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Nicky Tozer, VP of EMEA, Oracle NetSuite

For many finance teams, the dreaded financial close period means long days, time-consuming tasks, and cumbersome processes. Make no mistake – tasks like accounts reconciliation, journal entries and financial reporting are necessities for achieving an accurate picture of business performance and ensuring compliance. But is there a smarter way to go about it?

It would appear that financial teams are tackling the topic in different ways. According to APQC’s General Accounting Open benchmarks survey, when it comes to time spent on financial close there is quite a gap between the top and bottom performers. Of the 2,300 respondents surveyed, the bottom 25 percent required 10 or more calendar days between running the trial balance and completing consolidated financial statements.

A shorter financial close period results in several benefits. For executives it means timelier access to important data, which leads to better informed decision-making. For CFOs and finance teams it means more time to focus on more value-added functions such as analysis and insight. For example, reviewing the data and providing input into scaling operations up or down in response to cash flow demands or changing market conditions, or how to reallocate resources in order to capitalise on an emerging opportunity.

So, what is the secret to a fast and accurate financial close? Savvy financial teams are increasingly turning to continuous accounting to save time and provide more timely insights to the business. Continuous accounting involves an incremental distribution of financial close activities throughout the reporting period. Tasks such as reconciliations are embedded in day-to-day activities throughout the month or quarter: this helps to eliminate last-minute demand. It also means quicker access to up-to-date financial intelligence, which leaves the entire business better informed.

With these benefits in mind, the question becomes: why aren’t all companies already embracing continuous accounting? There are several conditions required before companies can hope to get started. To begin with, continuous accounting won’t work if different systems aren’t synced up. If a company’s financial records aren’t speaking to their IT records, or if a team is working off of disconnected spreadsheets, then they will struggle to carry out as-you-go accounting.

Many companies who are successfully carrying out continuous accounting rely on a modern cloud-based financial and ERP (enterprise resource planning) system. Such systems ensure an integrated and standardised overview across different functions. Users have access to a common general ledger, a common chart of accounts, as well as a single version of data for inventory, payroll, sales orders and customers. This offers companies the data integrity and standardisation of processes that are essential to continuous accounting.

ERP systems also offer the attractive possibility of automating certain functions. Tasks such as journal entries, account reconciliations, and variance analysis can be completed by the system gradually throughout the reporting period. This translates into further time-savings and even shorter financial close timeframes.

Yet another advantage is the ability to more efficiently delegate tasks using the resource planning functionality of the system. As everyone is connected to the system, it is possible to assign tasks across the team throughout the reporting period. This is easily managed thanks to a transparent overview of tasks attribution and progress. For example, a typical financial close could last 5 days and consist of 25 processes. In this case, 5 tasks could be assigned per day. Managers can continue to check back in with the system to follow up on which tasks have already been completed, and which remain outstanding. With this, gone are the days when managers and staff are giving CFOs the answers they think he or she wants to hear. Moreover, the CFO knows who’s on target and where and how. The CFO also has the ability to run KPIs on the close process identifying which individuals or locations are not completing their tasks on time and reallocating resources appropriately.

Increasing numbers of companies are realising the benefits that continuous accounting offers. In addition to the time savings themselves, companies are finding that they are able to access more up-to-date financial intelligence. This helps the entire business make more informed decisions based on real-time data. And for those who have already made the switch to connected ERP systems, the path to continuous accounting will be a simple and straightforward one.

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