Your financial close process is tried, tested and true. Or maybe you always thought it was—until the world came face to face with a pandemic.
The COVID-19 pandemic and the changes it’s brought to the working environment have shed new light on the monthly financial close process. By adding fresh pressures it revealed challenges that have always been there. And some teams have started stepping up as a result, to improve their month-end close and the processes that support it—Vena’s own team included.
“It exposed a lot of inefficiencies in our process … things we thought we had down,” Vena’s Chief Finance Officer, Darrell Cox, admitted in Excel at More with Financial Close, part of Vena’s recent Financial Close Livestream—now available on demand to members of Vena’s Plan to Grow platform. “And maybe we weren't taking full advantage of the systems that we had.”
At Vena, Darrell admits, the pandemic has permanently changed our financial close process. We’ve added new month-end close best practices and efficiencies that will continue to inform the process even as the workplace starts to return to normal.
And from what we’ve seen, we’re not the only ones.
Adding New Pressures
Remember the days when you’d look over your shoulder and shout a question out to your colleague, maybe asking about a specific transaction or a missing statement? It was probably just standard operating procedure—especially for smaller teams. That is, until workforces went remote and informal communications like these were no longer an option.
With teams dispersed and everyone working from their separate homes, suddenly those ad hoc communications weren’t possible anymore. In this new remote financial close environment, teams had to find better ways to communicate. But that was just one new pressure that affected the month-end close schedule.
“Proximity was over, distributing information and making decisions got harder and meetings got out of hand,” Darrell said of the new pandemic reality. In this new environment, the need for a more defined month-end close process was revealed—as were several obstacles getting in the way of that happening. And the realities of a remote work environment meant those obstacles suddenly couldn’t be ignored.
Meeting the Challenges Head On
Four common challenges have long been a reality of the financial close process. But the pandemic has inspired many finance teams to tackle them head on—introducing changes that promise to improve their financial close process now and in the future.
1. Poor Collaboration
Let’s face it, those over-the-shoulder conversations probably weren’t the most efficient way of communicating with colleagues. They were still helping to facilitate collaboration throughout the financial close process, though. But as the pandemic progressed and companies embraced remote work they weren’t possible anymore—exposing holes in how teams collaborate around their financial close. Without true visibility into data, as well as team tasks and schedules, effective collaboration can be challenging, especially during a remote month-end close.
While there was a lot of wasted time on unnecessary (and unwanted) meetings early on in the pandemic, more collaborative technology and processes that facilitate communication have been able to replace that for many organizations. When led by strong leadership that champions their usage across the board, common tools and processes with collaboration built in can help set a new standard and improve communication around the month-end close—whether you’re working remotely or not. In fact, with those in place this evolution promises a more transparent and collaborative financial close environment even once restrictions are lifted.
2. Lack of Automation
Speed is essential in any financial close. You want to do a good job and avoid errors, of course, but you also need to get the month closed out as quickly as possible. To accomplish those goals, finance teams have relied on their own processes and shortcuts—and making changes to those has risked interfering with their month-end close timeline. Which means that teams, pre-pandemic, would have balked at any kind of change—even when that change comes in the form of automation that promises to add new efficiencies in the long run. Change has been impossible to avoid over the past two years, though—and keeping up with that change has meant embracing automation tools.
The pandemic has revealed “deficiencies in automated processes” across finance—while making those processes especially critical. Not only do team members no longer see each other in person every day, but illness and the Great Resignation have left many teams short staffed, while the reality of living in a pandemic has meant the team members remaining are often overwhelmed. The organizations that have been able to streamline their financial close through automation have been able to remove some of that pressure. By focusing automation efforts on repetitive, overly manual or time-consuming tasks, you can make the entire monthly close process more efficient and begin to standardize it across the entire team. New technologies, such as machine learning and artificial intelligence (AI), can also help create fresh ways to improve your close process.
3. Disconnected Data
Disconnected data is a problem for a lot of finance and operations teams, across all processes—including your financial close. Missing and poor quality data is a familiar issue, while tracking down the right data has long been a headache. A pandemic hasn’t made any of that easier, adding new pressures as dispersed teams working remotely try to get the data they need from different sources around the globe. This means it’s become more necessary than ever to get those data problems in order.
The pandemic hasn’t solved our data problems. In fact, our 2021 Industry Benchmark Report shows that finance teams are still struggling with disconnected data and are missing a unified strategy on how they create, maintain, control and use data. But the need for remote processes, including a remote financial close, has added new urgency to the need for such a strategy, as well as processes that will ensure the right data is coming to you monthly—when and how you need it.
4. Disparate Systems and Processes
If you have dispersed teams working around the world, it’s not uncommon for each of them to be using a different technology and/or processes to close their books. And that makes collaborating, consolidating data and introducing the automation you need even more difficult. All of that was true pre-pandemic, of course, but it became clearer when added to the other pressures that have come to light over the past couple of years. Without a common process and shared financial close software, communication and transparency become even more difficult to accomplish, adding pressure to the month-end close process—and, as a result, your team.
The pandemic has forced many organizations to review their existing financial close software in order to improve communication and transparency in this new remote working environment. Implementing a common technology that’s easy to use no matter where you are provides a shared system that dispersed teams can collaborate within. And by working in a common system, an efficient and shared process that everyone can get behind becomes easier to achieve.
Establishing a New Normal
“Finance processes and communications aren't just about communications between us finance people,” Darrell pointed out in Excel at More with Financial Close. “It's about communication across the business. It's about supporting this process of running our business, delivering timely and accurate information and analysis, supporting and achieving business alignment and making great business decisions.”
With the pandemic forcing them to evolve, teams are working together better than ever to achieve that. And the good news is that those processes aren’t going anywhere. Even as restrictions begin to lift, organizations are in a better place to continue working virtually, across disparate teams and in the office—with a stronger, more effective month-end close in place.