For anyone working within finance and accounting, hearing the words annual year-end close can bring up a lot of stressful memories. For many FP&A teams, the annual year-end closing process comes with incredible pressure to get final figures out to management as soon as possible.
This process often means that FP&A teams need to extract and collate information from a wide range of sources throughout the organisation and then check and triple-check that the numbers are accurate.
Afterwards, FP&A teams need to validate balances against external sources, and then assemble all their financial information to get a holistic picture of the organisation’s finances. During this period of time - deadlines too often end up being tight and plans often go awry, creating an unfortunate flow-on of other priorities being put on hold.
However, what FP&A teams may be delighted to hear is: they do not need to live that way - and MODLR has a simple and effective solution to not only decrease the stress and the workload of the year-end close, but to increase accuracy in reporting as well.
The year-end close hurdle
The year-end process essentially is about collecting, validating and organising information to create an accurate story about your organisation. Most organisations, however, have difficulty managing multiple sources of information - at minimum, external information such as cash balances and loans payable need to be validated against the general ledger but organisations often find themselves dealing with multiple software systems to reconcile and summarise information. Needless to say, this process can lead to a lot of stress.
Organisations that manage software systems in addition to their core ERP often run into challenges. Tasks such as the year-end account reconciliation would involve collating data points from multiple systems, which creates multiple double-checks and manual entries, usually involving Excel, and leaves room for a lot of human error.
This is especially a problem for organisations with a number of subsidiaries or business units equipped with their own financial systems. These issues exacerbate and become more complex and disconnected with the more systems that are involved. So what can organisations do to collect and present data from multiple systems that is simple and easy to analyse? How can organisations streamline the validation and calculation of their balances and closing entries?
These are common questions in response to these challenges which organisations face when dealing with disconnected systems. Then following up those challenges, there is the issue with presenting and recording information in consolidated financial statements, intercompany eliminations and entries, and reporting that in various different formats to different stakeholders.
These variables add more and more complexity that makes it very easy to be out of sync across your financial documentation, increasing the risk of errors in accuracy and consistency issues cropping up. To add to the pressures of the year-end close, many organisations find themselves short of trained staff skilled in the year-end closing processes, increasing the weight on the - already - overloaded shoulders of the finance team.
Traditional processes and tools for year-end close are lagging behind
Most organisations have entrenched reporting tools that go alongside their core financial management systems, and they often end up inadequate to support efficient year-end close processes.
These tools are unable to effectively handle data from a large number of financial systems and/or external accounting software.
Complex business intelligence tools are able to quickly and efficiently track KPIs, analyse trends and monitor the overall picture of your organisation - but they tend to lack the simplicity, methodical logic, and depth of analysis needed for the end of year closing process.
These barriers existing in available tools, mean that most businesses end up defaulting to copy and pasting information from stock reports and data exports straight into Excel. This tedious manual process often is extremely time-consuming for FP&A times, especially when there is a constant stream of changes and updates.
As FP&A teams would need to do new manual entries with each change, they run a large risk of human error, inaccuracy, and version control issues in coordinating the effort. Furthermore, if data is placed incorrectly with the copy and paste method, then it is easy for errors to be prevalent during your data analysis.
Fortunately, there is a way out of using error-prone traditional tools for your financial close, and you can make the year-end close easy and stress-free.
Automate, update and repeat with MODLR
Now, how do we accomplish easy and stress-free year-end close processes?
The answer is simple: cloud-based automation.
Implementing a powerful and dynamic tool that can automate and streamline your financial year-end tasks, with a high degree of precision, will entirely change the way you work.
Ideally, you’d like to utilise a tool that can function as a single source of truth that pulls information automatically from multiple sources and systems in real-time. This alone cuts down a large margin of time from the year-end process.
Let’s take an example of reconciliation of your A/R balances from an external system into your organisation’s general ledger. A manual reconciliation would require someone to run reports through both the systems involved and manually enter the financial data into Excel and back it up on a separate worksheet.
If we utilise a tool that can automate the process, the person in charge of the process simply needs to create links to the automation tool with the two separate systems, and add the correct formulas to pull the matching numbers and ignore exceptions. From there, all that is needed is to ensure that the data in the external sources are up-to-date and your information will be automatically and immediately refreshed with the latest information. This cuts down the time of a year-end process from hours and hours, to only take seconds.
This type of automation is possible with a cloud-based platform like MODLR, which is able to pull real-time data from a multitude of sources, ERP systems, and specialised integrations. MODLR can take the process even further and create detailed analyses, scenarios and insights on your financial data to streamline the year-end process. Adopting a dynamic and powerful reporting tool such as MODLR can instantly ease all the stress and spare valuable time from your year-end close.
Prepare ahead for your next year-end close.
If we reflect on the year-end closing process - especially given the recent disruptions in the global market, we can all agree it can be a nightmare of a process, filled with stress and time-consuming tasks. This tedious and protracted process often comes from the manual tools approach that most organisations take to do their year-end close. But this doesn’t have to be the case. With a tool that can provide automation and real-time reporting you can turn tasks that take hours in the year-end close to take minutes, and even seconds.
Think of all the valuable time that can be saved and used for more high-value actions such as strategic planning and decision making. Think about how smooth your operations could run if your end-of-year close took only a matter of days instead of a month. Think about how seamless your planning would be if your budgets and forecasts were already pre-forecasted using data-driven insights and trends from your most recent financial quarters. You would be able to save time, money, and a greater level of confidence in your financial data and the well-being of your FP&A team.
Schedule a demo of MODLR to see our cloud-based platform in action and discover how you can simplify and expedite your monthly, quarterly, and year-end reporting, and:
- Expedite production of report packs
- Reduce the timing of your forecast and budgeting cycles
- Gain wider visibility into your reconciliations
- Find a real-time dynamic solution that can directly report and pull information from your ERP
Experience for yourself how seamless a year-end close can be with MODLR; get greater confidence in the accuracy of your data and utilise your saved expenditure on higher-value decisions and strategic planning.