The best time to prepare for closing the books was yesterday. And the day before that, and the day before that.
The mad sprint of painfully condensing all your closing activities into a manic few days or weeks is woefully out of touch with today’s modern business practices—not surprising when you consider they were designed more than 20 years ago. So why are you still following them?
These outdated accounting processes follow the traditional record-to-report model, which is reliant on numerous different tactical processes taking place before you can try and build a financial picture of the business: reconciliations, eliminations, allocations, consolidations, as well as uploading data from all subsidiary systems from the corporate General Ledger. The problem with the frenzied 11th-hour dash is that it’s time-consuming, prone to mistakes, can incur high labor costs, hinders analysis, and puts compliance obligations at risk. And when it’s finished, the information is already out of date.
It’s not that the process is broken per se, but rather that it has simply failed to modernize and keep pace with the world around it. Thankfully, there is a better way.
Businesses are waking up to a smarter way of closing their books through continuous accounting. You may also have heard this approach referred to as “the soft close” or “even real-time close.” Continuous accounting provides a modern approach that empowers real-time financial insight. Think of it as “always-on” accounting that not only lets finance teams close the books faster, efficiently, and accurately, but it also means that regardless of where your team is at any given time, you have a true view of the business from a financial perspective. You can virtually see what your real numbers would look like as if you had actually closed the books at today’s pace of business.
So is changing the way you close the books worth it? In a word, yes. The numbers speak for themselves for those who recently transformed their closing. For example, an aerospace company is seeing a fourfold acceleration of its financial close processes; a university has seen its business processes increase by a factor of seven, along with a 20% efficiency increase; and a manufacturing company has reduced its uncollectable accounts receivable by 50%.
But it’s not just the numbers that are persuading CFOs to modernize their approach. Using a combination of cloud computing, mobile, automation, analytics, and a core digital platform, continuous accounting shifts you off the back foot by putting accurate insight at your fingertips. Imagine never having to say to a board member, “I’ll get back to you on that.” Instead, you can pull whatever information you need, knowing that it is accessible, timely, and accurate.
It’s time to bring your accounting processes in line with modern business practices with a flexible, agile, intelligent approach that lets you look forward and plan accordingly. Without it, you’ll always be sprinting to the finish only to find you’re on the back foot looking backwards.