Management accountants are their own worst enemies. Why? Because they always deliver the month-end reports even if it takes a disproportionate amount of hours. That’s their job and because most finance people are diligent and task orientated — they get the job done.
What does the month-end look like in your business? Does your finance team spend a lot of time pulling data from your enterprise resource planning (ERP) system into spreadsheets so they can manipulate it into the standardised format? Is there a lot of wasted effort, double-checking and renaming? For many, the process of preparing the data is a huge time waster and takes a lot away from the close and ultimately analyzing the data. A modern finance solution allows the accounting department to quickly customize and automate financial statements reduce the month-end close from days to hours.
According to the American Productivity & Quality Center's (APQC’) General Accounting Open Standards Benchmarking survey, 2,300 CFOs from different companies were asked what is their “cycle time to monthly close” the results showed the bottom 25% said they need 10 or more calendar days to perform the monthly close process. The top performers, or the top 25%, can wrap up a monthly close in just 4.8 days or less — about half the time of the bottom 25%. At the median are the organizations that need 6.4 calendar days to close out a month’s books.
The average company takes 6.4 calendar days to complete the month-end close.
American Productivity & Quality Center
Speed up the close and make the reports more accessible
Finance teams using a dynamic BI tool to report on month's close can review and analyze financial statements directly. A BI tool with financial statement capability makes month-end financial statements more accessible and allows more people to understand the impact of operational decisions on financial performance faster.
By adding financial statements to Phocas business intelligence software brings active analysis, data drill down and dashboarding to the finance and management team with fully controlled user permission.
Financial statements are created in the same tradition as the accounting team recognizes, but the process is automated for each statement. The finance team can quickly build financial statements customized to users’ access, so branch managers can see information relevant to their branch, and management can see information across the whole business. The statements can also sit across one or many ERPs so leaders can view the individual company, branch, regional performance and even the consolidated performance when required. The benefit of using this technology means an accountant only needs to build the report once and then it automatically updates throughout the month to provide a real-time view of financial performance
Now that preparing the financial statements is faster and simpler, the finance team has time to carry out an in-depth analysis of the numbers. By preparing financial statements within a data analytics environment, you can quickly compare statements from one traditional period or outside of these timeframes - say one week to the next.
Complete the close from anywhere
Although the finance team is data-intensive, its ability to adopt newer technology lags behind other departments in an organization. Due to this, the finance function has to rely on the IT department for creating templates to extract various reports, build a smooth connection between the ERP and a spreadsheet, and integrate technical features.
While working from home, it may become difficult for the finance team to communicate with the IT team in a timely way. Financial software is like an efficient assistant for the finance team that reduces the reliance on IT and enables accountants to finalise the close from anywhere. While the ERP data remains under the tight control of the finance team, the software transforms how the finance team handles the output received from the ERP.
Financial software automates the process involved in the preparation of financial statements and reports required by decision-makers. It extracts data from one or more ERPs in real-time and reflects the latest figures across the reports and dashboard. The finance team doesn’t have to repeatedly log in to the ERP to download the latest reports.
Case study - Whiting HoldingsTo monitor the performance of its business, Whiting Holdings, an Australian steel distributor, consolidated all its financial, sales and inventory data into one platform. By harnessing technology and implementing data analytics, the finance team automates its month-end and statutory reporting which helps get to the source of the data faster and make clear decisions.
Finance Project Manager, Ingrid Vanlangenberg works across finance and IT and is always looking for ways to drive efficiency within the business. By harnessing technology and implementing data analytics, the finance team automates reporting which saves on administration tasks so they can dig into things that make a difference - like margins.
“Phocas has created a lot of efficiency in our finance team and we've actually reduced the number of days it's taken to roll out those reports from about ten days to about five,”explains Ingrid.
Ingrid also likes the Phocas dashboard tool.
“Dashboards are a great way to visualize the data and they're fantastic in that you can drill down further into that graph and go right into the database and obtain further information. Phocas gives us those pricing trends. And the analysis enables us to make key decisions to manage our inventory levels and slow-moving stock,” says Ingrid.The price of steel fluctuates, and margins are tightening. Demand is dependent on the health of the construction industry, and in the current market, distributors don’t want slow-moving stock.
To find out more about automating your financial statements and reduce the month-end close process , download this ebook, Modern Financial Planning and Reporting.