May 23, 2022 At Daston, we understand that closing the books at the end of a financial period remains a cumbersome, time-consuming, and stressful process. It can be even more challenging when pressure is intense from management and investors to see an accurate, real-time view of performance data, such as profitability, liabilities, and cash flow.
When finance directors seek better, faster ways to close the books, Daston delivers.
Faster Period Close, Better Business Decisions
A faster period close process gives stakeholders real-time access to the latest available data, enabling them to make better-informed, faster decisions. When the accounting team spends less time closing the books at the end of a fiscal period, team members can spend more time analyzing the data to make better informed business decisions…for example, understanding if it makes sense to scale operations up or down, or reallocating resources to take advantage of an emerging business opportunity before a competitor does.
A proper period close is also vital to achieving a high standard of external reporting that today’s regulatory authorities and investors demand. An effective period close can help a business meet tight filing deadlines with better integrity, as well as deliver full disclosure and transparency in financial statements. It can also help companies avoid costly errors that lead to decreased valuations, restatements, and even regulatory action or fines. Additionally, a more efficient period close often reduces audit costs, as auditors rely more on your internal controls and spend less time reviewing large sample sizes or discussing and documenting errors.
The Dangers of Disparate Systems
Start-ups, scale-ups, and other companies often employ a variety of different systems, which they have pieced together over time to solve specific problems. Because these solutions often are poorly integrated, a plethora of manual processes and spreadsheets are created as part of the process. This solution creates a huge challenge for the accounting team at period close, since data exists in silos, and manual updates can create error and timing issues. If the organization is operating internationally with multiple accounting systems, the challenge is multiplied, and period close becomes a nightmare.
Integrated ERP For The Win
Companies that regularly achieve efficient period close use a single, fully integrated Enterprise Resource Planning (ERP) system. In these cases, all teams, functions, and geographies within the company access the same general ledger, a common chart of accounts, and a ‘single version of the truth’ when it comes to data on payroll, inventory, customers, sales orders, and more. When it comes to closing the books, the advantages of an integrated ERP include:
- Data consistency: All entries are united by the same accounting logic and conform to the same format.
- Data Integrity: There is one authoritative data source throughout the company.
- Standard Processes: Everyone involved in the period close follows the same processes without using workarounds or shortcuts that could affect accuracy or compliance.
- Automation: The system is designed to handle processes that might otherwise require manual intervention, for example, journal entries, bank statements, and intercompany reconciliations.
- Orchestration: Everyone works from the same deadlines and calendar and can see how their individual tasks fit into the overall picture of the period close.
- Oversight: Those in charge can see the progress on period close briefly via a dashboard. When bottlenecks are highlighted, they can take steps to address them.
- Elimination of offline tasks: The use of spreadsheets to link data from disparate systems or perform calculations is eliminated, as it introduces errors and creates additional reconciliation work.
Closing by Cloud
When a company’s core accounting system is cloud-based, finance team members and the wider organization can participate in the process, regardless of time zone, individual location, or time of day. This is particularly useful for companies working with currency translations, minority ownership calculations, intercompany transactions, and multiple GAAP and IFRS standards.
Cloud-based ERPs keep audit costs low, too, since auditors don’t have to travel to test transactions. The cloud also allows those working in remote locations to enter data, respond to queries, and launch consolidation processes and reconciliations. What’s more, they can complete tasks from any device.
A faster period close can deliver considerable value to your organization. To learn how to free up valuable time for your finance team, contact Daston today for a free demonstration!