The term “fast close” describes a corporation’s ability to complete its accounting cycles and close its books quickly. Achieving a fast close is increasingly becoming a key ingredient in the enterprise performance management (EPM) endeavors of some of the world’s most successful companies. A fast, high-quality close, with the support of a performance management software solution such as Business Objects EPM, enables:
- Quick access to valuable financial insight and information, allowing corporate management to more rapidly identify problem areas such as underperforming products or business units, and make faster decisions to improve those areas of performance.
- More time for value-added analysis, which leads to greater depth and value in written financial reports as well as better overall decision making.
- Improved account reconciliation, control systems and quality through the establishment of reporting processes that are supported by automation, workflow management and data entry validation.
- Cost savings generated from the time saved on manual intervention, error reconciliation, variance analysis and data processing/collection.
- Better investor relations resulting from a company’s ability to publish detailed statutory results and financial data ahead of regulatory deadlines and before industry peers.
However, barriers to the fast close exist. Some examples include:
- Data Quality/Collection Errors. The inability of many companies to achieve a “right first-time” fast close process is a symptom of broken or failing processes and systems, and is linked to manual data entry, late delivery from reporting units, a lack of validation and controls, and poor integration with source systems or across multiple close processes.
- Intercompany Reconciliation. The intercompany account reconciliation process often sits on the critical path for the close cycle causing significant delays in the resolution of unmatched intercompany transactions and balances.
- Poor Performance from Consolidation Applications. Delays can mount when companies try to optimize the many elements of the close process but consolidation applications fail to handle the processing load.
- Lack of Process Automation. Key close processes that can and should be automated — but often aren’t — include: intercompany matching and elimination, consolidation entries, currency conversion, business rules, equity elimination, cash flow and GAAP conversions.
- Weak Audit Trails. The lack of strong audit trails can become a barrier during the close process (as well as during the post-close audit sign-off) when central finance seeks to investigate and verify figures.
Corporate finance centers can overcome these and numerous other barriers to the fast close by using the powerful products in the Business Objects EPM suite and supporting them with best-practice processes. These products provide the foundation and functionality for facilitating wider people- and process-oriented changes like shifting the intercompany account reconciliation process outside the close process, automating traditionally manual consolidation functions and achieving a right first-time close process.
