2016 Year-End Financial Close Breakthroughs: Lessons Learned

2016 Year-End Financial Close Breakthroughs: Lessons Learned

It's over – you no longer have to worry about the dreaded year-end close. 2016 is truly behind us. However, the stress of the financial close period only repeats itself next year, or next quarter if you're not using the right tools and techniques.


This guide discusses the challenges in financial close and reporting, what solutions are available to make the process smoother, and the best practices to make these solutions work efficiently.

What Challenges Do You Face at Financial Close?

What does your financial close look like? Do you rely on spreadsheets and emails to collect and consolidate financial data? Are you relying upon a legacy system that has passed its prime? And do these techniques drag out the closing period so it’s longer than five to seven days?

In a January 2017 webinar entitled “War Stories from the Fiscal Year-End Close and Reporting Season of 2016,” Planful VP of Product Marketing John O’Rourke moderated a panel that discussed what kinds of hurdles companies faced in 2016 as they tried to close their books, and how organizations can ease the pain going forward. This guide touches on some of the issues the panelists brought up.

As O’Rourke pointed out, the essential process of the financial close consists of four steps: collect, consolidate, report, and disclose. That’s easier said than done, though. Today’s multinational business has to contend with currency translations due to branches in other countries, inter-company transactions, minority ownership calculations, and supporting multiple GAAP standards, to name but a few issues.

SpreadsheetsAll of that becomes much more difficult when you’re using tools such as a spreadsheet or legacy systems. Spreadsheets don’t allow for collaboration between accounting and finance team members, and there aren’t effective quality control mechanisms or audit trails in place to ensure data is correct. Legacy systems are often expensive to maintain and may not meet today’s more stringent requirements.

Moreover, both of these methods make it very difficult to share information with internal and external shareholders. While it’s easy to attach a spreadsheet to an email, readers can’t see a revision history or, go back to an earlier point, or even know whether data is completely accurate. And legacy systems might not generate reports in formats that are simple to read or distribute.

Even GL/ERP systems aren’t the best solution for year-end close. Although these software programs provide basic and generalized accounting features – they’re not designed to integrate and consolidate data from other GLs and the reporting capabilities are often limited.

What Are the Business Impacts of These Challenges?

Every time you close the books past the targeted closing date, you and your team feel stressed, right?. Your collective health isn’t the only thing that suffers, though. The inability to close in a timely fashion hurts your organization, too. For a start, decision makers don’t have the information they need to make the right choices for the company.

CFO business partnerWhen you take too long to close the books, or if the results are not accurate, the c-suite and other stakeholders will lose confidence in the finance department. As a result, executives will start creating their own versions of the truth for decision-making, which can lead to additional problems.

When executives have accurate and current information, their forecasts will be more meaningful. It’s hard to predict what will happen in the next quarter, let alone next year, when the numbers you’re looking at aren’t the most recent. Forecasts become more powerful and better indicators of future performance when they’re based upon numbers that reflect the current reality.  And think about the additional value finance can provide to the business with more time to analyze the results.

These challenges can be surmounted, when you utilize the proper best practices as well as the right tools. During the webinar mentioned above, three finance professionals discussed the steps they took to streamline the financial close and accelerate reporting. Before they discussed the solutions they used, they recounted the difficulties their businesses experienced when closing the books.

What Are the Problems Real Companies Have Faced with Financial Closing and Reporting?

The webinar featured two Planful clients: Tim Brown, CFO of the Boston-based Motus, a firm that provides reimbursement, tracking, and BI solutions, and Dwight Lloyd, financial controller at Alabama-based P&S Logistics, a conglomerate of companies in the transportation and logistics industry. Annie Nguyen, Planful’ controller, also shared her insights into best practices for the financial close process and accelerating financial reporting.

Before moving to the cloud, financial processes were slow. The companies used a combination of spreadsheets and on-premises solutions. Data was in silos. There was no easy way to reconcile financial data with information stored in other systems, such as the sales pipeline. It could take a minimum of two weeks just to reconcile financial information with sales forecasts.

The approach to managing their firms was akin to looking in the rear view mirror; managers couldn’t get data in a timely fashion, so they were constantly looking at previous financial information to make decisions as opposed to having the most up-to-date numbers. Linking multiple spreadsheets was a struggle because the numbers wouldn’t balance properly.

With on-premises solutions, members of the finance team needed to be on-site and wait for the system to process data. People working off-site couldn’t access the reporting software, so they would have to send in their numbers or call their on-site colleagues and provide the information over the phone. The on-site staff would need to enter the data manually after checking it for errors.

Another challenge that businesses face is checking the quality of financial statements. It can be a lengthy and frustrating process – how do you know who entered what information when? With spreadsheets, you can’t see a revision history, there are no time and date stamps, let alone information on who inputted data.

What Are the Best Practices for Streamlining the Financial Close and Reporting Process?

Brown, Lloyd, and Nguyen discussed what their companies did to address these challenges and make their financial close and reporting process streamlined. Moving to a cloud-based solution simplified and in many cases eliminated the issues their businesses faced when attempting to close the books in a short period of time while also sharing information with stakeholders and remaining compliant to regulations.

cloud-computingWith a cloud-based system, there’s no more waiting for data. Information is available in a matter of hours, not days or weeks. Companies can perform reconciliations on a daily basis. Managers can make decisions about expenses on the spot and adjust their outlays accordingly during the present quarter.

In addition, more kinds of data are available. With ERP software, you might only be able to see information in a given module of the software. That’s not the case with cloud-based financial close and reporting solutions: you can see operational data as well as financial.

Checking the quality of that information isn’t hard, either. Employees have different levels of access, so only someone with authorization can enter data. A time and date stamp means you know exactly when that employee entered or updated data, as well.

Moreover, reporting is no longer a chore. Cloud-based software automates the reporting process entirely. At the touch of a button, you can generate a variety of reports. Again, you don’t need to wait for information – it’s already in the system.

The automated flow of data makes it easier to stay compliant, too. Cloud-based software can create GAAP-based financial statements for auditors. Need to make changes to reports? Not a problem – formatting changes are quick and easy, and you don’t have to go through many steps to perform them.

The Advantages to a Cloud-based Financial Close and Reporting System

Cloud-based financial close and reporting software offers a number of advantages over other solutions. It makes closing and reporting simple, fast, accurate, and efficient.

The automated nature of cloud-based software means that manual data loading is virtually eliminated. And when it comes to sharing information with stakeholders such as members of the C-suite, the board, or other investors, the solution does the work of generating reports for you. Compliance becomes a breeze, too – once again, the system generates the documents you need so that auditors can easily see relevant information and you can avoid financial penalties.

It’s also easier to collect information. Cloud-based software connects to other systems that you use (such as ERPs or HCMs), so you don’t need to worry about accuracy or that the data isn’t current. Moreover, because there’s no more manual entry of information your staff doesn’t need to spend hours validating data and correcting errors.

As a result of the efficiencies cloud-based software introduces into the financial close process, businesses have a better grasp of their financial information, which means they can make better decisions. They’re no longer relying on numbers that are weeks out of date. Instead, their decisions reflect information that’s current so their forecasts are more realistic and achievable.

Your laborious and lengthy financial close and reporting process isn’t a badge of honor, and you don’t have to go through the same nightmare every year, every quarter, or even every month. Cloud-based software streamlines these actions so decision makers can make better choices. To learn more, watch the webinar replay: War Stories from the Fiscal Year-End Close and Reporting Season of 2016.

Watch the Webinar Replay

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