Fast Track to a Quick Accounting Close
By Heather Peterson
Accounting departments are under pressure to speed up the monthly closing process for management. Data integration is the key to success yet a recent survey indicates small to medium size businesses are seriously challenged in their ability to share critical financial data.
Time is of the essence in this modern day economy of “time is money.” Society constantly pushes for faster results. The most recent instance of wanting results at warp speed can be found in the accounting realm where targets for closing the books can be within 3-5 days of month-end. Targets such as these pushes accounting departments to their limit. What’s referred to, as the “fast close” demands the compilation and preparation of data at an instantaneous rate. The idea is to prepare the data timely enough for analysis and adjustments to be made all in the same time frame.
The faster the better, right? That’s not entirely true. Stuck in the ways of excel and spreadsheets, speed and accuracy are nearly impossible to achieve. Hyland Software, developer of the process management software OnBase, warn that, “The financial reporting process is critical, risky, time-sensitive, and becomes increasingly more difficult and error prone.” Some of the risks with fast close include errors such as incorrect numbers, incomplete tasks and stress. Working with excel, makes a fast close literally impossible with the amount of time the program takes to update and complete. Using excel in a fast close leads to missed deadlines and a lack of visibility. An accurate accelerated financial closing can only truly be accomplished using an integrated application process.
When implemented successfully using an integrated database, a fast close of the financials can yield beneficial results to the company. Business process solutions experts, Infosys, outline the benefits to accelerated financial closing stating, “Financial closing and reporting is not a new jargon and it is happening from times of immemorial. Now-a-days accelerating the closing and reporting process is gaining more importance.” A quickened turn around of data allows for investors and management to discover key insights about their business operations. A fast close can open many doors, here are some of the many benefits of accelerated financial closing:
-Real time results. As soon as financial information is available, management can act quickly based on the KPIs (Key Performance Indicator) findings to change objectives, targets, as well as short and long term plans for their business model.
-Use time wisely. With a fast close, the time that would have been spent preparing data can be spent analyzing the data for valuable insights, yielding better results. The faster we can get through the close, the more time for resources to spend fixing issues spotted during the month and get ahead of the curve.
-Renewable resources. Finishing the books faster allows for a targeted re-deploy of resources. Provides a more focused accounting team as they know more time each month can be allocated to meeting other goals.
-Lean and mean data machine. By expecting the fastest result in acceleration, this process highlights and eliminates the main inefficiencies disabling top speed. Just the discovery process alone will enable a company to understand where the “disconnects” are.
-Make the bosses happy. Instant results will effectively reduce the uncertainty in the market, boosting the stakeholder’s confidence. Many organizations rely on lagging indicators to help them see the performance of the company. Lagging indicators are things such as return on net assets, revenue growth, margin analysis and return on sales.
-Complexity leads to transparency. Fast-tracking the closing of financial books makes for more complex reporting in turn creating more disclosure throughout for the purpose of transparency.
Integrated apps, the solution to the problem. Software using cloud applications such as NetSuite, QuickBooks Online, Xero or Intacct have integrated third party application networks that integrate tightly with the general ledger. The integration of the cloud allows for data to be prepared and compiled well before deadlines due to seamless transitions between applications. With everything all in one place, data is quickly consolidated and closed. According to CFO Magazine, “Smaller, cost-conscious companies are paring their closing times via remotely hosted software and services.” The magazine also tracked the collection of financial data by a cloud-based vendor for a technology company and emphasized the result of reducing the closing cycle time by 20 days.
With accounting departments being pushed to close their financial books quicker, using integrated commission management solutions like QCommission and Easy-Commission streamlines the process instead of tedious manual steps. Products such as QXchange help integrates applications with popular programs such as QuickBooks, Sage, Salesforce and SugarCRM.
Companies stuck using excel are at an inherent competitive disadvantage without complete, accurate, and timely reporting of integrated application systems. Both QCommission and Easy-Commission come with countless integrated features that enable for productive and accurate accelerated closing. Oracle, a well-known software engineer company, praised the future of accelerated closing, “Companies that have adopted the fast close did not do so overnight. It is a major undertaking, involving both business process and systems re-engineering that could take years.” With the amount of effort put in by these companies to be completely integrated and cloud-based, the results from using one like QCommission will yield impressive results. Zoom Zoom! Sounds like the need for speed with the Fast Track Close is here and the good news is technology provides us with a powerful tool that did not get fully leveraged in the past.
 Hyland Software. Optimize Your Close Process to Significantly Increase Accuracy, Visibility and Speed. OnBase. Retrieved from http://www.onbase.com/~/media/Files/hyland/solutionsheet/ss_afrm-optimize-close-process.pdf
 N., A. (2013, March 28). Why Accelerated Financial Closing – a Perspective. Retrieved from http://www.infosysblogs.com/bpo/2013/03/why_accelerated_financial_clos.html
 Banham, R. (2011, November 1). What Ever Happened to the Virtual Close? Retrieved from http://ww2.cfo.com/accounting-tax/2011/11/what-ever-happened-to-the-virtual-close/
 O’Rourke, J. (2008, July). The Fast Close: Are We There Yet? Retrieved from http://www.oracle.com/us/products/middleware/bus-int/064429.pdf
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