more-arw search

Financial Close Technology Webinar

To view this Resource, use the form on the right

Financial Close Technology WebinarAccountants have been "closing the books" since the profession was formed. It is still a process that is often filled with stress and chaos. In today's close, there is inherent complexity and continued pressure for greater speed and accuracy as we strive for less time shuffling data and more time analyzing results and driving the business. Turns out there is a lot of new technology addressing the many issues hampering the "close and disclose" process. These applications can help you close faster and more accurately, and get to the disclose (analysis & reporting) process in better shape, with more insight. In this session, we explore some new technology and best practices to help you optimize these processes and get to better results - and less stress!

This Financial Close Technology Webinar video is from the Proformative webinar "Leveraging Technology in the Financial Close" held on June 28, 2012.  The webinar features a presentation from Bryan Dehmler-Buckley, Principal Product Manager, Host Analytics.


Financial Close Technology Webinar


To get started, we're going to talk about the change, what's driving the change in the close and disclose process. What I want to start off with first is a discussion on the current state of affairs, and maybe some of the differences between what we have seen in the marketplace in terms of those companies that would be classified as bottom performers in their efficiency with which they are closing their books, and those which are considered world-class performers. Then we're going to jump into a quick discussion on some best practices that will allow you to move from the former to the latter. Then, lastly, we'll wrap up with a few empirical examples of customers that we've seen that have implemented technology to get them from that bottom performer state to the world-class performer state.

Take a look at our first slide here. You can see we've got two different categories; bottom performers and world-class performers. We realize this is a spectrum, but for the purposes of this discussion we're going to focus on moving from the low to the high here. As you can see, at first glance the difference doesn't seem necessarily all that profound. Ten days, nine, ten days, somewhere in that neighborhood, you might say, "Okay. That's not that significant of an improvement." But if you consider a company, and specifically a CFO and all of the folks who report to them, you think that every single month it's nine to ten days, and every single month all the activities that group is engaging in, that the other company cannot engage in, really sets them up for having a competitive advantage in the marketplace.

Now, what enabled this? Certainly, there's a few factors that can allow you to move from one to the next. Technology, these days, is really the driving factor behind this. It's made it a reality over the past few years. What's important to understand, of course, is what companies do with this extra time. Okay? What do they do with this faster stream of data that technology is enabling? How do they utilize that to make better, faster positions? We'll discuss a bit about that in our later slides where we'll talk about
the best practices with the close and disclose process and how companies are implementing those to become more effective. Before we understand all of these outputs, let's take a look at how these close cycles are broken down in typical organizations, and the best practices to get you to that next level of performance.

Based upon an analysis of our current customers as well as some industry benchmarks, we've come up with a categorization of the close cycle as it pertains to the bottom performers and the world-class performers. As you can see, for the bottom performers, a large amount of time is spent collecting and adjusting the data. Everybody's been party to this where it's a huge aggregation effort to get this information from the resources across the organization. Not only does that chew up personnel time, so there's lost efficiency for the individuals who are responsible for that, but it also chews up the ability to become more effective in terms of your decision making because the individuals that need to participate that process are bogged down with other activities.

As you can see, as you move up the chain, there's a very little bit of time that's left at the end of the process to do any type of reporting and analysis on the close data itself. What's really driving this? In the past, systems really haven't traditionally been designed to facilitate this type of process. Right? They're pulling data from the district data sources, the multiple GLs, global organizations that are constantly expanding and growing through acquisition or even just organic growth as well as the speed of business. Right?

The information being shared so readily today, leveraging the Internet, the speed of thought has increased, and therefore, the need for faster and better decision making has also increased. We're kind of caught in this cycle of we know we have to close faster, but we have these old shackles that have been placed upon us. We don't know how to break free of that. Fortunately, over the past several years we've had technology that's been introduced that allows us to move towards that.

What we're seeing with our customers that have advance to the world-class level is that it takes more than just a little luck, obviously, right? There has to be something else behind this. What enables world-class performers is really three things. Our CFO likes to talk about world-class performers really leveraging people, process, and  technology. Having the right people, with the optimal skill set, in the right position, puts you on that path to success.

Now defining the most efficient processes based on best practices, and implementing those across the organization as well as defining evangelists who can push your message throughout the organization will, again, put you on that path. Lastly, utilizing the most effective technology which is designed to leverage those people and support the processes that your organization has in place today really seals the deal.

Editor's Note: Take a look at Career Advancement Skills Webinar, Enterprise Performance Management Analytics Webinar, Managing Currency Risk Webinar Corporate Finance Technology Webinar and Business Planning Consolidation Webinar.

We're going to focus on that last one, because the people and the processes are things the software can't solve, necessarily or the technology can't solve. They have to part of the culture, part of your culture and the organization. Certainly, the technology can help enable some of the processes, but at the end of the day those have to be in place before the technology can really enable you to be successful.

As we discussed at the beginning, moving from bottom performing to world-class, really frees up time. Now what is done with this extra time each month is what keeps these companies at world-class level. So the time is spent on projects which previously seemed out of reach. Projects such as operational analysis, comparative benchmarking, looking at yourself against your competition, and what their metrics are compared yours. Process efficiencies; how do we improve the close process, how do we improve the collection of data, the analysis of data? Whatever is hampering your organization. As well as getting involved in new projects, right? Taking that expertise and bringing it in-house if that is something that is germane to your business. Growth analysis; are we going to grow organically or are we going to have an acquisition strategy? Do we make lease versus buy decisions.

All of these types of projects, which have been traditionally put on the back burner just because so much time has been spent closing the books, are now made a reality because you have that freed up time. Now, we need to recognize, also, that is not a level which you obtain and you're there. It's not like graduating and you get to that level or you become a professor and you've obtain tenure. You need to keep improving to stay where you are.

To that end, we're going to talk a bit about the best practices associated with having a faster close and disclose cycle. When I think of best practices, I think of a multi-layered process of best practices, some of which you apply and some which may not apply to your organization. But taken as a whole they really provide a series of steps that you can implement to allow you to get to that next level of performance.

Within this best practice framework, there are really two common themes that we see. The first is best practices related to process controls. Controls that facilitate efficient processing of information or gathering of information or management of that information. So you can think of security controls or how users are provisioned to access information within a consolidation system. Without these controls, not only could you be out of compliance with certain accounting standards, which that of course, is a no-no from an auditing perspective, but your workforce becomes less efficient if they're not optimally provisioned to do the activities that are pertinent to their job and/or to their function.

Now the second is best practices related to integrity controls. Making sure that information is accurate and traceable throughout the organization. You can think about this in the context of accounting rules, which are enforced to meet standards whether they be GAAP, or IFRS, or Basil II, or whatever happened to be the standards that are in place in your organization or are pertinent to your organization.

Now consider in this example, minority interest entries, which are prepared based upon percentage ownership and control by the parent entity. There are certain standards that are specific to that, in terms of what your level of ownership is, as well as your level of control of that subsidiary. Having those baked into a system certainly makes you much more efficient so that you can actually focus on . . ."

End partial: Financial Close Technology Webinar


Fill out this form to become a member and get access to all resource, videos, and whitepapers on Proformative.
Clear the field above and enter the number as indicated
By filling out this form you will become a member of Proformative, and are subject to Proformative's User Agreement.