As the pace of businesses increases day by day, the amount of financial data to be processed grows and financial close becomes ever more complex. However, a recent survey from Ventana Research shows a lack of progress in this area, with 43% of the participating organizations completing their quarterly close within six working days in 2022 vs 49% in 2019. Therefore, one of companies’ topmost goals should be to define how to switch to a fast close model.
What does fast close mean?
The aim of fast close is to smooth the closing load over the year, choosing month-end closing rather than one or two annual deadlines. This makes it easier to quickly produce accounts and reliable financial reports, which leads to a faster analysis of the company’s financial situation and, thus, accelerates decision making. In short, it is about the optimization of financial close by reducing closing time and improving information accuracy.
Main advantages of a fast close model
In addition to reducing useless and time-consuming tasks, you will achieve a solid view of your company’s financial health, as well as benefiting from the following:
- Error reduction, reliable analyses and enhanced data and information quality.
- Costs saving and enhanced productivity.
- Reduction of stress and efforts at the end of the year by streamlining the production of consolidated accounts.
- Continuous and sustainable improvement of the financial close process, which ultimately leads to more transparency.
- Freeing of finance resources to work on other value-added tasks.
- Improved internal control over the preparation of reports and financial statements and, accordingly, faster decision making and forecasts.
Implementation of fast close model
One of the keys to implementing fast closing is the automation and standardization of processes and, hence, it is essential to choose the right financial close management software. The following steps will help you:
- Define a realistic deadline for achieving fast close, starting with an assessment of your current state.
- Map the steps involved in your company’s financial close process, listing what can be optimized and automated to facilitate data processing and cut out unproductive tasks.
- Find a good CPM tool, to simplify the production of financial statements, reports and other documents.
- If necessary, seek business and product experts to help you along the way and train your teams in the use of automation and financial close software.
Common mistakes to avoid
There are, nevertheless, certain mistakes that could hinder the successful implementation of a fast close model. Therefore, bear the following in mind:
- Don’t rush, since fast closing is a large-scale process and requires an assessment of strategies, processes and best practices.
- Don’t neglect your teams and make sure that people, processes and technology blend together throughout the process, so that the implemented changes are easy to maintain.
- Don’t forget to draw up a month-end close checklist of the essential steps.
Is your company still spending endless time on closing and accounts consolidation? Discover how Talentia’s finance solutions can guide you along the process of switching to a fast close model.