Closing the Books: The Top 4 Obstacles Slowing You Down
Closing the books at the end of a financial period can be an endurance challenge. Last-minute reconciliations, manipulating data in spreadsheets, and performing other manual tasks often means a late-night scramble. By identifying and addressing the main obstacles to an efficient close you can speed up your process and gain faster access to insights for decision making.
2021 Close the Books Survey
Sage conducts an annual Close the Books survey of more than 1,600 finance and accounting professionals. The purpose of this yearly survey is to help finance leaders benchmark against their peers and learn best practices. Sage Intacct recently released the 2021 survey results, which feature best-in-class businesses and their path to achieving faster closes. Below are the four main obstacles reported: manipulating data, information handoffs, data accuracy and reconciliation, and researching anomolies.
The biggest culprit slowing down the close is manipulating data manually with spreadsheets. Not only that, it prevents timely access to data and can result in errors that impact decision making. In fact, survey respondents who reported being imacted the most by using spreadsheets take 36% longer closing the books than those slightly impacted. This manual work is frustratingly time-consuming and cumbersome.
Many successful organizations have turned to cloud financial systems like Sage Intacct to minimize the need for spreadsheets. One example is Pathway Lending, which provides loans and educational services for small business owners. They reduced the monthly close by 60% after implementing Sage Intacct. The game changer for them was the customizable reporting and dimensional accounting across business segments. Not only did they improve efficiency but they were also able to provide insightful, real-time information to their board.
For many businesses, legacy on-premise financial systems make it hard to track revenue sources and related transactions. Using Sage Intacct the Archdiocese of Detroit, a nonprofit Catholic ministry, was able to simplify their chart of accounts and easily track multiple entities. As a result they saw a decrease of 25% in time spent on the banking process.
The survey also discovered that information handoffs caused a delay in closing the books. While data from across the organization is necessary, collecting that information can be difficult. This is especially true of organizations with staff from around the world. For instance, it can take a couple of hours trading emails back and forth if finance needs information from marketing to close they books. The survey reported that these information handoffs have a medium to high impact on their close time. In contrast, with cloud financial systems, real-time data eliminates time-consuming handoffs and provides not only a more efficient close. It also results in accurate monitoring of business health.
Sage Intacct customer and investment firm Halstatt reported being able to easily access data across the solution, improving collaboration among stakeholders. In turn this empowered the finance and accounting teams to become strategic partners.
Data Accuracy and Reconciliation
According to the survey results another obstacle to closing the books is data accuracy. 56% of respondents reported a medium-to-high impact of reconcisiotions in the close process. The top organizations closed the books faster by automating reconciliations. Their system automates transaction matching and reconciliations so cash accounts are tied to bank accounts, which results in faster month-end closes.
For Anchor Loans, a construction lender, Sage Intacct enabled them to eliminate 16 hours of manual bank reconciliations the finance team had been doing in Excel. They also gained a 75% improvement in balance sheet reconciliation. With Automation, finance can easily identify discrepencies and drill down into the details to resolve them.
Data accuracy is an additional bottleneck. As with reconciliations, 56% of respondents reported a medium- to high-impact of investigative time. With Sage Intacct cloud financial management system, companies can easily identify inconsistencies with anomaly detection. This frees up finance teams to focus on higher value activities like strategic planning. It also ensures accuracy across the entire financial period. Companies can easily analyze vast quantities of data, drill down into anomolies and take action to resolve them.
This process helped Monstercat, a growing independent music record label, improve visibility as it added entities and currencies. They break out their monthly P&L into account types, helping them monitor the health of the business and identify trends or discrepancies.
By improving how they manage and report on dynamic revenue streams, they also saved time on monthly reporting and increased productivity by 30%.
Finance teams that manage to avoid the biggest obstacles of the close access information faster than other businesses. That provides the data for strategic decision making, the ability to forecast, and the opportunity to be more valued within their organizations.
Lengthly, burdensome close processes not only hurt morale, but prevent an organization’s decision-making when it can’t quickly get current information. Cloud technology provides faster insights to turn finance leaders from historians to visionaries.
Closing the books at the end of a financial period remains an uphill climb battle for many. But identitfying and addressing the major obstacles can reduce the time to close, provide insights and raise the profile of your team. Learn how Sage Intacct can help you overcome these obstacles.