Time to transform the financial close as we know it

Closing the books accurately and quickly is more essential than ever as organizations rely on data to make informed decisions and plan ahead. Yet, in practice, the process is just as error-prone and time-consuming as it has always been. Excessive manual work leads to inefficiencies and mistakes, while disparate data creates inconsistencies. More than causing stress – sometimes even burnout – within finance teams, this also erodes trust among management. 

Taking a holistic approach to the accounting and controlling process

While there may be no such thing as an easy financial close, there are ways to relieve the stress and frustration, says Joseph Taymans, business & finance transformation manager at delaware.  

He emphasizes the importance of viewing the entire finance workflow from an end-to-end perspective: “The financial close is just one step in a long, continuous process.  It’s a crucial stage that depends on numerous operational processes. depends on numerous operational processes. That’s why it is essential to streamline the entire flow with the business stakeholders (HR, sales, marketing, product management, etc.), also considering the important connection with the budget dimensions for better steering.”  

“While this may sound straightforward, we do encounter teams where the controlling and planning process is siloed to the closing process. This generates frustrations for both accounting and planning teams. Without sufficient alignment, it is impossible to report properly and thus impossible to provide the necessary steering for upper management.  

Moreover, ensuring data availability and accuracy goes beyond the finance team’s responsibility. If a sales representative doesn’t log a deal or a warehouse operator fails to scan incoming goods, the accountants responsible for the close will be left scrambling at month’s end.” 

Accelerate, improve and prepare for the future 

Drawing on years of experience, Joseph shares four best practices for achieving a stress-free financial close, while also considering future challenges and key trends. 

1. Introduce technology to optimize the closing process  

Organizations should embrace technologies such as AI and machine learning to optimize the closing process. Many delays and complexities in the month-end closing arise from repetitive, manual – and, hence, error-prone – tasks. Investing in technology solutions such as machine learning and AI to automate the process can significantly raise efficiency and accuracy. As the capabilities of these technologies continue to evolve, they are increasingly able to support not only transactional activities but also strategic tasks. This shift will enable accountants to streamline financial closing processes further and empower employees to focus on value-added tasks. 

“Automating can start small by gradually replacing spreadsheets, which are still widely used, or by implementing a tool that automatically reconciles balance sheet accounts,” Joseph asserts. “Many ERPs include functionalities to automate manual tasks such as invoice processing, balance sheet reconciliation, and financial reporting. E-invoicing software streamlines invoicing workflows, which directly speeds up the close. And organizations can leverage machine learning and AI to build predictive models and enhance the closing process.” 

2. Ensure compliance and mitigate risk

Another best practice to keep in mind is implementing structured procedures throughout the entire finance value chain, which is essential to guarantee complete, accurate financial statements – which are, after all, the basis of every financial close.  

As management increasingly requires immediate insights into business performance for effective decision-making, finance teams are expected to monitor and analyze financial data in real time. That means that continuous accounting and continuous closing are on the horizon. 

Joseph: “When finance teams ensure compliance with accounting standards and review and reconciliate data throughout the month, they’re sure to get the books right faster. In addition, variance analysis can help spot discrepancies early. All these steps will help mitigate compliance risks and not only speed up, but also drive greater confidence in the financial close.” 

3. Commit to continuous improvement

 Another guideline to navigate today’s volatile world and create financial value is that CFO offices should not only invest in technology but also cultivate a culture of continuous improvement and invest in upskilling their teams. It will not only be important to stay on top of the financial aspects of the closing but also to control and report on non-financial data.  

This means that data analytics is becoming crucial to the financial closing process. It enables finance professionals to analyze vast amounts of data generated by financial activities and processes, or identify trends, anomalies, and discrepancies, and ultimately make better decisions. 

Joseph: “Once you start improving the closing process, the benefits will compound exponentially, as the financial close is a recurring monthly task. Each month, the process will become faster and smoother as teams adapt, refine their workflows, and discover new ways to boost efficiency.” 

Looking ahead, there is a growing demand from investors, regulators, and stakeholders for greater transparency and accountability on Environmental, Social, and Governance (ESG) issues. CFOs are also expected to manage ESG-related risks and report on their organization’s non-financial data, reflecting the increasing importance of sustainability and ethical governance. 

4. Streamline collaboration across departments and teams

 As previously mentioned, the entire organization plays a role in accelerating the financial close. Therefore, the final best practice is about communication and collaboration. Poor coordination between departments that manage data relevant to the financial close can hinder both accuracy and speed. 

Joseph: “When teams from sales, marketing, product management and HR provide data to finance in other formats or via various channels, delays are inevitable. To avoid this, ensure consistency in data, processes and workflows. Clear communication, well-documented transactions, and agreed-upon deadlines are essential for a stress-free financial close.” 

Financial closing: the future starts today 

A solid transformation of finance processes, introducing new tools and processes, will be a must to deal with these challenges and prepare for the future. How that future will look like? Joseph spots the following trends: 

Build confidence among finance, management and shareholders 

In summary, as your organization’s strategic priorities shift, transforming your finance processes, including the financial close, is a smart move. It will help build confidence among finance, management and shareholders – while also relieving stress for your team. 

As Joseph’s best practices indicate, a finance transformation is about more than technology. It requires a holistic approach that connects technology with people and processes to maximize value and drive lasting change. At delaware, we combine strategic insight and deep know-how of finance processes with technical expertise to reimagine finance operating models and help build a world-class finance organization that fosters productivity and reduces stress.