Strategy Fluence

The Modern Close: 3 Complaints and Catalysts for Change

Sponsored by Fluence

Modernizing the financial consolidation, close and reporting process has been a finance priority for years. Today, it is about far more than efficiency gains.

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Recently, Fluence conducted a survey across finance leaders at high-growth organizations to examine the challenges, uncover the opportunities, and outline the steps to improving the financial consolidation, close and report process. And the data revealed that legacy technology is not meeting the needs of modern teams.  

When asked to rate the quality of their software tools, only 19% of respondents described them as “superior.” This means that more than 80% of finance leaders continue to use legacy tools that force them to perform largely manual processes. The strain this puts on finance and accounting teams is bad enough, yet sadly that’s just the tip of the iceberg. 

Top Three Problem Areas 

Maintaining the system is more costly than planned 

You pay for finance and accounting technology in many ways. It’s not just cash. 

Even before you purchase and deploy a new tool, you (or your team) invest time in the buying process. You may have to compare features, pricing and other factors from a laundry list of possible vendors. Meeting with potential partners, implementation, onboarding, and training, eats up even more hours. 

If the software doesn’t work as expected, then you end up suffering the cost of lost productivity, missed deadlines, errors... all which hurt your profit margin and your team’s reputation. Now add unexpected maintenance costs, and you’re in worse shape than when you started. 

Data is hard to integrate with other applications 

Digging around to find the data that matters is like digging for buried treasure. To make matters worse, working with various disparate data sources is like approaching a series of locked doors. The keyring may be right on your fingertips, however, the keys are plenty and they are not clearly labeled or organized.  

The ideal state for a tech stack is more like an open concept office: You can see where everything is at a glance. Getting around is easy because the floor plan was designed to be navigable. Seamless data integration across technology is critical to accuracy. As your company makes more investments, launches new lines of business and acquires new companies, more applications and platforms will enter the mix. If integration with your financial consolidation and close software is a problem now, it will get worse.  

The system is hard to use, so adoption rates are slow 

When you’re shopping on Amazon, there’s nothing like the instant gratification that comes with the ‘buy now’ button. Thanks to consumer technology, expectations have changed and business technology needs to rise to the occasion. Old legacy systems require year-long implementation processes, custom code, and in-depth training; modern consolidation and close solutions are no-code, finance-owned, and easy-to-use. Finance teams that uplevel their technology get work done quicker, have more confidence in the data, and keep their people happier. 

What Finance Needs for Truly Superior Consolidation, Close and Reporting 

The journey of taking numbers from raw data to insight is similar to the kind of zig-zag someone would see in a maze. Phone tag, convoluted email chains, and unanswered texts lead to missed deadlines and frustrated teams.  

Poor financial workflow was cited as the top reason to modernize existing consolidation and close software, while inadequate template building was close behind. Finance can only serve the businesses with tools that are tailored to streamline and enhance the way they work. 

This means that... 

  • Instead of rigid structure, applications should offer drag-and-drop capabilities. 
  • If some tasks are common during every close, they should be pre-built into the system. 
  • Colleagues should be able to collaborate using popular tools like Slack or Teams. 

How Exactly Can You Become The Change Catalyst Your Finance Team Needs? 

Even if you’re nodding your head at all of this, the idea of becoming a change catalyst might still be vague. Pushing for new technology can feel like an uphill battle, but initiating the conversation will only help you win faster. Here are three tips to start the shift. 

  1. Connect Finance Modernization To Broader Organizational Changes

A recently published article by consulting firm McKinsey & Company captures the gist of it: “If We’re All So Busy, Why Isn’t Anything Getting Done?” 

McKinsey suggests that organizations need to stop rewriting org charts with simplicity. The article explains that instead, they should clarify decision-making roles and create room for higher-quality interactions. Educate stakeholders across your organization about the value of a modern consolidation and close solution and illustrate how the change will help quicken the decision-making process, minimize wasted back-and-forth across departments and make everyone more results-focused. 

  1. Show How The Next Wave Of M&A Can Be More Manageable

In EY’s 2022 survey of CEOs, 60% of respondents said they are actively pursuing additional mergers and acquisitions over the next 12 months. Each new acquisition, investment, or other new entity can bring its own: 

  • Chart of accounts 
  • ERP system 
  • Local currencies 
  • Regulatory reporting requirements 
  • Consolidation rules, and more 

Change catalysts should be able to help explain how modern consolidation and close solutions can ease many of these hurdles. Indeed, modern consolidation software should allow you to add a new company in a single day, especially without tying up your accounting team in the process. 

  1. Advocate For Change Like A ‘Smart Contrarian’

Change catalysts may talk about technology, but they’re fundamentally dealing with people. Chengwei Lu’s article, How to Be a Smart Contrarian explores how those trying to make changes tend to fall into four traps: focusing too much on an organization’s “elites,” ignoring cultural issues, stereotyping problems based on old metrics, and being a slave to dominant logic. 

Becoming what Lu referred to as a “smart contrarian” means building your business case by consulting widely, including your organization’s “outsiders.” It’s also important to always look for potential facts that contradict what is currently accepted as wisdom. Finally, remember to be open-minded to a range of alternatives to the status quo, and the new ways in which they are logically-supported. 

Asking tough questions when it comes to account reconciliation, financial consolidation or even the month-end close process can be tough, but understanding where you are is critical to defining where you want to be. For more statistics and insight, download our full report, The Roadmap To Modern Finance to see how your organization stacks up and what you can do to modernize your process.