A fast close-the-books process provides multiple benefits for the finance function and for the company. First, a fast close process creates more time for finance professionals to focus on strategic activities, such as identifying warnings in financial data and providing financial direction. It also reduces the cost of the finance function, since fewer hours are needed to close the books, and demonstrates that the company's controls and systems are well organized. The company sends the message to its competitors and to the investment community that it is an expert at performing business processes.

Total costs to close the books and create financial reports, as a percentage of revenue, is an important measure to track because it reflects how well the company manages the labor and technology resources of the finance and accounting organizations. While it's important to close the books quickly at the end of an accounting period, companies also want to achieve a quick close in a financially responsible manner. Leading companies seek to close the books quickly by improving the fundamental processes, including the structure of the organization, the workflow, and the procedures, without necessarily spending large amounts of money on additional workers or the latest computer systems.

Total costs to close the books and create financial reports per full-time employee (FTE) indicate how well a company manages its finance and accounting costs relative to the number of workers in the organization. Leading companies seek to improve the close-the-books process, without necessarily spending large amounts of money, by improving the structure of the organization as well as workflow and procedures in the accounting and finance departments.

Here is a list of key indicators of improvement opportunities:

• Nearly every account on the balance sheet is reconciled to the penny monthly
• Heavy reliance on spreadsheets and “off-line” subledgers
• Relatively high volume of manual journal entries
• Frequent and high volume of overtime by accounting personnel to meet tightening deadlines
• A history of being highly acquisitive and not effectively integrating the unit’s close process into the corporate consolidations process
• Continual issues with post-close adjustments (e.g., “surprises,” issues that recur as post-close adjustments each month/quarter/year-end, large dollar amount adjustments, etc.)

Check out KnowledgeLeader’s Fast Close Guide for more information on this topic.

Other related resources include:

• Close-the-Books Audit Work Program
  Audit the close-the-books process regularly to ensure it is consistent, accurate, compliant with GAAP, and tailored to your organization’s needs.
• Close-the-Books Key Performance Indicators (KPIs)
  Establish key objectives and select outcome and activity measures to monitor and improve the close-the-books process effectively.
• Close-the-Books Process Flow
  Review and reconcile all accounts and entries, make necessary adjustments, and close the general ledger to ensure accurate financial statements at month-end.
• Close-the-Books Process Questionnaire
  Use this questionnaire to outline and standardize all activities, responsibilities and timelines in the close-the-books process.