Last updated on Feb 21, 2024

How can you optimize the financial close process?

The financial close process is the set of activities that ensures the accuracy and timeliness of financial reporting. It involves reconciling accounts, consolidating data, preparing statements, and complying with regulations. However, many organizations struggle with inefficient, manual, and error-prone processes that delay the financial close and increase the risk of errors and audit issues. How can you optimize the financial close process and achieve faster, more reliable, and more transparent results? Here are some tips to help you streamline your financial close process and improve your invoice processing and cash flow.

1 Automate and standardize

One of the key ways to optimize the financial close process is to automate and standardize the tasks that are repetitive, labor-intensive, and prone to human error. For example, you can use software tools to automate the reconciliation of bank accounts, intercompany transactions, and sub-ledgers. You can also use templates, workflows, and rules to standardize the format, approval, and posting of journal entries. By automating and standardizing the financial close process, you can reduce the time, cost, and effort involved, as well as improve the accuracy and consistency of your data.

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Oluwatoyosi Adekanmbi

Finance Specialist
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In my past experience, I maximised the use of a comprehensive closure calendar that lists all of the crucial occasions, due dates, and requirements for each cycle with a compliance certificate to ensure compliance.

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Amey Chitale

Finance Manager -Mahindra Group | Chartered Accountant
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Automation can be used to eliminate routine, repetitive tasks and improve overall work efficiency. Some of better ways is to Automate the process of Bank reconciliations, Debtors , creditors and inter- company reconciliation where ledgers of counter party shared in accounting system and reconciliation can be automated. This can save lot of manual work. Apart from this, routine and repetitive journal entries should be passed using Transaction codes in SAP or ERP which can save lot of user time. In addition to automation, there should be standardisation of key processes and it's accounting such as order to cash, record to report , Fixed Assets which will eliminate duplication of work and improve overall workflow

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2 Implement a close calendar and checklist

Another way to optimize the financial close process is to implement a close calendar and checklist that clearly defines the roles, responsibilities, deadlines, and dependencies of each step in the process. A close calendar and checklist can help you plan, monitor, and communicate the progress of the financial close, as well as identify and resolve any issues or bottlenecks. A close calendar and checklist can also help you align your financial close process with your business objectives, reporting requirements, and best practices.

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Pooja Lakhwani

LinkedIn Top Corporate FP&A Voice 🔆 | CMA Professional | Power BI Enthusiast | CFO Services
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Below are the points that I would usually consider: 1. Always create a Month End Close checklist to monitor your financial close process. 2. Assign people & add timelines for all the tasks added in the checklist. 3. Make sure to ask the client for any pending items & documents that are required to update the financials.

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3 Review and improve your processes

A third way to optimize the financial close process is to review and improve your processes on a regular basis. You can use metrics, feedback, and analysis to evaluate the performance, efficiency, and quality of your financial close process, as well as identify any gaps, risks, or opportunities for improvement. You can also use benchmarks, best practices, and industry standards to compare your financial close process with your peers and competitors. By reviewing and improving your processes, you can enhance your financial close process and ensure its continuous improvement.

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Tomi Akinwale ACCA, ACA, ACTI, B.TECH, FMVA, AAT.

Tax | Financial Reporting | Deloitte | CV Optimization
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A thorough way is to implement a consistent review and improvement mechanisims which must be deliberately monitored accross every unit of the organisation.

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4 Leverage technology and data

A fourth way to optimize the financial close process is to leverage technology and data to support your decision-making, reporting, and compliance. You can use cloud-based platforms, artificial intelligence, and analytics to integrate, consolidate, and visualize your financial data from multiple sources and systems. You can also use dashboards, reports, and alerts to monitor your financial close process and provide real-time insights and feedback. By leveraging technology and data, you can increase your visibility, transparency, and agility in your financial close process.

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5 Train and empower your team

A fifth way to optimize the financial close process is to train and empower your team to perform their tasks effectively, efficiently, and collaboratively. You can provide your team with the necessary skills, knowledge, and tools to execute their roles and responsibilities in the financial close process. You can also foster a culture of accountability, ownership, and teamwork among your team members. By training and empowering your team, you can improve your team's productivity, engagement, and satisfaction in your financial close process.

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6 Align your invoice processing and cash flow

A sixth way to optimize the financial close process is to align your invoice processing and cash flow with your financial close process. You can use invoice automation, electronic invoicing, and payment solutions to streamline your invoice processing and reduce your invoice cycle time, errors, and disputes. You can also use cash flow forecasting, management, and optimization to improve your cash flow visibility, accuracy, and control. By aligning your invoice processing and cash flow, you can improve your working capital, liquidity, and profitability in your financial close process.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Amey Chitale

Finance Manager -Mahindra Group | Chartered Accountant
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To optimise financial closing process: 1. Prepare chart of activities, checklist and monitor timelines 2. Standardise the process and remove duplicate work 3. Automate the process of bank reconciliation, payments, debtors and creditors reconciliation 4. Guide and coach the team and delegate the tasks effectively 5. Review Financial statements on periodic basis to identify unusual activities

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Corporate Accounting

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How can you optimize the financial close process?

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1 Automate and standardize

2 Implement a close calendar and checklist

3 Review and improve your processes

4 Leverage technology and data

5 Train and empower your team

6 Align your invoice processing and cash flow

7 Here’s what else to consider

Corporate Accounting

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