The month-end close process can sometimes be a daunting, time-consuming task in the fast-paced world of corporate finance. As organizations grow and financial operations become increasingly complex, the demand for efficient, accurate, and timely financial and non-financial reporting becomes ever more critical. Making the reporting even more complex is that finance teams have typically relied on disparate data sources, siloed processes, and fragmented tools to deliver functional requirements.
THE RESULT?
Troublesome manual reconciliation processes and inconsistent outputs.
These challenges are further compounded by years of under-investment in digital transformation and systems rationalization. As a result, finance teams are already struggling to deliver against their existing mandate and cannot evolve into an expanded strategic role. Automation and Enterprise Performance Management (EPM) software has become essential in this environment.
This guide is designed to help CFOs and their teams navigate the challenges of automating the month-end close process. We’ll explore the benefits of automation, list some implementation best practices for leveraging EPM software to streamline financial operations, and share some customer success cases.
CURRENT CHALLENGES IN THE MONTH-END CLOSE
The traditional month-end close processes involve several key steps such as data collection, data validation, currency conversion, IC reconciliation and more. Many of these are complex processes in and of themselves.
Why?
Multiple data types and currencies are consolidated. Complex ownership structures are considered alongside accounting for inter-company transactions and balances.
Other complexities — such as tax — also come into play. Plus, before the results can be distributed internally and externally, many different roles and multiple levels of approval and signoff are involved. The close process can bring many challenges:
- Inconsistent data
- Limited visibility
- Compliance risks
- Delays
- Complex disparate systems
INCONSISTENT DATA
Data accuracy and integrity are fundamental to the month-end close. Ultimately, they ensure financial statements are reliable, trusted, auditable, and compliant with all global regulatory requirements. Because finance data comes from various sources and systems, as identified above, the data is prone to errors, inconsistencies, and discrepancies.
This is further validated by the steady increase in disclosure and notes requirements including ESG reporting which requires the inclusion of more and more non-financial data which must tie back to the financial figures.
Organizations with high transaction volumes, manual data entry, and complex spreadsheets thus face additional challenges in maintaining accuracy and integrity. Those challenges lead to a time-consuming reconciliation process and potential inaccuracies in financial reporting.
Lesson Learned
Inconsistencies and inaccuracies put high levels of pressure on finance teams, often resulting in stress and burnout.
LIMITED VISIBILITY
Limited visibility into the status of month-end close processes can add latency and uncertainty. Finance leaders may struggle to track progress, identify bottlenecks, and ensure all tasks are completed accurately and on time. This lack of visibility and control can lead to last-minute rushes and a higher risk of errors.
Lesson Learned
Lack of real-time data hinders decision-making and forward planning.
COMPLIANCE RISKS
When managing multiple entities, currencies, and intercompany requirements, and ever-changing global and local regulations/standards, finance teams in complex organizations face even more additional challenges. Unfortunately, many financial consolidation systems just can’t do the job. They weren’t built to properly treat this level of complexity.
As a result, organizations relying on legacy point solutions finance teams must implement more manual processes, complex spreadsheets, and time-consuming reconciliation processes to make up for the gaps in existing financial systems.
Those challenges create inefficiency, potential inaccuracies in financial reporting, and worse yet, compliance issues.
Lesson Learned
Manual processes increase the risk of non-compliance with regulatory requirements.
DELAYS
Many organizations still heavily rely on spreadsheets and manual processes during the month-end close.
Beyond simply being incredibly time-consuming, manual data entry, spreadsheet-based calculations and reconciliations, and ad-hoc reporting is also prone to human error.
These manual tasks often lead to inefficiencies, delays, and inaccuracies, further adding to the stress of the month-end close.
Lesson Learned
Manual data entry and reconciliation are time-consuming, labor-intensive, and prone to errors.
COMPLEX DISPARATE SYSTEMS
Finance teams often work with multiple EPM systems and tools. Over the past three decades, finance has been conditioned to implement best-of-breed consolidation and close solutions for account reconciliations, transaction matching, tax, and planning and forecasting. These solutions all have varying detail levels, complex integrations, and data duplication, so they don’t seamlessly integrate with each other.
Unifying this in one single EPM platform reduces complexity and maintenance effort significantly and enables significantly better alignment of external statutory and internal management reporting.
Lesson Learned
The duplication of data and meta data between disparate EPM systems adds time, creates complexity, and becomes a key contributor to inefficiencies in the month-end close.
WHY AUTOMATE MONTH-END CLOSE
To start, automation has been a big topic for organizations ever since the Industrial Revolution brought machines to play where manual labor had traditionally been the only method. Bringing automation to finance processes — including the month-end close — has moved to the top of the agenda for forward-looking finance leaders. Such leaders are looking for ways to better support their organizations and drive a real impact on the overall performance.
THE PROOF: Think about how much time you and your team spend manually copying and pasting information between fragmented sources and tools, as opposed to analyzing results and helping your business partners take action.
THE BENEFITS OF MONTH-END CLOSE AUTOMATION
EFFICIENCY GAINS
Achieve faster close times by identifying and reducing repetitive manual tasks, automating all processes in a single unified platform, and streamlining critical processes with interactive visualization and collaboration capabilities to increase both control and accountability.
ACCURACY AND COMPLIANCE
Reduce errors and improve regulatory compliance with out-of-the-box support for local and global regulations, reporting standards, and tax to streamline consolidations and treatments needed for accurate financial reporting.
IMPROVED DATA INSIGHTS
Access real-time, accurate financial data to increase visibility into financial and operational activities, ensuring users can effectively identify actions and enable informed decisions at the speed required.
ENHANCED COLLABORATION
Better coordinate and communicate to more equally distribute workloads and reduce manual tasks, leading to fewer temporary staff requirements at peak times, more team cohesion, and people doing more work aligned with their qualifications.
For any organization, even minimal movements in the above can make a significant difference. Closing faster with better data is a sign of leadership, strength, and strong governance. In turn, organizations can make better decisions, maximizing new opportunities and investor/stakeholder confidence in the market.
KEY FEATURES OF EPM SOFTWARE FOR AUTOMATING THE MONTH-END CLOSE
When evaluating software options for the month-end close, ensuring the best capabilities are available and proven in the market is critical.
Importantly, the solution should be capable of supporting the organization now and well into the future. Organizational change can come at any time.
However, regulatory changes tend to come with some notice and can be significant, such as recently introduced ESG reporting requirements.
An Effective EPM solution should include:
- A fully unified approach
- Data integration and quality
- Workflow automation
- Advanced analytics and reporting
- Account reconciliation automation
- Automated Transaction matching
- Audit trail and security
- Artificial intelligence and machine learning
A FULLY UNIFIED APPROACH
With a unified, cloud-based platform like OneStream, all capabilities for the close are in a single solution. This unified approach reduces the complexity of multiple applications or instances and streamlines all month-end close data and processes in one place.
OneStream’s Digital Finance Cloud is unique because it is powered by a true platform – unifying all financial consolidation, close (account reconciliations, transaction matching, ESG, and tax), financial and non-financial/operational planning, reporting, and analysis processes in a single solution and data model.
ACCOUNT RECONCILIATION AUTOMATION
Manual account reconciliation can be an extremely time-consuming activity, one with all-too-often frustrating results. In fact, many finance teams have lost countless hours and even days attempting to reconcile balances — often resorting to Excel when transactional detail is required to make sense of differences.
Automating this process can, in and of itself, thus be transformational for many finance teams and save significant amounts of time.
Effective account reconciliations require a process that is not only automated but also fully unified with the financial close. If GL trial balances are loaded into a single system for financial consolidation, reporting, and account reconciliations, then the data will always be synchronized. The close process will then be faster and more efficient.
DATA INTEGRATION AND QUALITY
EPM software integrates data from various sources, including ERP systems, CRM systems, and other financial tools. This integration ensures a single source of truth for financial data. Automation can reduce manual time-consuming data loading and manipulation and provide faster access to data.
Financial data quality management (FDQM) lies at the core of a unified solution. For organizations, FDQM is crucial to driving effective transformation across finance and lines of business. A key requirement is 100% visibility from reports to sources—all financial and operational data must be clearly visible and easily accessible.
AUTOMATED TRANSACTION MATCHING
A unified EPM system should include an automated transaction-matching capability to help resolve differences and accelerate the account reconciliation process by providing the ability to quickly match transactional data from multiple sources. Because such matching uses a rule-based approach, users can focus only on exceptions and drive process efficiencies.
WORKFLOW AUTOMATION
The solution must also include guided workflows to protect business users from complexity by guiding them uniquely through all data management, verification, analysis, certification, and locking processes.
By standardizing tasks, approvals, and notifications, automated workflows streamline the month-end close process. This streamlining reduces bottlenecks and ensures timely completion of the close process.
AUDIT TRAIL & SECURITY
In any EPM solution, comprehensive logging for compliance and audits is essential. Every metadata and data value added, changed, or deleted should be tracked and logged.
Through this information, users can know the who, what, when, where, and values before and after the change. Users should not, however, have the option to disable audit logs.
The system must also be architected in a way that doesn’t compromise performance when all audit controls are running.
Overall, the EPM solution should provide robust security features, including role-based access controls and data encryption. This robustness ensures data integrity and compliance with regulatory requirements.
ADVANCED ANALYTICS AND REPORTING
Through a broad range of reporting and analytics capabilities, a unified solution helps reduce reliance on spreadsheets and fragmented reporting tools to increase the speed, scope, and accuracy of reporting across the organization.
The most advanced EPM software offers advanced analytics and reporting capabilities, allowing CFOs to generate detailed financial reports, dashboards, and forecasts. With that level of detail, decision-making and strategic planning are both improved.
ARTIFICIAL INTELLIGENCE (AI) & MACHINE LEARNING
AI and machine learning enhance the month-end close process by identifying patterns such as the same data types recurring, detecting anomalies, and predicting potential issues.
Because these technologies can analyze large volumes of real-time financial data, both AI and machine learning provide insights and recommendations to improve accuracy and efficiency.
With modern finance platforms like OneStream, AI and machine learning are finance-focused, built directly in the platform as a core service, and work across all processes.
These features eliminate the need and complexity of moving data and removing it from the context of the process.
ONESTREAM’S SELF-SERVICE REPORTING & ANALYTICS
Selecting the right solution is one of the first steps to successful automation. But when you’re preparing to automate, the way it’s done, how the solution is implemented and rolled out to users, and how the training/enablement is deployed are all key steps.
10 STEPS TO ACHIEVE SUCCESSFUL AUTOMATION
1) Engage Stakeholders: Involve key stakeholders early in the process and build consensus.
2) Select the Right Technology: Decide your criteria for choosing the right automation tools/software.
3) Govern Data: Ensure a focus on improved data accuracy and security.
4) Customize and Scale: Check availability to adapt tools to fit specific needs.
5) Regularly Monitor and Update: Ensure you can easily keep the system up to date.
6) Assess Current Processes: Evaluate existing month-end close procedures to identify manual processes that can be automated.
7) Define Objectives and KPIs: Establish clear goals and metrics for automation improvements.
8) Plan and Execute Implementation: Create a step-by-step implementation plan.
9) Train Your Team and Employ Change Management: Fully prepare your team for the transition with advance training.
10) Continuously Improve: Regularly review and optimize the process.
In conjunction with the steps above, begin with automating specific aspects of the month-end close process and gradually scale to more complex tasks. This approach allows your team to adapt to the new system and minimizes disruption. Never under-invest in training. Instead, do what’s needed to ensure your finance team is well-trained in using the EPM software. Then provide ongoing training and support to keep everyone up to date with new features and functionalities.
CUSTOMER SUCCESSES WITH MONTH-END AUOMATION USING ONESTREAM SOFTWARE
BDO Enhances Information Delivery
BDO is a U.S. professional services firm that provides assurance, tax, and advisory services to multinational clients through a global network of over 80,000 people working in 1,591 offices across 162 countries.
The BDO team, led by CFO Lynn Calhoun, selected OneStream because it met three primary requirements: scalability, information delivery and data integrity.
In sum, OneStream fit the bill as a platform that could handle larger data volumes as BDO grows and empower key decision-makers with accurate information, rich dashboarding and reporting capabilities. By combining multiple disparate data sets, OneStream creates “one source of the truth” for BDO.
OneStream helps BDO align its external, legal, management and FP&A processes within a single solution while providing a framework to address different levels of detail between budget/forecast collection and actuals reporting across Accounts, Cost Centers and Departments. This capability, in turn, provides additional granularity for reporting and planning across various lines of business in a single solution that offers a unified data model.
BDO leverages OneStream’s financial signaling capabilities to report on and analyze large volumes of daily transactional data, loading 10 million records nightly. Those records are transformed into 30 to 40 million rows of data through OneStream and then made available for BDO’s users via an interactive dashboard.
“We now have happy users who are able to absorb information the way they want with self-service reporting and dashboards, This includes a wide range of information, not just financial – including managing people and clients.”
— Lynn Calhoun, BDO CFO
McCain Foods Automates to Efficiency in OneStream
McCain Foods Limited is a Canadian multinational frozen food company established in 1957 in Florenceville, New Brunswick, Canada. Today, McCain Foods is a global company with 22,000 employees worldwide and corporate offices in Toronto, Canada. McCain Foods is the world’s largest manufacturer of frozen French fries, potato products, and appetizers.
The company converted from SAP BPC to OneStream’s Intelligent Finance Platform for financial consolidation, financial reporting, and management reporting, as well as added lease accounting capabilities. And McCain did it all within a seven-month period to meet the implementation date for IFRS 16.
With 300 happy users, McCain Foods is benefiting from a simplified month-end close. In SAP BPC, regional data was loaded via flat files and took one to five hours depending on the region size. With OneStream, this process was reduced to 20 minutes. The company is now loading approximately three million data records per month into the OneStream environment. And from an administrator perspective, the OneStream platform is more automated and much easier to use, which has resulted in more engagement with controllers logging in directly to the system.
“We love the guided workflow functionality in OneStream, It ensures we’re assigning the right tasks to the right team members and provides a visual overview of what is required at each month and quarter-end. It also supports great corporate oversight on how we are progressing through the month-end close.”
— Katie Sholtbolt, McCain Financial Accounting
Automating the month-end close process with EPM software is a strategic investment that will yield significant benefits for your organization.
By increasing efficiency, improving accuracy, enhancing visibility, and ensuring compliance, you can transform your financial operations and drive better business outcomes.
As a CFO, you must lead this transformation and champion the adoption of automation within your finance team. You can successfully implement EPM software and achieve a more streamlined, efficient, and effective month-end close process by following the guidelines and best practices outlined in this guide.
For the reasons highlighted throughout the guide and more, OneStream has become the trusted vendor of choice for more than 1,500 organizations globally.
WHEN YOU EMBRACE THE POWER OF AUTOMATION, YOU TAKE YOUR FINANCIAL OPERATIONS TO THE NEXT LEVEL. THE FUTURE OF FINANCE IS AUTOMATED.