Buyer’s Guide to Financial Close: Transform Your Month-End Process

Companies that manage to close the books on time have tackled more significant challenges compared to those closing later. Not every company may think it’s worth the effort to speed up their close process. Are you one of them, or are you ready to tackle the challenges for a faster close?

Quality of Data Inputs, Trust in Technology, Cost of Technology, Digital Proficiency of the Team

1. Quality of Data Inputs

The speed and efficiency of the close process are influenced by the quality of data received. If the data inputs are poor, the accounting team ends up spending time correcting errors before using the information. Legacy systems in areas like accounts payable and receivable can complicate this if they don’t integrate well with the ERP. Rework is often needed due to errors in data entry or inconsistencies in data standards.

How do you solve it?

Invest in data integration and cleansing tools to ensure quality and consistency of your data. Implement data governance practices to standardize data entry and improve accuracy across different systems. Upgrade legacy systems to better integrate with ERP solutions, reducing errors and manual corrections. Establish clear data entry protocols and conduct regular audits to identify and fix data quality issues.

2. Trust in Technology

Finance teams, especially those handling controllership, often struggle to trust the accuracy of financial data generated using advanced technology. Despite investments in advanced systems, staff may still manually verify outputs due to concerns about accuracy and reliability.

How do you solve it?

To boost confidence in automated systems, implement strong validation and reconciliation processes. Regularly audit and cross-check data outputs with manual reviews to ensure accuracy and reliability for finance teams. Invest in training programs to help staff become more familiar with the system. Use systems with advanced error-detection and reporting features to further build trust in the technology.

3. Cost of Technology

A quicker close largely depends on substantial investments in technology. You will need to assess if the benefits of a faster close justify the costs of these technological investments. For some, the incremental advantage of a faster close may be worth the expense.

How do you solve it?

To justify investing in new technology, do a detailed cost-benefit analysis to measure the gains from speeding up the close process. Choose scalable and modular solutions for flexible investment based on current needs. Cloud-based options can be cost-effective with lower initial costs. Also, think about the long-term benefits like less manual work, fewer mistakes, and better compliance, which can balance out the initial expenses.

4. Digital Proficiency of the Team

To achieve an extremely fast close, accounting staff must effectively use available technology systems. This means they need to have both strong accounting skills and a high level of digital proficiency.

How do you solve it?

Provide ongoing training and development programs to improve the digital skills of the accounting staff. This includes offering workshops, online courses, and hands-on sessions with the technology. Encouraging a culture of continuous learning and support can help staff become proficient with new systems. Regular updates and communication about new features or system enhancements will keep the team up-to-date and efficient.

The financial leaders need a compliant, efficient, and collaborative way to manage the financial close due to more complex company structures, stricter financial regulations, multiple record-keeping systems, and increased remote working.

The record to report market offers different solutions for your accounting teams to handle and execute their group close, consolidation, and reporting processes in one centralized application. This helps them streamline closing processes, speed up group close times, reduce redundancy and errors in the consolidation process, and produce compliant financial statements for external and internal reporting.

Financial Close Management

This involves managing the entire financial close process, including setting up close tasks, tracking the completion status of different entities, configuring and auditing workflows, and using dashboards or portals to monitor the process in real time.

Balance Sheet Reconciliation

Managing reconciliations for high-risk balance sheet accounts, such as cash, intercompany accounts, inventory, and subledgers, to ensure the accuracy of the group’s financial statements.

Journal Entry Processing 

Handling the creation, documentation, and approval of journal entries throughout the closing process, including manual entries as well as system-generated and top-side adjustments.

Anomaly Detection and Resolution

Detecting errors and resolving them prior to the month-end close is one of the core features that should be supported by a record to report software. Correcting these errors from the very beginning helps you aid your efforts for continuous close.

Intuitive Dashboards

Having a tiered overview of the tasks helps the accounting managers understand the current status of a close task and as well as the workload of an accountant. The software should also have the capability to track custom metrics.

Finance leaders often highlight ease of close, configurable consolidation rules, and prebuilt reporting as important features when evaluating software. However, these areas show the least difference among vendors. The most significant differences lie in features like data integration with existing ERPs, implementation by the vendor, and support models.

Seamless Integration with ERP and Other Systems: The ideal Record to Report software should integrate effortlessly with your existing tools i.e your existing system of records. Ensuring data stays in sync between your ERP system and accounting software is crucial. The accounting team must be able to monitor any discrepancies to maintain accuracy. Without this control check, there’s a risk of errors and inconsistencies, which can compromise the reliability of your financial data. Implementing an accounting software ensures a unified workflow, reduces the need for manual data transfers and minimizes errors. Such integration allows for efficient data handling and consistency across platforms.

Utility for All Team Members: To be truly effective, Record to Report software must be user-friendly and beneficial for every team member, not just finance leaders alone. The software must support something similar to Excel, as accountants have worked with Excel their whole lives. Suddenly asking them to use something unfamiliar can create chaos. Ensuring the software is intuitive and has familiar tools like Excel can greatly enhance user acceptance and streamline the transition process. When everyone finds the software helpful and easy to use, adoption rates increase, leading to improved overall efficiency and satisfaction across all levels. 

Implementation Time: Quick and smooth implementation is crucial for Record to Report software. Lengthy setup times can stall business growth and operations. Choose a software which primarily focuses on automating your day to day activities and give you a quick ROI. They should later focus on customizing the software to automate very specific functionalities. The software should be designed for fast deployment, allowing your team to start using it productively within a short period, thereby maximizing your return on investment.

Training: Comprehensive training is essential for successful software adoption. The Record to Report solution should be intuitive and supported by thorough intuitive self training modules to not only train the end user but also keep them hooked to it so that the user adoption increases. This ensures all users can quickly learn and utilize the software effectively, reducing downtime and enhancing productivity from day one.

Customer Support: Excellent customer support is vital for addressing any issues that arise with Record to Report software. A responsive and supportive software provider helps you navigate challenges and ensures you get the most out of the software. This ongoing partnership is key to maintaining smooth operations and continuous improvement.

An Eye on the Future: The right Record to Report software provider stays ahead of industry trends and continuously innovates. They should be responsive to client feedback, regularly updating their software to meet evolving needs. This forward-thinking approach ensures that the software remains relevant and supports your business as it grows and changes.

The role of AI in accounting is transformative, offering significant enhancements in efficiency, accuracy, and strategic decision-making. By automating routine and time-consuming tasks like data extraction, matching, journal entry and anomaly detection, AI allows accountants to focus on more strategic activities, greatly improving productivity and turnaround times.

Machine learning helps achieve over 99% accuracy on the first attempt, making operations smoother and letting finance teams focus on strategic tasks. In reconciliations, AI detects unusual patterns, offering insights to identify risks and make better decisions, thus improving accuracy and efficiency while providing useful insights into financial performance. Through predictive analytics and real-time reporting, the accounting software provides valuable insights for forecasting trends and making informed decisions.

Additionally, AI enhances security by detecting potential fraud and ensuring data protection through advanced encryption.

Embracing AI in accounting not only improves efficiency but also drives business growth, making it a strategic move towards more insightful financial management.

HighRadius transforms accounting processes using advanced technology. It provides complete solutions that automate and simplify Record to Report (R2R) workflows. With AI-powered features, HighRadius helps organizations improve their accounting, making it more efficient and accurate.

Financial close management

The HighRadius Financial Close Management software provides end-to-end automation for the financial close process. By leveraging AI and machine learning, this software helps reduce the peak load and gains control over the month-end close process. Key features include:

• LiveCube task automation: Automates 50% of close tasks using a no-code, Excel interface, making month-end close faster and more efficient.
• Journal entry management: Automates 95% of journal entry preparation and posting, ensuring accuracy and reducing manual effort.
• Close progress dashboards: Provides real-time visibility into close progress with customizable dashboards and reports, improving transparency and control.
• Maker Checker Workflow: Monitor priority tasks with assigned roles, multi-level approvals, segregated responsibilities, and team-wide close process control featuring review and approval workflows.

Using HighRadius Financial Close Management, organizations can achieve a 30% reduction in days to close, enhance productivity by 40%, and ensure 100% completion of close checklists.

Account reconciliation

HighRadius Account Reconciliation software optimizes the reconciliation process by leveraging out of the box AI transaction matching rules to automate and streamline the reconciliation process. Key benefits include:

• Automated reconciliation: Automate 80% of the reconciliation process and reduce the time and effort required while improving accuracy.
• Enhanced compliance: Provides audit trails and ensures compliance with regulatory requirements by maintaining accurate and up-to-date financial records.
• Transaction Matching: The AI/ML powered feature automates reconciliation by quickly and accurately matching high volumes of transactions with a 90% transaction automatch rate, reducing manual effort and errors. Its advanced algorithms handle complex matching scenarios, providing real-time visibility and control, enhancing financial operations, and ensuring compliance.
• Reconciliation Progress Dashboard: Get real time visibility on tasks and take proactive actions on potential delays to reduce days to reconcile. You can also track metrics important for your organization to take proactive actions.

By implementing this software, businesses can achieve 95% journal posting automation, 100% GL accounts coverage and experience 30% reduction in days to reconcile. 

Anomaly management

HighRadius AI/Ml powered anomaly management software enhances the efficiency of detecting and resolving anomalies in financial data. Key features include:

• Automated anomaly detection: Uses machine learning to identify all anomalies in financial transactions. 
• Real-time alerts: Provides immediate notifications of detected anomalies, ensuring timely action.
• Automated Corrective Suggestions: Identify anomaly patterns and automatically suggest actions like correcting journal entries and reduce days to close by 30%.
• Feedback Based Self Learning: The system goes through the historical data and uses it as a continuous feedback to reduce the false positives by 30%.

This HighRadius anomaly management software allows businesses to reduce the time spent on anomaly detection by 50%, improve the accuracy of financial data, and resolve 80% of the anomalies.