and persistence to see your initiative through to the end. This guiding team is essential to getting buy-in and improving collaboration—both between finance and other departments and within finance itself.
3. Define the “what”
Set a goal for how fast you want your close to be. Most companies try to do it in five days or less—some even in one day. Brainstorm with your team what it would take to achieve a one-day close, and compare the gaps between where you want to be and where you are now. This includes identifying points in the close process that might be causing bottlenecks.
4. Attack the “how”
Now you can redesign your close process by reconfiguring the combination of people, technology, or process steps to be more efficient:
- People: Make it a team effort, and be sure to get buy-in from across the organization.
- Process: Do as much work as possible in advance of the period end date, such as bank reconciliations.
- Technology: Most importantly, invest in an integrated financial management system such as Sage Intacct. The more that everyone feeds data into one system, the easier it will be to achieve a fast close.
5. Kick it off and get buy-in
Alert the organization about your faster close process, and encourage others to provide feedback. Be open to accepting new ideas that could improve your close process.
6. Remember that actions speak louder than words
Take a managed and phased approach to your plan. This includes identifying early wins that can be implemented on your next period close. The goal is to reduce your close process by another day with each iteration of the process until you achieve your goal.
7. Institutionalize continuous improvement.
You can learn from every completion of the close process. Do this in a positive way, by asking what went well. Inevitably, you will also learn what needs improving. Use lessons learned and problem-solving techniques to better the next round of the close process.
A fast close leads to more timely information, which improves decision-making. Achieving a fast close means working smarter, not harder, which requires an investment in people, process, and/or technology. The good news is you don’t have to go it alone. Contact Altasphere Consulting. We have the technology and expertise to make a faster close a reality for your business.