Speeding up the close: instead of grumbling about the significant time and resources required to comply with new regulatory demands, many companies see a golden opportunity for finance to lead the way to better decision-making.

• Author: van den Hombergh, Gaye
• Position: Compliance

The clock keeps ticking, as public companies with a January-December fiscal year--having already squeezed out 15 days from the former 90-day requirement for closing their full-year books--must trim another 15 days by December 2004 to meet Sarbanes-Oxley requirements. With deadlines looming, finance and technology staff are looking for ways to reduce time and speed up the process to meet the impending 60-day close deadline.

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While corporate finance departments scurry to accelerate their close process, analysts, investors and board audit committees are watching closely to see how fast and how well companies are able to report quarterly and annual results.

But, in a complex corporation, how fast can the close be without jeopardizing quality? Finance departments large and small are preoccupied with this question, while work proceeds at a feverish pace. Yet, there is a silver lining for all this effort. Faster financial results can lead to better decision-making, which, in turn, can lead to significant bottom line impact.

In fact, the speed and quality of the close has become a prime indicator for analysts and other company observers for gauging the health and accuracy of a company's financial position. "The ability to close quickly enables management to concentrate and respond on prior period results to keep a competitive edge," says Blythe J. McGarvie, a director of the Pepsi Bottling Group and Travelers Property Casualty Corp. and president of Leadership for International Finance. "A faster close gives directors more time to digest the numbers and better fulfill our fiduciary responsibilities," she adds. A former CFO, McGarvie believes that a swift close also reflects on the efficiency and effectiveness of management and the company.

For many, the ability of a company to close the books quickly is a measure of management's control of the business. Access to real-time financial results allows management to identify significant issues as they arise during the period, permitting them to make mid-course interventions as necessary. Likewise, management is better equipped to evaluate hard data and foresee trends, both positive and negative, and take advantage of opportunities that may be time-sensitive. In such cases, finance has become a true partner to business units, playing a more strategic role that directly impacts business results.

Such control is valued also by Wall Street, which rewards companies that are able to...