By Simon Shah, Chief Marketing Officer, Redwood Software
Early mornings, late nights, and barely a moment to snatch a sandwich at lunchtime – ever feel like you’re doing significantly more work during the financial close? Well, you are not alone.
Today, we have launched research in association with The Hackett Group, digging deeper into the challenges that companies face in streamlining the close process, and the impact that this has – not only on timeliness and confidence in the numbers – but on the team.
From the gathering of financial data to tabulating, validating, handling exceptions, and finally documenting and reporting, the financial period-end close is fraught with significant manual effort. The research reveals that 55% of even the Top Performing companies – which have already adopted a broad range of best practices to optimize the close – struggle with work-load levelling over the month, with 45% admitting that this leads to staff working overtime. It is perhaps unsurprising to see that this high-pressure, tense environment has an impact on team morale – 45% of businesses in this Top Performer group highlight frustration within the Finance & Accounting team as a key issue in the closing process.
Interestingly, the report also found that 33% report that finance staff capacity is the biggest bottleneck in the process. This makes us wonder whether Top Performers are seeing improvements in cycle time and final-close dates simply by working their teams harder during the close, rather than getting to the core of the problem which is to streamline the process and remove manual effort. In fact, one participating company mentioned that during the close it was very common for the team to get very little sleep due to the tight calendar deadlines.
So why the stress?
At many points in the close, the entire process must stop and wait for the successful completion of one (or a series of) steps to continue. Businesses may be using task lists, spreadsheets, or similar tools to keep track of these activities, which builds in manual latency, and opens the door for errors. Error management is another time-consuming area of the close. We often hear it said that “a quick close is a good close”. Not so. There’s little point closing the books in record time if valuable team time must then be used to go back through messy data to subsequently reverse entries for example.
“Throwing people at the problem” is not the route to success. From an external perspective, a faster close might lead to greater satisfaction with the timeliness of the information. However, from a team standpoint it’s clear that this often leaves much to be desired in optimizing workload.
Businesses need to rethink the close process, to ensure that highly qualified staff are freed up to focus on strategic, value-adding activities, rather than transactional activities. This is where robotics comes in. To take advantage of this technology, businesses must “rethink” how robots can help, ensuring that they not only aid the manual task, but replace those manual tasks altogether.
Get in touch with Redwood to find out more.