Month End Close Process Improvements
Finance teams who are taking 10 to 25 days to get their monthly results out to management and the board are generally not adding a great deal of value to the business – as there is no time outside the close process. Especially when the actual results to budget are given scant attention by management and the board unless there are material deviations to the plan. These stakeholders are more interested in the future and how internal and external influences can impact on forecasts and scenarios. This revelation can be disheartening for finance teams to hear given the hard work that goes into producing the monthly results.
Having led the finance team of a $300M multi-national company to reduce its close process from five days to two days to meet overseas requirements, we can demonstrate how this can be done by:
- Interviewing stakeholders to understand the key information they require for decision making from the actual results
- Helping to ‘sell’ the streamlining project to stakeholders and gain buy-in in terms of the added value that can be achieved from the finance team with the extra days freed up each month
- Understanding and documenting all the tasks that are currently performed to get to the monthly result including the time taken to do these
- Identify the ‘critical path’ in getting the results published and the constraints in the process
- Alleviate the constraints by:
- moving non-critical tasks outside the close process
- identifying the idle resource that could assist with a bottleneck
- reviewing process cut-offs and whether they can be done earlier
- Ingrain the concept of materiality into the finance team. Will a number, if wrong, impact on the decisions of the users of the information? If not, don't spend time on it
- Implement appropriate month end close software to automate processes, gain visibility into task progress and standardise routines. Robotics and AI can provide opportunities here