Every month, without fail, finance teams all over the world “close the books.” This month end close process often requires working long hours to hit pressured deadlines.
The hours are long—benchmarking firm APQC reports that the median company takes nearly seven days to close the books every month, while the bottom 25% of companies take over 10 days.
That’s three months per year (or more) spent on month-end close activities.
With many financial reports offering a snapshot of the company’s past rather than providing a window into its future, is it any wonder that finance leaders come under pressure to stay relevant?
How did we get here?
Accounting dates back to 1494, when an Italian mathematician named Luca Pacioli outlined the system of debits and credits known today as “double-entry bookkeeping.”
For centuries, accounting teams have operated like production lines. Each team member had specific responsibilities throughout the month, all working towards the final product—a set of financial results outlining how the business performance during the period.
The quality metrics in finance have always been timeliness and accuracy. While this may have served us well as small traders, the swell of organizational data in recent years puts these teams under increasing pressure to deliver on both measures, leading to long hours, compounding stress and burnout.
“I’m waiting for reports to run. I have multiple spreadsheets open so I can copy and paste data into journals while I wait […] honestly, I can barely see straight,” says a senior accountant in a growing technology company. “When everyone else has finished their month and gone home to rest, my work is only beginning.”
In 2021, business teams need to be agile and nimble. To thrive in this environment, every organization needs a complete view of its data—real-time insight coupled with the ability to take real-time action.
Can we even begin to imagine this utopia without addressing the elephant in the room—the month end close process? If Finance is to stay relevant, the need for a real-time pulse on business performance must be a priority.
Too much time gathering, processing, and reconciling data leaves too little time for insights and decisions—eventually dragging down the bottom line.
The Month End Close Process: Is there a better way?
With the pace of change accelerating all around us, business leaders are hungry for real-time data that equips them to make informed decisions in the face of uncertainty. Instead of spending the majority of its time writing the story of what happened in the past, what if Finance took a future-focused view—forecasting and analyzing the activities that inform and support decision-makers?
Despite a period of enormous disruption in 2020, APQC reports that finance teams continued to spend almost half of their time in transaction processing and only 20% of their time in decision-support activities.
It’s time to look at “modern accounting” through fresh eyes—to move from a monotonous month end process close towards a continuous one.
By a continuous close, we mean having a readily available, real-time picture of business performance at any point during the month. We’ll focus on how a number of month-end closing activities can be automated, from reconciliations to variance analysis, all of which can create a compelling competitive advantage for companies that decide to move out of the middle ages.
In the world of finance, the pandemic’s biggest impact was felt in the additional demands in planning and re-forecasting. More than ever before, Finance is under pressure to provide high-quality, relevant information in real-time to support critical business decisions. The continuous close can help.
Want a sneak peek at how we’re rethinking the month-end close process? “Always be closing” doesn’t just apply to Sales… Download our free CFO’s guide to the continuous month-end close.