While most organizations have put processes in place to tame the sometimes unruly financial close process, it is still a messy, bureaucratic, and time-consuming activity. Nevertheless, it has to be done — and done correctly.
Efficiency in the financial close process is not just a way to save yourself from a headache: It has a direct bearing on a company’s productivity. Data from APQC, a nonprofit research and benchmarking firm, revealed that top companies manage to complete the financial close process in, on average, 12 days or fewer. By contrast, the bottom performers needed 18 days or more to do the same task. That’s 50% longer, and it represents both a huge investment in time and much more room for error.
Regardless of the size or complexity of an organization, implementing a successful financial close process requires a streamlining of processes to ensure both speed and accuracy. But how, exactly, does this get done?
Technology to the Rescue in the Financial Close Process
Naturally, communication and attention to detail are both critical for reducing the time and costs associated with financial close. Businesses have known this for decades. It has only been with the advent of new technologies, such as cloud-based software systems, that organizations have been able to take a giant leap forward in this area.
Cloud-based software has exploded in the business world. Cloud-based applications are not only providing low-cost word processing, spreadsheet, and database applications; they are speeding collaboration across a number of business functions, including inventory and warehouse management, marketing automation, supply chain management, and of course, accounting and financial functions.
Part of the appeal of cloud-based software for financial processes, including financial close, is that it eliminates paper-based transactions and streamlines processes. KPIs can be computed and made available instantaneously, and reporting becomes much simpler and easier. Automated workflows channel issues to the appropriate levels of management for remediation.
That said, any move to a digital platform can achieve this. What the cloud adds are two critical elements: a centralized, standardized database and easy collaboration.
Take centralization first. Cloud-based applications make it possible for distributed organizations to work from a single dashboard that can be accessed from anyplace with an internet connection. This dashboard works from a single database that updates continuously, allowing one to pinpoint bottlenecks and see changes to reports on the fly.
Centralization needs to be paired with good collaboration, however. This happens to be an area where the cloud shines. Users can be assigned to tasks and given access to documents and reports, allowing them to fulfill their part of the close process. As these tasks are completed, or when problems arise, others can be informed and prompted to provide direction or take action. Steps can be tracked in real time, giving an overall snapshot of the process and again identifying bottlenecks.
Given the dramatic differences that cloud-based systems can make for processes like financial close, one wonders why they have not yet been universally adopted. The answer is, in part, a fear of the cost of implementation. Organizations get comfortable with their in-house systems, even when they realize those systems are clumsy and inefficient. We tend to choose the devil we know.
Still, in pays to keep in mind that statistic above: 12 days versus 18 days to close, 50% more efficiency. Given that cloud-based solution are so easy to implement, aren’t those solutions worth exploring?
NetSuite to the Rescue
As a CFO, you take on many roles and are required involved in all aspects of today’s business environment. With NetSuite, you are able to streamline your financial processes while saving money. And with the expertise and knowledge of the cloud, a Nuage Consulting Group professional is there to guide you along the way. Learn more about Netsuite today.