Streamlining the Accounting Close Process

Introduction

With so many different approaches companies can take to streamline the Accounting Close process, it can be difficult to determine where to best focus project resources.  This research abstract highlights a company that recently shared details about their Accounting Close process and what they have done to improve their operation in this critical area.

Company Experience

On a recent Peeriosity Peercast^TM, a Senior Accounting Manager at a Peeriosity member company with over $10 billion USD in revenue and close to 100,000 employees, shared their experiences related to an initiative to simplify and enhance their Accounting Close process ^[1] started as the result of a mandate from senior Finance leadership.  The Accounting Close process was taking 3 business days and the consolidation and reporting activities took another four business days.  

A project team was formed, and the following were the objectives of the team:

• Faster availability of information for analyses and account reconciliations ^[2]
• Enhanced visibility of month-end results via the existing self-serve reporting tool
• Driving SG&A accountability ^[3] and one version of the truth
• A clear policy on adjustment and correction thresholds, and the review and approval process
• Elimination of the weekend work during the close

The project focused on the three dimensions of people, process, and technology.  Once the objectives, goals, and work plan were approved by the CFO, the objectives were communicated to the key stakeholders and buy-in was obtained from the operational leaders.  The project consisted of multiple tracks and opportunities and barriers were identified and mitigating solutions were identified to address them.  All month-end close processes and tasks were reviewed, including their timing and impact.  Special emphasis was placed on the processes used for the review of manual journal entries. 

At the same time, the company launched a supporting IT project focused on increasing the cadence of reporting updates through the Oracle OBIEE tool and establishing a dashboard and notifications when reporting updates were completed.  In addition, they reviewed sub-ledger processes and timing with their IT partners, which included the identification & elimination of a two-day delay related to the AP sub-ledger posting to the general ledger.  The IT partners also reviewed the overall technical performance of the primary financial system to ensure that all modules were running at optimal speed and performance.

The primary communication channels for the project included weekly project team meetings and a weekly project dashboard provided to stakeholders and sponsors, a copy of which is included on the Peeriosity member website.

The results of this project included the following:

• Eliminated weekend work during the close
• Reduced number of days to close
• Implemented a flexible close schedule for Monday holidays
• Accounting Close was reduced to two business days; eliminating one business day and the weekend
• The consolidation & Reporting portion of the close was reduced to 3 business days; eliminating two business days and the weekend
• Increased accuracy and faster availability of information for analyses and reconciliations
• Enhanced visibility of month-end results via the existing self-serve reporting tool
• Enhanced business decision-making capabilities
• Eliminated unnecessary manual journal entries through consolidation and implementing thresholds

Additional details regarding the company’s efforts in this area can be found on the Peeriosity member website, including the presentation material and Peercast recording.

iPolling^TM Results Review

Recently, a poll was created using Peeriosity’s iPolling^TM functionality that provides some interesting results related to streamlining the Accounting Close process.  The first of two poll questions addressed the current level of satisfaction with the process, with 55% of the companies indicating they were either very satisfied (10%) with the process or satisfied (45%).  Another 35% said they were neutral, with the remaining 10% responding that they were unsatisfied.

The second poll question then looked at what companies would like to see improved as it relates to the Accounting Close process.  While the responses were widely spread across response key options, the most popular ones were to reduce the number of hours that staff worked during the close (26%), improve the timeliness/quality of account reviews ^[4] (21%), and reduce the number of manual journal entries (21%).

Closing Summary

As demonstrated by our feature company, when given the proper amount of focus and resources, the Accounting Close process can often be significantly improved.  When focusing on the three dimensions of people, process, and technology, a holistic look can be taken at this important process, which provides the opportunity to then take it to the next level of efficiency and effectiveness.

What is the status of your company as it relates to the Accounting Close process?  Is your current approach meeting your needs or is it time to take another look at this critical process?

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

“Peercasts^TM” 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 Mail^TM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

“iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer Mail^TM, members can easily communicate at any time with others who participated in iPolling^TM.