If the month-end close were a musical genre, it would definitely be the blues. At many companies, creating monthly financial reports remind finance team members of songs that express deep sadness, even anguish. Why is that?
The monthly financial reporting process is fundamentally broken at many organizations. It’s a time-consuming process that relies largely on dumping static data into spreadsheets, with the result often being a disorganized, stressful, and downright painful close. Even worse is with such a drawn-out manual process, any last-minute reconciliations can throw your numbers off, rendering your static spreadsheet-based reports out-of-date and obsolete. And you can’t make good decisions with the wrong numbers.
How can you banish the month-end blues? It comes down to improving your process at the deepest levels. Here’s how you can stop singing the blues at every month end and put a smile back on your face by implementing best practices.
Identify Your Pain Points
The first step to improving your month-end close is to identify your pain points. What parts of the process are causing your biggest problems?
For many companies, static spreadsheets are a culprit in their month-end blues. While many finance professionals rely upon Excel, unless it’s connected directly to your ERP, this application causes more headaches than anything else.
There are a few reasons why static spreadsheets are a poor choice for the financial reporting process. To start, static spreadsheets are a receptacle for errors. It’s so easy to make mistakes with Excel: All you need to do is to copy and paste the wrong number of cells or type a formula incorrectly. And voila, your numbers are instantly inaccurate. It’s so easy for these little mistakes to slip by undetected.
Second, Excel has a notorious lack of security. This isn’t the fault of the application itself; there are built-in security features such as password protection and the ability to lock cells. However, they’re rarely used.
Third, there’s no version control, so anyone could make an edit at any time and no one would know (unless you save the file with a different version name, which not everyone does).
Fourth is the inability to obtain information in real time. Spreadsheets that aren’t connected to an ERP system don’t offer real-time data. This means any time you make a change during reconciliation, you’ll need to re-export your data from your ERP, re-import it into Excel, and then start massaging and manipulating it again into the format you need for reporting.
Improve Your Month-End Close Process
Once you’ve identified your pain points, it’s time to talk about how you can improve your month-end close process. Improvement requires alleviating your pain points. How do you do that?
Eliminating manual processes is a major first step. For many companies, that’s a difficult proposition. Part of the shift away from manual processes may require a change in mindset and looking at an automated reporting tool. While there might be plenty of people in the finance department who would gladly give up entering data by hand, there are always those stalwarts who say, “But this is the way it’s always been done.” Bringing about a mindset change necessitates education: You have to teach people why this new way is better for both the company and for them. When people see the benefits of abandoning manual processes, they’ll be more eager to embrace a new way of doing things.
That new way is automation. Instead of spending hours importing and manipulating information in a static spreadsheet, financial performance management software can automatically gather data from your system of record. This saves time and reduces the risk of errors.
The linchpin of automation is integration. A financial reporting solution must be integrated with an ERP system in order for it to pull information seamlessly from the system of record. In addition, integration enables real-time updates. With the right tool, your data doesn’t have to be exported into a static spreadsheet, and you definitely don’t need to ask the IT department to help you write reports anymore.
The Month-End Close with Automation and Integration
When you integrate your financial reporting solution into your ERP system, you won’t be singing the blues at the end of the month. Your month-end close process will become a happy tune.
Integration and automation have other benefits. For example, you’re no longer spending time on repetitive tasks such as data manipulation and formatting. Instead, you’ve freed up your schedule to think about strategic insights on how to help the company run more efficiently.
Adding self-service capabilities to your business reporting solution is another efficiency booster. Imagine people outside of finance finding answers to their questions on their own. For the IT folks, there are no more frantic phone calls to create financial reports right now; your team members can get more work done because they’re not stuck helping other people. Your entire organization runs more efficiently thanks to integration and automation.
When month-end is done right, it’s a smooth, almost effortless, and definitely hassle-free routine. To get to that point, you need the right processes in place that can be achieved through automation and integration.
To learn more, read our ebook on A Better Way to Conduct Month End.