In a recent webinar hosted by Marty Schillaci, the CEO of The Resource Group, we conducted a poll to ask viewers about the length of their average monthly close cycle. Seventy-one percent responded that their close cycle takes an average of 10 days or longer. This is a common problem for businesses who might be overdue for upgrading their legacy ERP system to a more scalable cloud-based solution. Does your company require a week or more to complete the close cycle? If so, would closing the books faster benefit your organization?
1. Improve efficiencies and reduce costs
Improving efficiency and reducing the length of closing inevitably leads to a reduction in costs. You’ll be able to eliminate paying overtime, and you might be able to avoid hiring an additional worker. Additionally, improving efficiencies can decrease employee burnout, which is very a costly issue especially when it results in needing to rehire. You’ll also gain more time to do other work that you might have been avoiding – allowing you to get ahead on tasks rather than constantly playing catch-up.
2. Strategic decision-making
With a shorter month-end close, you’re able to access and understand important metrics sooner, enabling you to make decisions more quickly. The extra time your finance team gains can be put towards deeper analysis of your financial and operational metrics.
For multi-entity businesses that must consolidate their data across locations, quicker access to data is particularly key. But regardless of your industry, you’ll be able to make business decisions based on relevant data rather than relying on your gut instinct and what you think is the current state of your business.
3. Focus on the future
Fundamentally, the month-end close process is about evaluating history, complying with regulations, and making decisions for the future. However, machine learning and advanced analytics are in the midst of changing the focus of ERP from understanding the past towards accurately predicting the future. That’s why Sage Intacct’s “Finance 3.0” vision includes not just predictive analytics and continuous audit capabilities, but also completely getting rid of the month-end close.
Eliminating the financial close process might seem like a far-fetched proposition, but it’s actually already in the process of happening. Modern technology advances allow continuous accounting and auditing, so businesses have real-time insight into their operations and key metrics. This technology can be combined with machine learning and other technologies to guarantee accuracy and compliance while maintaining a complete audit trail.
Once your organization can access 100% of your data in real time and be sure that you’re complying with accounting regulations, the month-end close cycle will become largely unimportant. Rather than spending time focusing on the past, CFOs and finance teams will be freed to increase their technological expertise and leverage predictive analytics to fully understand the future.
What Does this Mean for Your Business?
If your finance team needs numerous days of the month simply to complete the close cycle, your systems and inefficiencies are limiting your business’s potential for growth. If you’re using a legacy ERP system that you know won’t support your company’s vision for success, it may be time to consider an upgrade to cloud-based ERP such as Sage Intacct. Additionally, an outdated ERP system can hurt your business by making it harder to recruit and retain fresh talent.
In contrast, McKinsey and Co. explain how an empowered CFO and finance team with access to the latest technologies can operate as the heart of your company’s long-term success. If you’d like to learn more about cloud-based ERP solutions and how they can help your business thrive, contact us today.