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Strategies to Simplify the Accounting Closing Process

It’s common for Shared Services leaders to be asked “How many days does it take you to close?” The follow-up question not usually asked, is “How painful is your closing process?”

A recent Peeriosity PeercastTM in the General Accounting research area featured a global Shared Services organization that coordinates the closing process for approximately 500 legal entities in over 80 different countries, with a maze of cross-border intercompany and external transactions that further complicate the closing process.

Here are the results of iPolling® questions that helped us frame the discussion:

workdays for the company to have final closing numbers Simplify the Accounting Closing Process ipolling

granting entity related exceptions to the closing calendar Simplify the Accounting Closing Process ipolling

The iPolling® results above indicate that most organizations have final numbers in five days or less and very few exceptions are granted for entities in the organization that may have issues related to closing within the prescribed schedule.

Closing Calendar

Due to the size and complexity of our feature company, the coordination of the closing process is in itself a project requiring a well-coordinated plan. Their requirements, assuming a quarterly close, which requires public reporting include:

  • Day 2: Sub-ledgers closed
  • Day 3: All Profit Centers Closed
  • Days 4-6: Local and Regional Reviews
  • Day 7: Corporate Consolidation
  • Day 8: Global Business Reviews
  • Day 10: Executive Management Sign-off
  • Day 11: Sarbanes Certification
  • Day 19: External Filings

Key Enablers of a Fast, Effective, and Efficient Closing Process

The discussion identified some critical enablers that most organizations have implemented or are planning to implement soon:

  • Common Global Chart of Accounts and Definitions
  • Common ERP Platform (Single or multiple instances if following global standards)
  • Clear Accountability and Facilitation by Shared (Business) Services
  • Global or Regionally Coordinated Accounting Centers within Shared (Business) Services
  • Work-Flow Technology

Continuous Improvement

Our feature company uses Six-Sigma throughout the organization, including their Shared Services teams. On an ongoing basis, they follow a disciplined methodology to improve their closing process:

  • Maintain detailed process maps including every activity
  • Regular “value-add” analysis of each step – “Does it add value?”
    • Eliminate
    • Automate
    • Skill assessment (convert judgment activities to rule-based)
    • Reduce variants
    • Review/Establish thresholds
    • Standardize wherever possible
  • Defect/Variability Measures
  • Cycle Time Assessment
    • Bottlenecks
    • Waiting Time

Technology and Process Enablers

  • Task Coordination and Automation Software
  • Visible “Cockpit” to Identify Issues Immediately
  • Linked Document Archiving
  • Workflow
  • Business/Data Warehouse
  • Business Process Modeling, Testing, and Training

What are you doing to simplify your accounting close process?

Who are your peers and how are you collaborating with them?

1 “PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.

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