Financial Close Solution Advantages

Introduction

Financial close is a critical yet often tedious task for accounting professionals. Despite the use of advanced ERP systems, many finance teams still face challenges in closing their books on time. Over 50% of companies take between 7 to 14 days to complete the close process, heavily relying on in-house systems and spreadsheets. This leaves just half a month for other core business activities and limits the time available for strategic planning and analysis.

This blog explores how financial close automation can address these issues, offering insights into the benefits of implementing cloud financial close solutions and focuses on its advantages such as reducing close time and improving accuracy.

What is a Cloud Financial Close Solution?

A cloud financial close solution is a software platform hosted in the cloud that automates and streamlines the financial close process. It integrates various financial systems to ensure that all accounting tasks required to close the books at the end of a financial period, such as reconciliations, consolidations, reporting, and approvals, are completed accurately and efficiently.

Challenges with Manual Financial Close Methods 

The financial close process is complex as it often requires coordination across numerous systems, owing to which almost 27% of finance professionals regard the close process as a major hurdle. Let’s take a look at some of the common challenges with manual methods that have an impact on the financial close process:

• Complexity

  Coordinating multiple financial systems and maintaining consistency across various accounts can be complex, often resulting in delays and errors. The complexity increases when integrating data from diverse sources, making it difficult to ensure that all information is accurate and up-to-date. This often requires extensive manual oversight, further increasing the risk of human errors.

• Time-consuming

  The financial close process involves numerous steps and checks, making it a lengthy task that takes away from the time needed for other activities. Each step requires careful attention and validation, consuming significant resources. This extended timeframe can delay strategic decision-making and impact overall organizational efficiency.

• High manual efforts

  Dependence on manual data entry and spreadsheets heightens the risk of errors and inefficiencies, slowing down the close process. Manual interventions are prone to oversight, leading to inconsistencies and inaccuracies in financial data. The lack of automation also means that tasks that could be streamlined take more time and effort.

• Data Integrity

  Maintaining accurate and consistent data across different systems is challenging, frequently leading to discrepancies and issues. Inconsistent data can result from variations in data entry standards or errors in system integrations. Ensuring data integrity requires multiple validation processes, which can be both time-consuming and prone to errors.

• Reporting

  Producing timely and accurate financial reports is challenging, particularly when data is dispersed across multiple sources. Compiling and reconciling data from various systems can delay report generation and impact their accuracy. This often necessitates additional effort to ensure that reports are complete and reliable.

• Technology

  Outdated or incompatible systems can disrupt the efficiency and effectiveness of the financial close, hindering overall performance. Legacy systems may lack integration capabilities, creating barriers to seamless data flow and process automation. This technological gap can lead to inefficiencies and increased manual work, impacting the timeliness of the financial close.

How Can a Cloud Financial Close Solution Help? 

A cloud financial close solution optimizes the financial close process by addressing limitations in traditional systems through comprehensive automation. It manages repetitive tasks and enhances data analytics, providing actionable insights to improve efficiency. By centralizing and standardizing the month-end close, cloud financial close solutions reduce the time needed to close the books for many enterprises and mid-sized organizations.

In fact, cloud-based solutions like HighRadius financial close management software amplify the financial close efficiency by centralizing and automating key tasks, enabling smooth collaboration among stakeholders, and ensuring visibility at different stages of the process. It provides a robust and integrated solution that enhances efficiency, accuracy, and transparency in financial reporting. By leveraging advanced AI and machine learning technologies, it ensures timely and accurate financial close and allows finance teams to focus on strategic initiatives and drive business growth by reducing the month-end close time by up to 30%.

On-Premise vs Automated Cloud Financial Close Solution

Let’s take a look at a comparative table highlighting the differences between on-premise and automated cloud financial close solutions:

5 Benefits of Cloud Financial Close Solution

An integrated, intelligent cloud financial close solution can optimize and enhance the capabilities of a basic ERP system. Here are five advantages of integrating automation in your financial close process:

• Continuous close

  • Automation reduces time-consuming manual tasks through workflows and pre-configured templates, enabling a day-zero close.
  • It enables effective real-time data utilization, which in turn supports continuous close.
  • By eliminating the need for manual intervention, it helps save time, allowing the financial team to focus on critical processes like budgeting, forecasting, and analysis.

• Real-time visibility

  • It helps eliminate a large number of disconnected spreadsheets with a centralized automated dashboard which gives the CFOs and finance team a real-time view of the financial data.
  • Further by leveraging AI, organizations can analyze large volumes of data and gain real-time insights.
  • This enhances transparency, improves team collaboration, and facilitates better communication and decision-making.

• Improved accuracy

  • It eliminates reliance on disconnected spreadsheets with a secure, collaborative, cloud-based interface.
  • By automating data entry and ensuring regular data updates it reduces errors and omissions.
  • With anomaly detection taking almost 40-60 % of accounting time, close automation leads to faster detection of errors and anomalies, ensuring timely actions and avoiding month-end delays.
  • This improves financial health visibility and builds trust with stakeholders through accurate financial reporting.

• Increased efficiency

  • Financial close automation enables the standardization of the close process and reduces the complexity that arises due to disparate systems and manual processes.
  • Standardization of the close process helps the team meet deadlines, reduces overtime costs, and improves consistency, leading to employee satisfaction and enhanced productivity.

• Streamlined collaboration

  • Provides a single source of truth across the finance department, improving decision-making for finance and accounting leaders.
  • By making the financial process error-free and proactively detecting anomalies it helps to eliminate material weakness in the balance sheet, ensuring accurate financial statements.

Must-Have Features of Cloud Financial Close Management Software

If you are looking for cloud financial close management software, there are a few must-have features that you must look out for. A robust financial close management software should include the following to enhance efficiency and accuracy:

• Automated workflows and task management

  A robust financial close management software should automate routine tasks like data entry, reconciliation, and approvals, reducing the time and effort spent on manual processes. Integrating task management features ensures accountability and timely completion as it automatically assigns tasks to team members and tracks the progress. In fact, HighRadius financial close software is designed to create detailed month-end close plans with specific close tasks that can be assigned to various accounting professionals, reducing the month-end close time by 30%.The workspace is connected and allows users to assign and track tasks for each close task category for input, review, and approval with the stakeholders. This streamlines operations and allows finance teams to focus on strategic initiatives, improving overall productivity and efficiency in the financial close process.

• Real-time data integration and analytics

  Seamless integration with various financial systems is essential for accurate, up-to-date data. Real-time analytics and dashboards provide actionable insights, enabling finance teams to monitor key performance indicators and make data-driven decisions. In fact, HighRadius financial close software seamlessly integrates with multiple banks, ERPS, and accounting systems to consolidate all the financial information, reducing errors and discrepancies, ensuring a unified view of the organization’s financial health, and facilitating faster, more informed decision-making.

• Secure data management and compliance

  The cloud financial close solution should be able to protect sensitive information with encryption and access controls while ensuring regulatory compliance with built-in checks and audit trails. Solutions such as HighRadius financial close software, prioritizes your data security and privacy, meeting key compliance standards such as GDPR, HIPAA, SOC 1 Type 2, and SOC 2 Type 2. This ensures that your data remains confidential and secure, giving you peace of mind while managing your finances.

• Customizable dashboards

  A customizable dashboard is an essential feature, as it provides users with a personalized view of key financial metrics and processes. This flexibility allows finance teams to tailor the dashboard to their specific needs, ensuring that critical data and insights are readily accessible. In fact, with HighRadius’ Close Checklists, organizations get a hierarchical overview of the close process that enables them to streamline the close process and close efficiently. 

• Error and anomaly detection

  Financial close software should have the ability to automatically detect and flag anomalies or errors in financial data, significantly reducing the risk of inaccuracies. By identifying discrepancies early, the software helps maintain data integrity and accuracy, providing confidence in financial reporting. With HighRadius Anomaly Management, users can transition to a continuous close by resolving 80% of anomalies. This proactive approach to error detection not only enhances compliance but also saves time and resources by preventing potential issues from escalating during the close process.

• Scalability

  Scalability is essential for financial close management software to grow with your organization. The software should handle increasing data volumes and complexity as your business evolves. It should support the integration of new financial systems, processes, and teams without compromising performance. This adaptability ensures that the software continues to meet your organization’s needs, providing consistent performance and efficiency even as your business expands. Scalable solutions can accommodate the demands of larger teams and more complex financial structures, making them suitable for businesses of all sizes.

• Audit support

  A financial close software should provide an audit trail that can be leveraged during internal audits to ensure a faster close. In fact, solutions like HighRadius have ‘task logs’ to help track all changes made to every close task in chronological order. Additionally, it also allows accountants to add all collaterals, supporting documents, comments, and web links to their tasks for auditors to have all information handy.

How Can HighRadius Help Streamline Your Business’ Financial Close Process? 

HighRadius Financial Close Management Software is designed to streamline and automate the financial close process, ensuring faster, more accurate, and compliant financial reporting. This solution integrates seamlessly with existing systems, offering advanced features that enhance efficiency and accuracy in every step of the financial close process. Here are the key features of the financial close software, that facilitate faster and more accurate close process:

• LiveCube task automation

  LiveCube Task Automation is based on HighRadius’ AI-based no-code platform called LiveCube. It looks and feels exactly like Excel but offers a plethora of features. LiveCube Task Automation module automates repetitive tasks, such as data entry and parts of the reconciliation process, using pre-configured templates and workflows. It automates business computations backed by big data that seamlessly retrieve data and send it back into your ERP. 

  It reduces manual effort, saves time, and ensures timely completion of tasks by automating 50% of close tasks. This allows finance teams to focus on strategic activities like budgeting and analysis, leading to increased productivity and reduced errors.

• Journal entry management

  Journal Entry Management centralizes the creation, validation, and approval of journal entries, automating the entire process. It facilitates faster month-end close by posting entries to your ERP automatically for adjusting the final GL account balance. In fact, it enables organizations to achieve 95% journal posting automation. 

  It improves accuracy and compliance by ensuring all entries are reviewed and validated before posting. This enhances the reliability of financial data and reduces the risk of discrepancies.

• Close progress dashboards

  Close Progress Dashboards are customizable dashboards that help organizations track custom metrics, ensuring that they can seamlessly analyze the efficiency of their processes. The dashboard provides real-time visibility into the financial close process that displays key metrics and progress indicators, helping businesses identify any delays or discrepancies in their process.

  It enables finance teams to track the status of the close process, identify bottlenecks, and make informed decisions based on real-time data. This transparency helps in managing the close process more effectively and ensures timely completion.

• Maker-checker workflow

  The Maker-Checker Workflow implements a structured review and approval process for financial transactions, ensuring that all entries are checked and verified by multiple parties. It facilitates a 30% faster close by implementing a hierarchical, multi-level review process.

  It enhances control and accountability, preventing errors and fraud by ensuring that transactions are thoroughly reviewed before final approval. This structured approach helps maintain the integrity of financial data.

• Close checklists

  The Close Checklists provides customizable checklists that outline all critical tasks and deadlines, helping finance teams track progress and ensure that no steps are missed. These checklists can be tailored to specific needs and workflows, making it easier to manage complex close processes.

  It reduces the risk of oversight and ensures that tasks are completed on time. This feature helps maintain accountability and improves efficiency by providing a clear and structured approach to managing the financial close. 

FAQs

1) What is financial close software?

Financial close software automates and streamlines the process of finalizing accounting records at the end of a reporting period. It ensures accuracy, compliance, and efficiency by integrating various financial data sources, automating reconciliations, and providing real-time insights into the close status.

2) What is the purpose of financial application software?

Financial application software helps manage financial operations, including accounting, budgeting, forecasting, and reporting. It aims to improve accuracy, financial close efficiency, and compliance by automating processes, providing real-time data, and enhancing decision-making through comprehensive financial insights.

3) How does financial close work?

Financial close involves finalizing all accounting activities for a specific period. This includes reconciling accounts, posting journal entries, validating data, and generating financial statements. The process ensures all financial information is accurate and compliant with regulatory standards before reporting.

4) What are the key advantages of using accounting software for financial reporting?

Using accounting software for financial reporting improves accuracy, efficiency, and compliance. It automates data entry and reconciliation, reduces errors, and ensures timely financial statement preparation. Real-time analytics and reporting enhance decision-making and provide valuable insights into financial performance.

5) How can cloud financial close solutions help your business? 

Cloud financial close solutions streamline your business by automating tasks, integrating data in real-time, and enhancing collaboration. They improve accuracy, speed up the close process, and provide remote accessibility, boosting efficiency and allowing for more strategic focus.

6) What is financial close efficiency?

Financial close efficiency refers to how swiftly and accurately an organization completes its financial close process. It involves optimizing and streamlining tasks, reducing manual efforts, and minimizing errors to ensure timely, accurate reporting. Enhanced efficiency leads to better decision-making and financial control.