What steps can a finance department take to close the books faster?
Take these five steps to close the books more efficiently:
1. Synchronize accounting and financial data across the organization. Spreadsheets are good for calculating data on an individualized basis, but they generally don't detect errors, lack governance and logging information, cannot easily be reconciled with other data sources within the organization and are hard to share. Although it is possible to build custom integrations and compliance tracking for corporate spreadsheets, when the development, maintenance and implementation costs of an in-house solution are fully calculated, it is typically faster and more cost-effective to simply purchase a global financial management system.
2. Automate the activities associated with financial translation and normalization, such as exchange rate translations, accruals and escrow and intercompany transaction reconciliation. Based on this, close feeder systems on a regular basis rather than saving all closing activity for month, quarter or year's end.
3. Delineate top-line corporate activity from localized general ledger activity. This way, company-wide activities and adjustments can all be made at once rather than requiring each business unit to enter its own share separately.
4. Make accounting data consistent with a standard chart of accounts. Large corporations typically have multiple accounting systems due to merger and acquisitions activity, geography or rogue offices and employees. And there are good reasons for this: Different geographies and regulatory issues require different formats and reporting. But these considerations aside, companies must have a standardized set of data that all business units and subsidiaries agree to use. Regardless of the number of systems involved, there should be one consistent format of results stored within one source that represents the best version of the truth, ideally on a same-day or near real-time basis.
5. Provide a two-way road between financial and operating managers for all relevant accounting inputs. To close the books quickly, companies need to get the best data from business managers. After this data has been received, these managers also need access to financial and regulatory results to double check information and provide additional guidance. Finance can get out of the business of data entry and transactional processing by handing these tasks over to those creating and managing the initial data.
About the author:
Hyoun Park is a founder and principal consultant at DataHive Consulting. He focuses on the intersections of social media, big data and human insight to develop enterprise technology solutions. For the past 20 years, Park has focused on harnessing the transformative power of the Web, social media, enterprise mobility and the cloud while responsibly sticking to a budget. Follow him on Twitter @hyounpark.
Related Q&A from Hyoun Park
Hyoun Park lists critical features finance managers should look for when evaluating treasury management software.continue reading
Many large companies have more than one core financial system, which can inhibit data visibility. Learn how and when to consolidate.continue reading
Hyoun Park explains the conditions when dedicated revenue recognition software becomes a 'need to have' rather than a 'nice to have.'continue reading
Have a question for an expert?
Please add a title for your question
Get answers from a TechTarget expert on whatever's puzzling you.