The financial close is one of enterprise finance teams' most demanding and critical tasks. From tight deadlines to ensuring data accuracy, the process often involves multiple people from multiple departments, several versions of the same spreadsheet, repetitive tasks and compliance risks.
Yet, many enterprises continue to struggle because they rely on outdated methods that slow progress and add complexity.
Simplifying the financial close process is more than just a convenience, it’s a necessity. A streamlined approach reduces errors, saves time, and allows finance teams to focus on strategic priorities that drive business success.
In this blog, we’ll explore what it means to simplify financial close, key challenges finance teams face and practical ways to transform this essential process.
Understanding the challenges in the financial close process
The financial close process is the backbone of financial reporting and compliance. It involves reconciling accounts, managing journal entries, tracking close tasks, and producing timely reports for stakeholders. Despite its importance, this process is often riddled with inefficiencies that make it harder than it needs to be. One Deloitte study found the top process finance teams spend time on is the close.
Some common problems include:
- Inconsistent Data: The accuracy of a financial close depends on the quality of available data. Even a single discrepancy can result in time-consuming rework. Spreadsheet-based processes often amplify the risk of such errors, making consistency a significant challenge.
- Lengthy Processes: Reviewing financial and income statements can take considerable time, especially for busy stakeholders. Investigating variances between actual and expected results adds to the workload, particularly in organisations with complex operations.
- Intercompany Challenges: For multinational companies with multiple subsidiaries, matching intercompany transactions is a daunting and time-intensive task, often fraught with incomplete information and poor communication.
- Missed Deadlines: Tight schedules and manual bottlenecks frequently lead to delays in reporting, hampering decision-making and creating unnecessary stress for finance teams.
- Organisational Complexity: As organisations grow, financial structures become more intricate. Handling mergers and acquisitions, joint ventures, or revenue recognition adjustments requires deep expertise, making the financial close even more challenging.
- Communication and Collaboration Barriers: Spreadsheet-based processes hinder effective collaboration across departments and teams, particularly for geographically dispersed or remote workers. Legacy systems that lack integration further complicate coordination during the close process.
- Repetitive Tasks: Manual tasks like account reconciliations and journal entry reviews are time-consuming and divert attention from more strategic, value-adding activities.
The importance of simplifying financial close for finance project leads
Why should finance teams prioritise simplifying the close process? Because complexity is costly as well as frustrating. Manual workflows, inefficient processes and fragmented systems slow teams down, increase the likelihood of errors and make compliance more challenging.
Simplification offers clear benefits:
- Smoother Workflows: By eliminating redundancies, consolidating tasks, and streamlining steps, finance teams can focus on high-value activities rather than getting bogged down by repetitive processes. A clear, simplified workflow ensures tasks are completed efficiently and in the correct order, reducing delays and confusion.
- Better Collaboration: A structured and transparent process encourages seamless communication between departments, whether teams are working in the same office or across the globe. Shared dashboards and centralised task management systems make it easier to align efforts, ensure accountability, and avoid the chaos of last-minute adjustments.
- Reduced Risk: Simplification minimises the risk of errors and inconsistencies that can lead to financial misstatements, regulatory non-compliance, or reputational damage. With better controls and fewer manual touchpoints, finance teams can confidently meet compliance requirements and reduce audit risks.
- Increased Accuracy: Standardised templates, automated checks, and better data validation lead to more reliable results. Simplifying complex processes reduces the likelihood of manual errors, ensuring financial statements are both accurate and consistent.
- A Faster Close: Streamlined workflows and fewer manual interventions allow finance teams to close the books faster, meeting deadlines with time to spare. This helps improve the overall speed of reporting, giving leadership quicker access to critical financial insights.
- Improved Visibility: A simplified process provides real-time insights into the status of tasks, allowing finance leaders to monitor progress, identify bottlenecks, and address issues promptly. Enhanced visibility also supports better decision-making by offering timely and accurate financial data.
- Reduced Stress: A clear, well-organised process eliminates much of the uncertainty and last-minute firefighting that often accompanies the financial close. This creates a less stressful work environment, enabling finance professionals to focus on strategy and analysis instead of troubleshooting.
- Scalability: Simplified processes are easier to scale as the organisation grows. Whether the business expands through mergers, acquisitions, or new operations, a well-organised close process can adapt without becoming unwieldy or overly complex.
- Cost Efficiency: Reducing inefficiencies and errors during the close process translates into direct and indirect cost savings. Simplified processes require fewer resources and enable teams to allocate time and effort more effectively.
Steps to simplify your financial close process
If you’re ready to simplify your financial close, here are some steps to guide your journey:
1. Evaluate Current Practices: Map out your existing close process to identify inefficiencies, bottlenecks and opportunities for improvement. [Get your checklist here.]
2. Set Clear Goals: Define what a successful close looks like, focusing on speed, accuracy, and ease of execution.
3. Use the Right Software: Choose tools that align with your needs and integrate smoothly with your existing systems.
4. Train Your Team: Ensure team members understand their roles in the new process and provide training to help them adapt to changes.
5. Monitor and Refine: Regularly review the process, gather feedback, and make adjustments to maintain simplicity and efficiency.
Simplifying the financial close process isn’t just about saving time—it’s about creating clarity, consistency and confidence. A streamlined approach helps finance teams work smarter, avoid common pitfalls, and focus on delivering insights that drive business decisions.
If you’re ready to transform your financial close, Aico’s solutions can help. From simplifying reconciliations to improving task tracking, we provide the tools and expertise to help you succeed.
If you would like more information on how powerful solutions like Aico can help reduce errors in the financial close, please get in touch or watch our demo.