• Thomas Oschlisniok, Partner |
  • Antonius Sieverding, Expert |

It is a never-ending story: month-end, quarter-end, interim & year-end closing procedures. Companies constantly report on their figures. Internal and external stakeholders demand a precise and quickly available basis for decision-making processes.

What is the objective of "financial closing"?

Providing a reliable picture of the company's economic situation is the primary aim of the financial closing. Companies must comply with various regulations (e.g., Swiss GAAP FER, IFRS, US-GAAP, ESG regulations, etc.), yet they also must provide reliable information for management to back up decision-making.

The faster the financial and non-financial statements are prepared, the sooner the reports are available as a basis for public information and business decisions. 

The traditional closing process consists of tasks that occur on a periodic basis (e.g., daily, monthly, quarterly) and often still involves a combination of system processing and manual tasks. 

Why is closing a complex and challenging procedure?

For a long period of time, reporting processes have been characterized by a significant workload and effort:

  • many activities build upon another, resulting in complexity
  • substantial resources tied up at the closing date
  • poor data quality
  • process delays caused by manual work such as account reconciliations and journal adjustments
  • insufficient oversight and transparency
  • lack of comprehensively used systems

Why do Finance leaders need to optimize closing processes?

Nowadays, Finance leaders not only need to deliver period-end “actuals” that are reported on time and comply with increasing regulations. They also need to ensure a close alignment between the monthly record-to-report (R2R) closing process and the strategic forecasting of their entities. To achieve this goal and become a reliable partner to the business, Finance leaders must implement a digitally enabled operating model that is user-friendly, insightful and cost-efficient.

How does technology support closing professionals?

With the help of technology, Finance leaders can bring speed, quality, compliance and efficiency into their closing operating models. To overcome the traditional and complex way of the closing process, there are excellent digital closing tools available to solve the challenges Finance leaders face today. With the properly chosen, correctly implemented and orchestrated technology solution, companies generate positive outcomes in a variety of categories: 

Maximized efficiency and cost savings

  • eliminated and automated non-value-added processes, such as the preparation of required files each month
  • centralized repository for supporting documentation and evidence, such as bank statements
  • workflow and alerts based on events, such as due dates
  • standardization and streamlining of period-closing activities across several entities
  • automated journal processing for general ledger adjustments such as amortization journals

Saved time

  • significant savings through connected data sources (bank feeds), automated account certification and access for auditors within the tools
  • holistic closing platform – from managing financial statement transactions to processing journal entries
  • scalability across regions, markets and business units through easy global rollout opportunities

Better decision-making and closing monitoring

  • real-time visibility into account certification status, journal processing, profit and loss variances
  • more time spent on analytics vs. data collection and preparation
  • advanced reporting for running and scheduling reports such as aging reports & adjustments)
  • visibility of closing activities and bottlenecks specific to corporate and business units (BU), enabling confident close

Risk reduction

  • balance sheet integrity and completeness of the aggregated numbers
  • centralized security and access management of closing activities per individual user
  • audit trail of activities and change tracking within one tool
  • risk-based automation to lower risk accounts such as PPE (Property, Plant & Equipment)
  • migration from various decentralized tools to a single source of truth

Many benefits can be gained from digitalizing closing. However, this transformation is not purely about implementing new technology. Training of and acceptance by employees, purposeful and continuous change management are also significant success factors for the optimization of financial and non-financial closing processes.

Are your Finance leaders asking themselves the right questions?

Organizations continue to release their results during this time of disruption. However, the effort of doing so still means Finance leaders and their teams stressfully managing manual tasks. Therefore, we encourage Finance leaders to revisit the way they record-to-report, thinking of the following key questions:

  • Which parts of my record-to-report process can be digitalized or automated?
  • What tools can I use to support my record-to-report process?
  • Is my closing technology setup orchestrated in the right way?
  • How do I enable my Finance team to use technology properly?
  • What does my optimal closing process look like?

Ask yourself and add a good closing-chapter to a never-ending story!

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