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Technology Adra by Trintech

Leverage Breakthrough Simplicity to improve your Financial Close Process


Sponsored by Adra by Trintech

Here's how to leverage breakthrough simplicity to impact the Financial Close process.

Breakthrough simplicity leverages prescriptive tools and automation to improve the financial close. Companies are able to achieve improved efficiency, more transparency, and faster, more accurate results. For companies on the other side of the spectrum key tasks can be delayed due to a dependency on institutional knowledge, folklore, and manual tasks. There are additional benefits of leveraging breakthrough simplicity including: risk reduction, more control and visibility, and more time to analyze financial statements. We’ll take a holistic view of the financial close and will highlight where how and why automation can be implemented throughout each phase of the process.

Why Automate Your Financial Closing Process?

The closing process is one of the most fundamental indicators of efficiency within your financial infrastructure. If executed correctly, it serves as the catalyst for the Office of Finance to elevate their role as a true consultative business partner and trusted advisor laser-focused on strategic goals and shareholder value. Too many times, companies overlook the analytical aspects of the close process. It is important to remember:

  1. Financial statements are the ultimate scorecard for a company and must be accurate.
  2. The critical information obtained from financial close results is used to perform accurate and timely analysis – both internally and externally. 

Taking a Holistic View 

In taking a holistic view of the close, an organization can understand the connectivity, impact and dependencies of each phase as the foundation of breakthrough simplicity.

The financial close process starts with the: 1) Transaction Accumulation and Reconciliation, and Sub-ledger Close phase. This phase focuses on the accurate recording and reporting accounting transactions during a specific and defined period – monthly, quarterly or annually. The accurate processing of transactions will ensure that reconciliations, the sub-ledger close and financial reporting are timely and correct.  

All activities that comprise the financial close are driven by cut-off dates that ensure financial results are accurately reported as part of the 2) Corporate Close and Consolidation Process. 

The “Final Mile” of the process is the 3) Analysis and Reporting Cycle. This critical phase focuses on the accuracy and analysis of a company’s financial results and can be time-consuming and error-prone if too much time and resources are spent in the prior phases.

The Components of the Financial Close

 

Areas Where You Can Implement Breakthru Simplicity Tools

The table below suggests areas for automation within each phase. Our major premise is that the automation of manual processes saves time, reduces cost and reduces risk allowing resources to focus on the financial reports, results and analytics. 

  1. Transaction, Accumulation and Sub-Ledger Close
  1. Corporate Close and Consolidation
  1. Analysis and Reporting

Simplify and Automate Financial Operations: Streamline and automate accounts payable and accounts receivable processes by implementing E-Procurement, E-Invoicing and E-Payments. 

 

Implement Standardized Closing Packages: Use a standardized management reporting process, which can provide more visibility and reduce the  dependency on spreadsheets. 

Speed up Financial Statements to Increase Visibility and Actions Needed: Quicker visibility to financial reports allows the Controller and CFO to determine how the business is doing and if specific projects or initiatives need to be adjusted. 

 

Use Accruals and Estimates: Use a "not invoiced and not received" report. This allows the ability to accrue for all received product. Use standard automated entries when applicable.  

 

Implement Automated Workflow and Checklist and Status Reporting:  Build reviews and approvals into automated workflows that can identify the remaining tasks for the close cycle. 

 

Precision Reporting Across the Organization: Automated reporting will quickly identify potential business issues and will speed up decision making. 

Automate Accounts Payable: Automating accounts payable will reduce and alleviate the need for accruals which can slow down the closing process and impact financial results. 

Automated Process Help to Focus on What’s Important: Establish a materiality level for a discrepancy so the closing process is not delayed. 

A Single Source of Truth: When your financial close process is automated into a single system, the need for reconciliations to verify actual results is alleviated. 

 

Stop Paying by Check: Stop paying suppliers and employees by check! Move to ACH, P-Cards, or Payroll Cards. Many Mid-Market companies outsource their payment processes to third parties to alleviate cash account reconciliation challenges. 

Define Obstacles: Following each close, implement “Obstacles to Close” report which is distributed across the organization.

 

Financial Metrics and Dashboards: While income statements, ratios, and industry benchmarks were once the way to evaluate performance. Dashboards can provide real-time key performance indicators (KPIs) that truly reflect business performance.  

 

Conclusion 

Visibility to accurate financial information and underlying operating metrics are critical to your management team in any economic environment, but particularly in times of uncertainty.Leveraging breakthrough simplicity helps to streamline and improve the financial close. The Office of Finance now has the ability to quickly assess the health of the business, key business drivers, and potential problem areas. Many companies make the mistake of delaying leveraging breakthrough simplicity and the results can be disastrous. Use the above matrix to identify how you can start implementing some easy breakthrough simplicity tools. Over time, these tools will help to elevate your Finance team’s value and effectiveness.  

To learn more, schedule a demo today.