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The ART of the Close: Increasing Reliability
Companies should work to avoid the “uncomfortable close.” The uncomfortable close is one where you’re never quite sure if your numbers are accurate, if you’ll finish on time, or if tasks are being done—or done well.

In contrast, a reliable close is a well-oiled machine that operates the same way every month. When you’ve built reliability into your close process, you’re always ready for internal and external reviews, you know when you can report to the CEO, and you have confidence in your people, processes and data.
 
Create (and use) a checklist. Creating and using a working checklist both improves the quality of the close and increases accountability. Construct a detailed list by area setting out tasks, specific analysis, journal entries along with assignments, due dates, etc., for all activities to be completed during the close. Even better, build team engagement and ownership by enabling team members to add to the checklist or even own the checklist for a given month.
 
Communicate well and often. Communicating frequently with your team before, during, and after the close increases reliability by putting all expectations, progress, and emerging issues in full view. Don’t call endless meetings that cut into time reserved for close tasks. Rather, set aside time each day of the close—a daily check- in—to have targeted discussions with individuals on progress, issues, and upcoming challenges. Use the close checklist as the tool to guide the discussion on progress and issues emerging during the close. Just as critically, welcome questions, even the repetitive ones, and don’t make team members wait long for answers.
 
Balance the workload. When examining roles and responsibilities in a close, it’s not uncommon for many close responsibilities to fall to one or two close “heroes.” This creates a single point of failure that can result in significant delays in completing key close tasks and increase the likelihood of errors.
 
A reliable close requires a team effort, whereby the workload is balanced to ensure no one person has to be the hero. Close tasks should be assigned broadly so everyone on the team has a role. While tasks may be assigned to one person, in a reliable close more than just the team member with the assignment knows how to complete the task. Focus on training and how tasks are divvied up to reduce bottlenecks and eliminate dependence on heroes.
 
Track, report, adjust, repeat. Treat the close like you would any other critical company project, e.g., implementing a system, opening a new entity or location, etc. Plan ahead, track your progress, report on the results, and use the results to drive continual improvement each and every month.
 
The ART of the Close: Achieving Timeliness
A faster close isn’t just about reducing the time spent on the close. It’s also gaining time to spend on more important tasks: reviewing data, performing analysis, and adjusting to unexpected events—acquisitions, last minute transactions, or continuity disruptions.
 
Break internal close dependencies. Too often, the close is at the mercy of a linear timeline because one task cannot begin until another task is completed. The solution? First, start close tasks early. Successful companies start their close-related activities well before month end (e.g., close AP, roll-forward reconciliations, reverse entries, analyze accounts, etc.). Second, challenge any dependencies that aren’t set in stone and identify alternatives. With the right process—and the right technology—team members can and should be able to work on certain tasks simultaneously.
 
Streamline external dependencies. When third parties don’t deliver data on time, this impedes workflow and creates bottlenecks. Yet it’s OK to challenge all dependencies that aren’t “hard.” There’s often more room than you think to improve workflow around third-party contributions.
 
The American Institute of CPAs recommends proactively connecting with third parties to create an understanding of your process, the close’s connection to the organization’s financial health, and what you need (and when) to ensure the process happens on time. Meeting with third parties at work and via social engagements can foster win-win negotiations in the form of faster reporting or earlier cut-off dates.
 
In addition to building stronger relationships—or in lieu of, if it isn’t a viable option—evaluate opportunities to use estimates rather than actuals. Even better, implement technology that eliminates delays altogether by automatically integrating third-party data as it’s ready, in real time.
 
Reduce time and effort required to complete tasks. Even the most experienced person can take far too long to complete tasks because of a reliance on manual processes. Consider opportunities to automate repetitive processes whenever possible. Further, auto certification features in technologies like Blackline can help perform reconciliations for certain accounts and appropriately route reconciliations to the right people for review and approval. Such functionality can help speed up close timelines by eliminating the need to compose an email, attach a document, send, and wait for a reply. It also allows personnel to focus on the areas that actually require attention, rather than on accounts where no activity or material changes occurred.
 
A timely close also depends on the people involved concentrating solely on the close during the close window. Postponing non-critical daily operations or meetings on special projects while the close is in progress can help keep your team focused on completing the close as quickly as possible after month end.
 
Define what’s really important. While finding each and every penny hiding under the sofa may feel like a victory, unless you’re on a scavenger hunt it’s not time well spent. Instead, establish materiality thresholds and use those thresholds to exert effort where it really matters. Meaningful thresholds enable staff to focus on areas that truly need extra review or analysis.
 
Tackle upstream errors and issues. It’s important to remember that some errors and issues are simply outside of your sphere of control. Common upstream issues that can affect timeliness include erroneous data, surprise costs that haven’t been accrued, or perfunctory reviews by people not under your management.
 
Yet there are steps you can take to mitigate your own department’s risk. First, build pre-close analysis into the timeline to identify and resolve potential upstream issues before the close. Second, realize that open communication is the best tool when addressing issues beyond your purview. While it’s obvious to you that there’s a problem, leadership may not have the same immediate awareness that processes upstream are delaying the close.
 
Make the case with leadership that the close isn’t just a month-end, rote process but rather an indispensable part of the company’s ability to manage the business, monitor performance, and ensure integrity with stakeholders. Share your findings that pertain to upstream errors and delays—without playing the blame game. More commonly, upstream issues are not the result of an individual’s lack of effort or poor overall performance but rather limited understanding of finance needs and the impact of errors.
 
Conclusion
The close is a crucial part of understanding the bigger picture of the company’s financial health—and helping everyone make more informed, data-driven decisions that affect both profitability and longevity. Yet it can be one of the most time consuming, onerous, error-ridden processes for CFOs and accountants alike.
But it doesn’t have to be.

Deepika Sandhu
Deepika is a Partner in Connor Group’s Financial Operations (FinOps) practice where she advises companies on preparing for an IPO, public company readiness, accounting systems and internal controls. Deepika has more than 16 years of direct industry, management consulting and Big-4 experience in business process improvement, financial operations, and organizational effectiveness. Deepika is an expert in finance function process optimization, finance transformation and performance management to improve performance, reduce inefficiencies and enhance the overall operations of the finance organization. She also has significant experience in risk consulting, helping clients to quantify and pro-actively mitigate risks and assessing companies overall internal control effectiveness.
Last modified on Sunday, 17 March 2019
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