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Close & Consolidation Accounting Benchmarks

Ken Bowling's Profile

Close & Consolidation Accounting BenchmarksWe are a public company (Annual sales in $275 million range) with operations in the US, Canada and China.  It takes us about 5-6 business days to report monthly consolidated financial results.  Just curious how we compare with other companies our size.

Answers

Anonymous
(Consulting CFO and Business Operations Advisor) |

Ken,

Honestly, that's pretty good. The best I've been involved with was 9 for a more complex organization, so feels pretty comparable. The active terms I'm seeing are "reporting" and "consolidated" which indicates there should be two review cycles prior to release within that timeframe; given that requirement, and the necessary lag to capture end-of-month accruals, I wouldn't see a benefit in compressing it further.

Cheers

K

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Ken,

I believe this is good however our Business Unit consolidation for a BU with annual sales of almost $2 billion is pushing towards WD6 this year and I believe we can push it even down to WD4 or WD3 in coming years. So you are good now, but next year not so much.

The point I want to make is that you should keep pushing the faster close so that you can free up resources in your finance function to do more value adding activities.

Topic Expert
Lee Andrews
Title: P/T CFO, Business Consultant
Company: Pacific Bag, Inc./Other Clients
(P/T CFO, Business Consultant, Pacific Bag, Inc./Other Clients) |

5-6 days at that size and with foreign operations -- sounds darn good to me. In the public sector of course, a fast close is important with all the quarterly filings that create their own urgent reporting deadlines, and with needing to quickly monitor monthly results in between just in case bad news is looming.

But for private companies, while a fast close is preferable, I often find that those results sit on a lot of senior exec and management desks for at least 2-4 days after they are sent out, with little response. And I'm not sure that a faster close frees up accounting resource time -- it may timeshift where they spend their hours, but a close is a close is a close. If it takes, say 40 person-hours, it does not make that much difference if it is done Mon/Tuesday, or over the course of a week.

Ken, this does not specifically answer your key question of how you compare to other companies your size; I'm just giving my view on the fast-close debate. But from my public reporting company days (3 companies; $150mm to $1bn revenues), I don't think we could beat your 5-6 days. Maybe we did not have computers back then, ha!

Ken Stumder
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) |

I think that 5-6 days is quite good given the size of the company and the fact that you are international. We completed our last quarter-end close on Day 6, and we are a small private company. Of course, we don't have an army of staff either!

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Impressive. But I go back to Keith's comment. Accounting is a process over time. There is little value in throwing # of days out without defining what steps of the process you are able to do...with accruals, with adjusting entries, what level of reconciliation, and what staffing (Ken's point). I was able to get monthly p&l's out for 30 joint venture companies on the 10th business day, but with a very large staff. But the statements were final. They had to be, as the information was for external consumption.

Anders Liu-Lindberg
Title: Regional Finance Business Partner
Company: Maersk Line Northern Europe
LinkedIn Profile
(Regional Finance Business Partner, Maersk Line Northern Europe) |

Regis I agree with you from the point of view that just cutting days is not the point. The point is to optimize processes, systems and workflows. We have cut our local close process from WD4 2 years ago to WD1.5 today. This is achieved by going through all of the above and has even increased the quality of our numbers.

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