Advice and Information for Finance Professionals

How to Automate the Financial Close Across Countries

Guest Author

By Al Marciante and Marc Seewald, Oracle

Improving the financial close process is a top priority for many CFOs. According to our EPM Top Trends Report, more than half of finance leaders (54 percent) want to accelerate the process by moving financial consolidation and close to the cloud. This can be a particularly pressing need for CFOs at large, multinational organizations that have to manage multiple variables across geographies.

CFOs value a faster, more auditable monthly close because it frees them and their teams to focus more on strategic priorities, such as forecasting, planning, decision support, and providing guidance to business leaders.

For many companies, the close process is slower than it needs to be because it is largely manual. This is not only inefficient, but also makes the close process more prone to errors, which can cost the organization in regulatory fines, brand image, and administrative resources. At the same time, the close process itself is becoming more complicated.

New external stakeholders and more demanding regulations are putting additional eyes on finance reporting, and companies must disclose more data than in the past. The stakes are getting higher—especially for multinational firms that must manage country-by-country variations in reporting requirements, tax laws, benefits models, and more, as well as the need to reconcile accounts both globally and locally.

APQC’s General Accounting Open Standards Benchmarking survey asked organizations how many calendar days it took between running the trial balance to completing the consolidated financial statements—including time spent actually performing the process and time spent waiting to move forward. Approximately 2,300 organizations responded: The slowest 25 percent said they need 10 or more calendar days, the fastest 25 percent can wrap up a monthly close in just 4.8 days or less, and at the median is 6.4 calendar days.

How can financial leaders shave more days off these metrics? Let’s take a closer look at how automation helps.

How to Accelerate the Close

The root problem preventing timely and accurate closings is the amount of manual work required to access, reconcile, and verify data across the enterprise. This is particularly challenging for multinationals, which need to keep information and processes country-specific while still gaining insight into the finances of the organization as a whole. This is almost always the outcome of disparate technology and data—i.e., legacy IT systems—and the cloud offers a ready solution by enabling process automation at a new level.

Intelligent process automation (IPA) is the key to achieving faster, more accurate, and more transparent closings. At a high level, IPA plays three roles in the close process:

  • Monitoring: The software monitors different tasks in the background automatically.
  • Automating the next steps: Once a monitored task occurs, the system takes the data and automatically runs specific jobs, such as mapping, validating, pushing data to other parts of the system, and generating reports.
  • Involving the end user: After the first two steps, IPA seeks human involvement. It alerts users that they need to review the work that has been completed.

Eliminating the need for employees to chase inputs and complete simple next steps can save between one-third to half the time they’d typically spend on the close process. This supports faster analysis and reporting, and helps companies to complete close earlier and with more confidence in its accuracy. With IPA technology, organizations can automate the bulk of the tasks required for these close processes, such as:

  • Closing subledgers
  • Pro-forma closing of ledgers
  • Reconciling accounts
  • Closing ledgers
  • Consolidating subsidiaries
  • Reviewing and confirming financial and management reports
  • Publishing and securely sharing financial statements
  • Updating financial forecasts

How to Get There from Here

Transitioning to an automated close process typically occurs in stages. Companies usually start with moving from a set of manual jobs that use a spreadsheet. With IPA, they automate each of those tasks and use the software to manage the process. For multinational organizations, the automation inherently standardizes the processes while also allowing for changes as needed per geographic variation through cloud-based applications and other tools. 

As companies become more comfortable with automation, they generally start using IPA as part of their day-to-day processes—for example, updating data points across multiple reports when data changes.

For automation to work well, it should be part of an integrated, cloud-based system that reaches across the organization to deliver complete visibility into the close process. This enables a company’s finance experts to identify potential bottlenecks and areas of high risk, and respond quickly with the best possible solution.

Intelligent Process Automation Has Arrived

We’re rapidly approaching a point where technology can automate the entire close process—and even deliver continuous close, so that organizations know exactly where they stand financially, regardless of whether they’re in the middle of a month or a quarter—and no matter the size of their global footprint.

Automation also will become more useful as machine learning capabilities enable software to “learn” from an organization’s adjustments, sensing patterns and automatically taking the relevant actions.

This inspiring vision of a fully automated financial close is fast becoming a reality, and Oracle is leading the way. Oracle EPM Cloud solutions comprehensively address the financial close process and incorporate advanced technologies like IPA.

Reimagine your financial processes. Learn why and how to migrate from Hyperion to Oracle EPM Cloud.

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