Closing the Books Faster?

The benefits of a quicker close process...‍

Hyoun Park, founder and principal consultant at DataHive Consulting, recently posted “Five Steps to Closing the Books Faster” on SearchFinancialApplications.com. He listed five steps that an accounting and finance department take in order to close the accounting period quicker. “Closing” faster has been a popular topic of discussion as it enables management, lenders, shareholders, auditors, etc. To have financial results on which so many crucial decisions are made.

Shortened Filing Deadlines

In recent years, many publicly traded companies have experienced shortened filing deadlines for their annual and interim reports. For example, accelerated filers must file an annual report within 75 days of their fiscal year-end, yet large accelerated filers only have 60 days to complete this filing of FORM 10-K. Similarly, quarterly reports are only given 45 and 40 days from quarter-end for the types of filers described above, respectively.

This means there is less time to perform annual audits and quarterly reviews. To add even more pressure to the deadlines, additional compliance activities, such as auditing certain internal controls, must be performed in conjunction with close activities.

Pressure on Non-SEC Filers

Non-SEC filers, like privately held companies and not-for-profit organizations, also strive to shorten the close period. Those who undergo an annual audit of their financial statements and quarterly reviews by an external auditor must be able to have all pertinent financial data and internally prepared financial statements ready for review or audit.

Reducing Errors and Enhancing Efficiency

Some financial and accounting systems make it easier to perform transactions in a new period when the previous period is closed, although this is currently much less common. Errors of posting to a previous, open period can be prevented.

Additional Incentives for a Quicker Close

In addition to the benefits mentioned above, there are several other incentives:

• Timely Management Review: Management can receive and review financial statements sooner.
• Early Consolidation: Consolidation of financial statements, including inter-company eliminations, can start earlier in the cycle.
• Improved Accuracy: There is more time to review the financial data and prepare more complete and accurate financial statements with proper disclosures and footnotes.
• Streamlined Processes: Less overall time and effort is spent by the accounting and finance departments each accounting period with a more streamlined process.
• Timely Data for Analysis: Having final, actual accounting data available to the finance group using planning software for analysis against an approved budget and periodic re-forecasts is beneficial. The quicker this data is available for analysis, the quicker management can review it and make timely and informed decisions.

Leveraging Planning and Budgeting Solutions

Companies that use planning and budgeting solutions with integrated financial statements can benefit from having good insight into the future financial health of their organizations by comparing the forecasted statements with their actual counterparts as soon as the accounting period is closed. Closing the books faster is achievable when using the best financial projection software, which streamlines financial reporting and forecasting.

By adopting best practices for closing the books and leveraging advanced financial software, companies can ensure timely, accurate financial reporting. This not only meets regulatory requirements but also provides management with the information needed to make informed decisions swiftly. The benefits of a quicker close process extend beyond compliance, enhancing overall business efficiency and strategic planning capabilities.

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