Financial Close Benchmarks: How Does Your Process Compare?
During my years in finance roles, whether I worked on earnings, investor and board reports, or financial planning and analysis, we were always challenged to complete our year-end reporting faster. After all, the quicker the close, the sooner we could provide stakeholders with insights for decision-making.
We also looked for ways to make the financial close process smoother, from reducing the number of manual tasks to improving the quality of the narrative in our reports. While no two financial closes are alike, there were certain improvements we all wanted. And, it didn't stop at the year-end close: How could we make each month and quarter of reporting better?
I recently shared some of these best practices in the webinar, 5 Steps to Simplify Your Financial Close and Reporting Process, and asked for feedback from the accounting and finance professionals who joined. 130 attendees shared the current state of their financial close process, from the accounting close all the way to analysis and final reporting. Take a closer look at the results below.
Teams of all sizes are interested in a simpler financial close
Organizations large and small are interested in simplifying the financial close process, as evidenced by the wide range of contributors reported by attendees. There were nearly the same number of respondents with close teams of fewer than five people as there were teams with more than 20 individuals involved. The key takeaway here: efficiency is a universal concern, and there is always room for improvement, regardless of your organization's size.
Gathering data is still largely a disconnected process
Webinar attendees said they use several methods for gathering data for reporting results at the end of a period, including desktop-based spreadsheets, presentations, and enterprise resource planning (ERP) programs. Seven in ten say one way they wrangle data for the financial close is via email, phone, meetings, or other word-of-mouth methods. The result of these practices leaves finance teams exposed to error, as they require cutting and pasting, or worse: manual data entry. These are disconnected methods that do not update in real time.
Timing and accuracy are the greatest risks related to reporting
Regardless of the method, gathering data can be a challenge for internal and external reporting teams. Webinar attendees agreed that the primary risks they face include the timing of information, input errors, version control issues, and lack of visibility into the data. A more collaborative and connected approach can help resolve multiple areas of concern at once.
The solution for a simpler financial close
These findings are consistent with what we hear from accounting and finance teams across the globe. They are worried that data will change from one version of a document to another, and it may not always be immediately obvious why or when the number changed. Was it a copy-and-paste error? Did someone update the numbers to reflect new information? Is everyone rounding numbers in the same way? Are departments categorizing certain expenses differently?
Having listened to teams involved in the financial close process—and having been part of a large financial FP&A team myself—I know how valuable it is to have transparency into data. A full audit trail can help alleviate any unknowns—thanks to a record of each change—down to the individual contributor and exact timestamp.
Linking capabilities of modern cloud solutions also enable you to make a last-minute change to data in a source document and see it automatically update every linked instance across multiple reports of connected data.
From my perspective, that level of transparency and connectivity are two of the most significant factors to simplifying the financial close.
Take the next step
Now that you have seen how some of your peers manage their financial close, how does your process compare? Request a demo to explore whether Workiva can help you meet or exceed what your peers are doing.
About the Author
Dominick Fatibene, Senior Product Marketing Manager at Workiva, works exclusively with controllership and financial planning and analysis (FP&A) organizations to identify and support simplified internal financial reporting approaches that reduce risk and drive efficiency. Prior to joining Workiva in 2018, Dominick spent seven years at General Electric, holding various positions across finance, including operational finance, global and operational controllership, internal audit, and corporate FP&A. Dominick has been involved in all aspects of finance, including entity and segment accounting, consolidation, strategic planning, earnings, investor, and board reporting. Dominick was a member of GE’s prestigious leadership programs, including the financial management program and corporate audit staff.