Finance teams often approach month end closing as a necessary evil, during which multiple people must dedicate too many hours, at too high a cost, to largely standardized and repeatable processes. The traditional method can take seven to nine days – over a third of the month – during which accounting employees are looking backwards and putting out fires. There’s little efficiency, no visibility, and as business demands increase it only gets more complex. The impacts of this model go beyond the finance department. Manual closings are not just hassles; they have a significant impact on the business. The effects of inefficient month end closes may include:
- Interrupted cash flow. Long closing cycles result in delayed processing of financial transactions, impeding cash flow.
- High personnel costs. Carrying costs per employee rise substantially when team members spend one third of their time on routine processes.
- Complex and costly IT infrastructure. Cobbled-together legacy systems cause more problems than they solve, adding complexity and overhead to an already dynamic process.
- Inability to scale. The business needs to keep costs, time, and headcount down as new ledgers and subledgers become necessary.
- Competitive disadvantage. Inefficient operations run the risk of being outpaced by the competition.
View our E-Business Suite Month End Close accelerator in action below: