Almost three-quarters (73%) of respondents to an MHR Analytics Twitter poll revealed they are not confident about their data and numbers on month-end closes and audit submissions.
The findings from the survey of 1,000 respondents underline the increasing pressures facing finance teams.
A separate survey showed the new IFRS 16 lease accounting legislation to be taking its toll, with 30% of respondents calling it ‘complex,’ 17% ‘resource heavy’ and 24% ‘time consuming.’
“With a backdrop of rising interest rates, an uncertain economy and increased regulation, finance and accounting leaders are facing a wide range of competing demands, and this is something we’ve seen in our research as well as from working with our customers,” says Nick Felton, MHR Analytics SVP.
“Compliance, chaotic data sets and close processes paint a complex picture, but the good news is that these challenges come at a time when powerful technology is widely available to automate these processes and remove some of the burdens blighting finance and accounting teams,” he added.
The specialist provider of business intelligence and financial performance management sets out three practical ways to address finance woes through automation:
- Automated close and consolidation: Financial close and consolidation encompasses everything from corporate reporting and regulatory filing to intercompany eliminations, tax reporting variables, disclosure management and consolidation of financial statements. Delivering reporting in a way that’s compliant and accurate, whilst closing and consolidating quickly is a balance that can be difficult to deliver. The MHR Analytics Twitter poll demonstrated these difficulties, with only 27% of those surveyed saying they were confident on audit submissions and month-end closes, 27% saying theirs required improvement and 46% saying they were not confident.
“Failures in data collection, calculation and disclosure can all mean sleepwalking towards non-compliance.”
Tailored solutions like CCH Tagetik bring together disparate data sets and provide full control over reporting and time. This automated approach eliminates the costly mistakes made with manual methods and reduces admin time by automating repetitive tasks, creating fast and accurate reports to take away the month-end headache.
- Automated reporting: IFRS 16 lease reporting software is a primary example, with companies obligated to include virtually all leases on the balance sheet since January this year. For finance teams, the biggest change has been the removal of the distinction between finance leases and operating leases. From premises through to big-ticket office equipment, IFRS 16 demands detailed consideration of lease data relating to a potentially huge range of assets – many of which were previously dealt with off-balance sheet.
Failures in data collection, calculation and disclosure can all mean sleepwalking towards non-compliance. This can lead to loss of investor and partner confidence or severed credit lines – risks that few businesses can afford to encounter.
Research shows that the top performing businesses spend 20% more time on analysis of financial data than on gathering it
Equipping your team with an analytics solution can help. Implementing a single hub for IRFS reporting, data repository, calculation modelling, reporting and disclosures will allow teams to manage obligations while retaining ownership of the accounting process and ultimate peace of mind.
- Automated budgeting and forecasting. Research shows that the top performing businesses spend 20% more time on analysis of financial data than on gathering it. But to do this effectively, being armed with the right technology is fundamental – and a large number of businesses are still relying on spreadsheets which simply cannot provide the accuracy needed to effectively budget and forecast. Automated budgeting, forecasting and analysis, using IBM Planning Analytics for example, eradicates the risk of human error and transforms the finance function with complete visibility. One MHR Analytics customer has implemented financial workforce planning software to save an anticipated 30% in operational costs and generate long-term financial forecasts up to 10 years into the future.
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This is a companion discussion topic for the original entry at https://thefintechtimes.com/month-end-close-process/