Stressful Month-End Close Process? Here’s Why – And How to Fix It

Financial close is the process of verifying and adjusting account balances at the end of an accounting cycle (often the end of the quarter or end of year) to produce financial reports representative of the company's true financial position as of a certain date. These reports inform stakeholders such as management, investors, creditors and regulatory agencies.

As finance professionals, you’re all too familiar with the stress and pressure of the month-end close. Your team is responsible for consolidating all financials, reconciling and matching accounts and transactions, and publishing accurate financial statements with aggregated narratives, both internally and externally. As modern finance teams, you’re also stewards of financial and operational insights across the organization, to provide timely variance to plans and forecasts, operational analysis, and reporting & analysis to leaders and stakeholders across the business.

Yet the month-end close is often a source of stress, for a variety of reasons:

1. Tight deadlines
2. Manual activities (e.g., managing spreadsheets)
3. Complexity in bringing together data across ERPs and operational systems
4. Collection of comments and narratives
5. Disparate levels of data that must be pulled together for effective variance reporting to measure performance and update forecasts throughout the year

Despite those stressors, some organizations have streamlined this process, cutting days from the closing cycle. But other organizations continue to struggle with executing the close. That’s especially true of those who use many different ERP and operational systems, rely on spreadsheets, and employ best-of-breed consolidation, planning, reporting and analysis solutions.

To ensure your organization isn’t the latter, let’s look at the top challenges in the month-end close. We’ll also look at how you can tackle those challenges, streamline the close and alleviate the stressors on your team and the broader organization.

Top Challenges of the Month-End Close

Complex and Disparate Systems

Over the past 3 decades, Finance has ultimately been conditioned to implement best-of-breed consolidation, close solutions. Those solutions include Account Reconciliations, Transaction Matching, Tax, and Planning and Forecasting solutions. In other words, Finance often works with multiple ERP systems and tools. And they all come with varying levels of detail, complex integrations and duplication of data – which don’t seamlessly integrate with each other.

The varied systems and integrations, mapping & reconciliations, and duplication of data and meta data thus create a host of challenges. How? By adding time, creating complexity, and significantly contributing to inefficiencies in the month-end close.

Data Accuracy and Integrity

Data accuracy and integrity are fundamental to the month-end close. Why? They ensure financial statements are reliable, trusted, auditable and compliant with all global regulatory requirements. Due to coming from various sources and systems, as identified above, financial data is prone to errors, inconsistencies, and discrepancies. Organizations with high transaction volumes, manual data entry and complex spreadsheets face additional challenges in maintaining accuracy and integrity. The result? A time-consuming reconciliation process and potential inaccuracies in financial reporting.

Manual Processes

In many organizations, a heavy reliance on spreadsheets and manual processes during the month-end close remains problematic. Manual data entry, spreadsheet-based calculations and reconciliations, and ad-hoc reporting are not only time-consuming but also prone to human error. In turn, these manual tasks can lead to inefficiencies, delays and inaccuracies – making the month-end close even more stressful.

Financial Complexity, Regulations and Standards

For some organizations, complexity stemming from multiple entities, currencies, intercompany and ever-changing global and local regulations and standards create additional challenges. Many consolidation systems were never built to properly treat such complexity. Thus, organizations reliant on legacy point solutions must implement more manual processes and complex spreadsheets and time-consuming reconciliation processes. Why? To make up for gaps in their financial consolidation and close systems. The result is inefficiency, potential inaccuracies in financial reporting and, worse yet, compliance issues.

Lack of Visibility and Control

Limited visibility into the status of the month-end close process can add latency and uncertainty in the process. The result? Finance leaders might struggle to track progress, identify bottlenecks and ensure tasks are completed accurately and on time. This lack of visibility and control can lead to last-minute rushes and a higher risk of errors.

Solutions to Alleviate Month-End Close Stress

There is good news, however. With advancements in technology, close and consolidation solutions and some focused steps, your organization can tackle these challenges head on. Let’s look at five ways you can streamline the month-end close, drive efficiency and ultimately reduce stress for a timelier month-end close.

Implement Unified Financial Systems

By investing in unified financial systems, you can streamline the month-end close process by eliminating data silos and reducing the need for manual data entry. The key to such streamlining is a unified solution. With one, you can avoid many pitfalls that come with the traditional approach of multiple point solutions. Those pitfalls include the duplication of data/meta data and complex integrations. Not to mention, disjointed processes with different levels of detail negatively impact the consolidation, close, reconciliation and reporting. You can avoid all of that with a unified financial system.

OneStream Digital Finance Cloud

Solutions like OneStream are unique because they’re a single platform. They unify all financial consolidation, close (account reconciliations, transaction matching and tax), financial and operational planning, reporting and analysis processes in a single solution. Solutions like OneStream come with built-in data quality, support for both balance-level trial balance and high-frequency, high-volume transactional data. With these capabilities, complex integrations are eliminated, all consolidation and close processes are streamlined, plus, users can directly reconcile actuals to plans and forecasts – delivering on the otherwise elusive single source of truth.

By unifying all month-end close processes in a single platform, you can seamlessly integrate all transactional and operational systems to one system owned by Finance. That integration comes with key benefits:

1. Reduces data duplication and manual processes
2. Enhances data accuracy
3. Ensures adaptability to change
4. Streamlines the month-end close

Combined, those benefits reduce stress on your team and improve their efficiency.

Utilize Modern, Cloud-Based Financial Close Software

Cloud-based financial close software solutions offer scalability, flexibility and accessibility. After all, they’re specifically designed to streamline and optimize the month-end close process. How they do so is equally important. Traditionally, the month-end close used multiple solutions that require complex integrations, the duplication of data/meta data, and manual tasks to consolidate and reconcile.

With a unified, cloud-based platform like OneStream, all solutions for the close are in one solution. This unified approach reduces complexity and streamlines all month-end close data and processes in a single solution, leveraging a host of features:

• Built-in Financial Intelligence (e.g., currency, intercompany) that performs calculations (e.g., equity eliminations, transfer pricing), supports varied consolidation methods, and manages complex global consolidations – automating the close process and reducing manual processes.
• Out-of-the-box support for local and global regulations, reporting standards and Tax – streamlining the consolidations and treatments needed for accurate financial reporting.
• Built-in Data Quality, validations, confirmations, comments, Narrative Reporting and supporting documentation in one solution – ensuring reliable, trusted and auditable financial statements.
• Automated Account Reconciliation and Transaction Matching in one place to optimize all close steps from the same source data – streamlining and aligning all financial and accounting processes in one month-end close process.
• Comprehensive close management/workflow, deep Microsoft Office integration, and balance and transactional financial/operational reporting – increasing efficiency; improving accuracy; supporting internal, external and narrative reporting; and improving visibility and control.

Automate Manual Processes, Data Collection and Reconciliation

Automation is key to removing stress from the month-end close process. By implementing a unified financial consolidation and close solution like OneStream, you can automate data integrations and collection into one source of truth. You can also leverage the same data to harmonize Account Reconciliation and Transaction Matching.

With those capabilities, you can do the following:

1. Reduce the time and effort required to gather and consolidate financial data
2. Pull data from all required sources
3. Align and have visibility into all close processes
4. Streamline through workflows and controls
5. Perform reconciliations
6. Flag discrepancies for review

In those ways and others, cloud-based solutions like OneStream deliver visibility, data accuracy, integrity and trust while minimizing manual intervention.

Deliver Comprehensive Reporting and Advanced Analytics

Equally important to an effective, less stressful close process is the ability to quickly communicate the results with consolidated narratives to required external stakeholders and regulators. At the same time, you need a process that supports the internal reporting and analysis. Solutions like OneStream do both. They offer built-in dashboarding, financial and ESG reporting, Narrative Reporting, financial and operational analytics from the balance to transaction level, and deep integration with Microsoft Office.

With those capabilities, you can support all financial reporting processes. You can also ensure your business leaders and stakeholders across the organization can understand current performance and affect future performance and plans. In turn, your organization will benefit from better decision-making, proactive management and better planning and forecasting.

Leverage Artificial Intelligence and Machine Learning

AI and Machine Learning (ML) can enhance the month-end close process by identifying patterns, detecting anomalies and predicting potential issues. These technologies can analyze large volumes of financial data in real time, providing insights and recommendations to improve accuracy and efficiency.

Again, “how” AI and ML is applied to the financial close, directly affects the complexity, transparency and efficiency of the month-end close process. If you leverage a legacy, point solution approach, your financial data is spread across multiple solutions. All financial data would need to be moved to stand-alone AI and ML solutions. Plus, costly data scientists would need to be engaged to apply the algorithms to provide the desired insights.

When you eventually get the data back, you again need to map and integrate the insights into your point solutions used for the close. That means losing both granularity and transparency to understand the numbers, directly impacting your trust and confidence in the insights.

With modern Finance platforms like OneStream, however, AI and ML are Finance-focused, built directly in the platform as a core service and works across all process. These capabilities eliminate the need and complexity of moving data and remove it from the context of the process. With OneStream, insights are immediately available to inform the close, correct anomalies and impact every step of the close process.

And with a unified approach, AI and ML not only reduce risk, cost and latency in the month-end close, but also immediately drives better planning and forecast accuracy. That means you get insights needed to drive efficiency across all Finance processes and maximize your investments and time to value.

Conclusion

The month-end close process is undoubtedly stressful and demanding for your Finance teams. But it doesn’t have to be. Instead, address the common challenges and leverage consolidation and close technology like OneStream and best practices. With them, you can transform your month-end close into a more efficient, accurate and less stressful process.

Ultimately, automation, integration, standardization and continuous improvement are key strategies to alleviate stress and enhance the overall effectiveness of your financial close. By embracing these solutions, you’ll reduce the pressure on your Finance team and gain valuable insights that drive better financial decision-making for your organization.

Learn More

Over 1,400+ companies globally have made the move to OneStream to enhance their overall effectiveness and take stress out of their month-end close. How? By unifying consolidation and close, with financial and operational planning, reporting, and analysis, to deliver efficiency, confidence and trust in financial and operational reporting.

To better understand why, check out some resources and customer success stories on Financial Close and Consolidation and visit our website.