Closing the books at the end of a financial period is an uphill battle for almost everyone. But knowing what the biggest bottlenecks in the close are can help you accelerate your process, access insights sooner, and elevate the contributions of you and your team.
Earlier this year, Sage Intacct conducted a “Close the Books” survey among finance and accounting professionals to gain a greater understanding of the close process. They heard from 1,600 professionals and gathered valuable insights including the top three obstacles slowing down their close. We are excited to share these learnings from the “Close the Books” survey with you as well as what some organizations are doing to build stronger finance foundations that enable them to close faster than others.
Data manipulation in spreadsheets
One of the biggest pain points of the close is data manipulation in spreadsheets. Relying on manual tabulations and moving data back and forth between spreadsheets and the accounting system slows down the close and can lead to businesses making decisions without the latest information as well as errors in their numbers. But just how much of an impact are these manual tasks making? Survey respondents who said they were most impacted by spreadsheet manipulation have closes that are 36% longer than those who are only slightly impacted. It’s no secret that manual work is painstaking and time-consuming.
The nonprofit, Pathway Lending, knows this first-hand. It provides loans and educational services for small business owners to help underserved communities in Tennessee and Alabama. CFO Barbara Harris and her accounting team had to manually manipulate data in Excel spreadsheets. It was cumbersome to capture and present the information needed to bill across 10 to 12 educational grants to the board of directors. Harris wanted an automated financial management solution with flexible, user-friendly reporting and a chart of accounts that could be divided into dimensions to reflect the organization’s business segments. They chose Sage Intacct, and after the switch, their customizable reports helped reduce the month-end close by 60% and provided better insights to board members faster with real-time information.
Data imports and exports
Another major holdup in the close is the time spent importing and exporting manual data. In the survey, Sage Intacct found that organizations most impacted by manual data imports and exports have closes that are 25% longer than those that are only slightly impacted.
At the Archdiocese of Detroit, a nonprofit Catholic ministry responsible for hundreds of parishes in Michigan, the finance team was struggling to manage cash movement through manual journal entries. Their legacy accounting system made it difficult to track each of their revenue sources and related transactions as separate restricted and unrestricted funds based on each donor’s intent. The Archdiocese decided to move to a cloud-based financial management solution to streamline its accounting work.
With Sage Intacct, it deployed a new system and a greatly simplified chart of accounts that allowed it to track its operations and campaign activities for over a dozen entities. The finance team significantly simplified the process, exported transactions from its loan and deposit system each day, and imported them into Sage Intacct. This slashed their time spent supporting banking processes by about 25%.
Respondents identified data accuracy as another bottleneck of the close. When asked to what degree reconciliations impact close time, 56% of respondents indicated it has a medium to high impact. But the reconciliation process doesn’t have to be painful. Top performing organizations speed up their close without sacrificing efficiency with automated reconciliations. This feature automates transaction matching and reconciliations daily to ensure cash accounts are tied to bank accounts, speeding up month-end closes.
Anchor Loans, a “fix and flip” construction lender, solved its “nightmare” of manual reconciliations with Sage Intacct. Within a few months of implementation and migration, Anchor Loans was using Sage Intacct automation to eliminate up to 16 hours a month of manual bank reconciliations that the finance team previously did in Excel. They also optimized the balance sheet reconciliation process from 12 business days a month to just 3–a 75% improvement. Automation makes it easy for accountants to spot reconciliation discrepancies and drill down into details for resolution.
Finance leaders with teams that can accelerate past the major slowdowns of the close have access to reliable information sooner. They use that data to make real-time strategic business decisions and future forecasts and become greater assets in their organizations.
To learn more about key “Close the Books” survey findings and hear first-hand from Nick Labao, controller at Mixbook, about how he transformed his close, please view our recent webinar or download our newest eBook… Living on the Ledger!