How to safely race to an optimized financial close.

Author:Zubizaretta, Gabriel
Position:Risk Management

What would an optimized financial close look like after a year's worth of effort?


Most finance professionals have never asked this question and even fewer have answered it. It's hard to hit a target you cannot describe. To achieve goals, one must define them, break them down, plan to achieve them and work toward realizing them.

In the case of the accounting close, the characteristics of an optimal process are similar to those of a successful race car team. It requires the right systems and processes, quality control, precision, teamwork, mid-race adjustments and an ability to overcome adversity in a time-sensitive, regulated environment.

First, there must be increased visibility because an optimized close is transparent. Details about activities, the status of processes, compliance controls and contents are all highly visible by all team members. Visibility also helps to identify obstacles, limitations, anomalies and errors. Poor visibility limits efficiency. Think bright headlights and a clean windshield.

Managers should have the ability to adjust activities, workload and review depending on issues that arise during the process to increase manageability. Visibility gives warning, but manageability provides the option to navigate, adjust and overcome obstacles. Think of the car's steering wheel.

Additionally, evidence of process compliance, supporting documentation and controls verification should be embedded in each close activity. Quality and compliance are not add-ons or after-thoughts. Compliance is exponentially more challenging in a dynamic environment, like the accounting close, where issues can arise from anywhere and changes are the norm. Quality can only be attained through continuous improvement and adaptation. Think of racing teams designed to deliver high performance by being adaptable to track conditions.



Analysis should also be a normal part of the close, and quality control should be performed as early and as often in the process as possible. Think about how race teams monitor the quality of the fuel they use, test fuel gauges, calculate fuel consumption and continually review the process, refueling just enough to win the race without extra fuel weight.

During the close, there are several types of communication required to track information, obtain the status of various close processes and communicate needed changes. Most of the communications require interrupting the participants in the close. To minimize disruptions and speed results, companies should use various forms of push and pull notifications to ensure that relevant information is made available at the appropriate times. Using the race car analogy, think interactive dashboards that allow ad-hoc queries of information useful to the driver.

A optimized financial close also includes teamwork, with process and policies that are designed to support workload balancing and cross-training of personnel involved in the close. Teams are more effective than individuals. Team performance can be increased by improving knowledge...

To continue reading