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As per one survey by the Institute of Management Accountants, financial closing is one of the most significant challenges. In order to optimize financial close; an organization requires to make coordinated efforts. Here in this document, we have discussed how companies can race to an optimized financial accounting close safely.
How to Safely Race to an Optimized Financial Accounting Close?
TO SAFELY RACE
7-12 Three Most Common Types of Financial Close
13-15 The importance of Financial Close on Time
16-17 Why is optimized financial close essential?
Obstacles to Optimizing Financial Close
Simple steps to Optimize the Financial Close
33 A Method For Closing Books Accurately & Quickly
34 One Strategy, Various Benefits
35 Provide What Management Expects
36 Our Approach to Financial Close
37 What Kind of Benefits can Your Company Reap?
38 Why Choose Cogneesol?
processes and flaws
in the ERP system
barriers to the
IMPROVEMENTS TO THE
FINANCIAL CLOSE ISN’T
and rectifying the
root causes of
problems, not just
dealing with the
As per one survey,
conducted by the Institute
financial closing is one of
the most significant
finance and accounting
organizations face today.
More than half of
the survey respondents
stated that their team’s
be improved if the financial
close process gets
it has never been easy to
improve the financial close
process as it
is not just one process but
many processes that are
well, interdependent (to be
IF WE DISCUSS THE SOLUTION, THERE’S
NOT A QUICK CURE FOR INEFFICIENCIES
IN THE FINANCIAL CLOSE PROCESS.
In order to optimize the financial close cycle, an
organization requires to make coordinated efforts in
making improvements to financial close-related
policies, staff, and procedures.
THE HACKETT GROUP, REPORTS:
One Recent Survey,
of the survey
respondents trust the
numbers that are
reported in the
of respondents remain
under pressure to close
of respondents are
satisfied with the timely
closing process and its
of respondents say that
processes that are handled
manually are still the most
significant reason behind
the delay in the financial
Financial Close Process is
S I G N S S H O W I N G
Undefined close process
Inaccessible real-time data
Inefficient integration with
strategies and actual data
Manually generated financial
HARD CLOSE – THE TRADITIONAL
The hard close process, a vital part of the broad
area financial accounting, can become tedious and
inefficient, leading to errors or delays in reporting.
MOST COMMON TYPES
OF FINANCIAL CLOSE
Design &publish a calendar
for financial close
Regularly record operational
accounting system modules
Record monthly journal
Reconcile balance sheets
Review expenses and
Prepare financial statements
Close accounting system for
It uses an abbreviated procedure for financial closing. In this,
the accuracy of the financial statements gets reduced due to
several expenses and revenue accruals. Thus, the results
following a soft close can be inaccurate, or they might give
varying results over months.
MOST COMMON TYPES
OF FINANCIAL CLOSE
In the end, questions might get raised on financial statements that are compliant with
Make a detailed closing process and
add assigned responsibilities, defined
deliverables, and a closing calendar in
Maintain a series – one process
should not start until the pending one
Avoid investigating material
variances, remove small adjustments,
and set a level of detail for both
internal and external reporting.
Perform internal auditing to locate
issues in transactions, review key
components of financial statements
daily or weekly.
Automate your financial reporting
Standardize the close process.
Analyze reports on a monthly or
It allows the organization to switch from a manual and error-
prone process to a technology-based process. It implements
automation, control, and completes target-specific tasks within
In this, the workload is distributed more evenly (unlike the hard
close process), and it encourages constant reporting and analysis.
MOST COMMON TYPES
OF FINANCIAL CLOSE
performance using automation
Prefer utilizing tools for task
connectivity, reporting &
Analyze the current condition
of the process and improve it
for the future accordingly.
Adopt automation to optimize
Monitor metrics and outcomes
Reconcile bank accounts with
The company owners, as every
businessman, want their business to run
smoothly and grow steadily; this is
impossible if they don’t get accurate
financial statements on time.
In any company, people who have the
right to make a decision must become
aware of their business performance by
looking at its financial history.
This historical data generally includes
the very last month’s financial reports or
the same from the past 12 months.
With the help of this detailed
information, the decision-makers apply
their management skills and perform
financial forecasting and make other
THE IMPORTANCE OF
FINANCIAL CLOSE ON
THE SOONER THEY GET THE REPORTS,
THE QUICKER THEY CAN MAKE
These Tips to
• Continuously prioritize
the improvements in the
• Develop close
performance metrics and
monitor them regularly.
• Define accountability
for closing functions
without a scheduled
• Ensure your staff is
ELEMENTS OF OPTIMIZED
A methodology to improve continuously.
Implementing best practices as per your
Adoption of technology.
A complete set of smart strategies and
focused resources to sustain
The optimized financial close can be
achieved by following a comprehensive
approach that includes:
IS OPTIMIZED FINANCIAL CLOSE
The benefits of an optimized financial close are the reasons behind
its essentialness. Meeting regulatory guidelines and early
reporting of financial results are two major benefits, including the
Management of issues and items, consistent communications, and
timely reviews result in high accuracy in reported numbers.
Giving special importance to streamline repeatable processes
results in significant cost savings.
Consistently meeting regulatory compliance increases the
Earlier access to vital information (financial reports), which is
required to build and implement business strategies or react to
business environment changes.
Increased number of opportunities for accountants to perform
particular analyses and determine overall business improvements.
Access to financial reports based on historical and forecasted
financial information much relevant to the company’s operations.
The Following are the
reasons why many
companies face issues
in optimizing the
A growing company undergoes
multiple events such as
and mergers & acquisitions; with
these changes, the requirements of
close change. Improvements
focusing reshaping the entire
process always disturb the
significant processes, financial
close is one of such.
OF CLARITY &
The typical financial close process is
opaque that even some companies
collect metrics on the close process
performance. This lack of clarity
usually makes it challenging for
owners to determine the areas
where changes are needed, and if
the aftereffects of the changes
match their desires.
In many companies, accounting
departments are bound to catch up
with a cycle of activities – ending
one close, covering the heaps of
backlog from the last close,
starting to work on the next close
period. In between all of this,
accountants don’t get a plan to
assess the current processes to
find efficiency improvements.
Accountants, especially in large
companies, have to handle
multiple accounting systems
deployed across varying
currencies, time zones,
corporate cultures, and
requirements. All of this often
makes the close process full of
REPORTING Most companies get the
financial close done by
putting the latest
requirements into traditional
methodologies, instead of
overhauling a system during
critical and time-sensitive
activities, just to provide
the financial reports on time.
NATURE OF THE
Finance & accounting departments
often get in a rush around the
close, while each department
maintains its own list of priorities
and members focusing on their
own individual responsibilities.
Thus, in such an environment,
complete visibility, open
communication, workload balance,
and similar concepts are tough to
Companies make huge investments
in Business Intelligence, ERP, and
other systems that are helpful in
moving and managing data. These
systems mostly work efficiently;
however, at times, insufficient
investments are made to manage
and improve the financial close. As a
result, some processes get improved
while some remain the same.
ALL OF THE REASONS
MENTIONED ABOVE ARE
ACTUALLY OBSTACLES IN
THE CLOSE PROCESS.
STEPS TO OPTIMIZE
THE FINANCIAL CLOSE
There are specific tools and best
practices to automate and handle the
complete close process from the
beginning to the end. An optimized
financial close is that which;
Reduces the turnaround time of
individual close functions.
Adds predictability and visibility to close
Ensures reliability on the numbers being
complete and accurate.
Enhances the quality and consistency of
the financial close.
Identify Main Inefficiencies –
Assess Inefficiencies in the
Nonintegrated systems, through which most
accounting transactions are done, can
result in time-consuming reconciliations. Many
managerial reporting methods used at different
stages of the close might get better with
data manipulation and various spreadsheets.
These manipulations are often documented in an
unorganized manner, creating issues in the
WHY IS THIS STEP
Identifying efficiencies and inefficiencies
can help organizations to determine
the items they should address immediately,
items that have growth potential, and issues
that might require more effort and time to
A company’s foreign subsidiaries can further
create complications in financial matters due to
poorly documented intercompany transactions,
errors in currency conversion, inappropriate
consolidation & elimination of financial
Align Systems, People and
Processes - Raise awareness,
teams and goals
The second step requires making everyone a part
of the financial close process committed to the
process of change. Yes, it would be challenging to
bring dozens of employees together, typically
from operations & services, treasury, cash
management, finance &sccounting, legal, IT,
payroll, etc. and take them away from their
core traditional functions, but it is not
WHY IS THIS STEP
Aligning systems, staff, and processes help
you define the scope of optimization and
balance the resources and priorities to
achieve optimized financial close.
Also,after getting together, everyone must set
their concerns about deadlines aside so that to
focus more on collaborative objectives
that are vital for the company to survive in the
- Expose bottlenecks and
Identifying interdependent key
processes help the company set
achievable deadlines and reduce
unnecessary conflict & st that, by
understanding the vital path to
financial close, all staff members can
see the procedure and know their
responsibilities. This will also help
identify reasons behind delays, which
might help to improve the processes.
WHY IS THIS STEP
Determining the processes that require to
depend upon each other helps you
understand the reasons why the financial
close process gets delayed.
Having the Greatest
Impact - Define the root
Cause of issues and
After identifying bottlenecks, it is time to resolve
potential constraints before they become
responsible for more delay. Defining the main
causes allows the company to find out which
solutions would be best and when & where to
WHY IS THIS STEP
This step allows you to find issues
responsible for delays and define
solutions accordingly. Also, it helps
you have a system to start resolving
the problems that have the greatest
While working on improvements, it is vital to
begin with clear and precise information about
the problems, for instance, start with the
category such as personnel, processes, or system
and then find the root cause, its impact on the
financial close, and benefits of resolving the
Optimize Financial Close
Process Administration -
solutions to automate the
The final step to optimize the financial close
process is to implement the solutions.
Automating the administrative tasks and having
control over them can help reduce time wastage,
manual errors, and improve efficiency.
WHY IS THIS STEP
By executing the solution-focused
strategies, companies can automate the
recurring tasks and frequent
transactions, monitor staff responsible
for close cycle tasks, and get real-time
information about the financial close
Instead of following traditional means of
assigning the tasks, companies can
optimize the number of tasks and assign them to
different executives that should be involved in
the financial close process.
Numerous solutions can support you with
financial close & reconciliations, which can also
automate, control, and monitor the financial
close related activities. Solutions such as
BlackLine Systems, SAP Financial Closing
Cockpit, and Oracle Hyperion Financial Close
Suite can provide a smoother, more efficient, and
quicker financial close.
A Method For Closing Books
Accurately & Quickly
Accurate and timely financial statements are vital to meet compliance
requirements and achieve competitiveness, but recent survey conducted by
Genpact along with CFO Research revealed, “only two out of five responding
companies complete the quarterly general ledger close within one week—a
significant differentiator for enterprises that are more agile and effective in
Reduced close cycle time
Improved close process efficiency
Enhanced reliableness of financial statements
The faster the financial close is, the quicker the financial numbers get
reported and analyzed. Many companies hire outsourcing companies for
financial reporting services to get better and accurate
reports on time. However, some well-established companies spend only
four days from the closing period to final reporting, getting more
time for required analysis and fruitful decisions.
If we discuss accounting outsourcing services, the scope of
advantages is broad. Outsourcing provides you with numerous
Optimizing the close process is no less than a strategy to achieve multiple
objectives. A better close process is often achieved with the help of using
additional skills and capabilities. This allows staff to focus on core analysis
and interpret the financial data rather than just performing assigned jobs.
As a result, it reduces overall costs and ensures accuracy in the financial
The benefits of taking an end-to-end approach for multiple closing
activities can be increased efficiency, speed, and accuracy in the
financial close process. This is exceedingly helpful for company
owners and CFOs that are planning to cut costs and improve financial
effectiveness in alluring stakeholders.
PROVIDE WHAT MANAGEMENT
Keeping track of reporting deadlines and
Error-free financial data
Saving time and cost
Improving mid-year control over financial
data and forecasting to make better decisions
In today’s business environment, CFOs must implement
expectations of the management, some of which are
management accounting strategies to effectively handle
financial accounting and reporting process meet the
OUR APPROACH TO
Our approach includes evaluation of operational efficiency and
on-going closing processes and associated risks, in terms of both
accuracy and adequacy. It delivers a detailed analysis of
opportunities to bring accurate, more transparent, and faster
closing processes. We, as per our experience, focus on elements
that crucially impact the operational efficiency – People,
Processes, and Technology.
What Kind of Benefits can Your Company
You get information that is readily
available and reduce closing time.
Redundant processes are
Risks are reduced, and
transparency is improved.
Workflow is enhanced, and costs
You quickly get benefits, and
opportunities to optimize the
You get complete support for
having the required level of control
over critical items, and their
correction and analysis.
Interim financial reports are reliable
enough to make decisions.
All the financial data and reports
Cogneesol’s services will help you with financial close
optimization and reporting processes while preserving
shareholder value as we ensure that;
We serve our clients with quality
management experts having vast experience gained from previous
projects across various industries. We offer service packages that
can be customized as per the requirements and priorities of the
clients and ensure that the services delivered reach high levels of
Why Choose Cogneesol?
outsource accounting services
GET IN TOUCH
To Know more about us, get in touch with one of our