The financial close is a critical function in a company’s accounting and finance operations—a linchpin in the financial reporting process. A well-executed financial close enables businesses to produce timely and reliable financial reports, ensuring that all transactions are accurately recorded, accounts are reconciled, necessary adjustments are made, and financial statements are prepared.
But in today’s accelerated business environment, finance and accounting teams are under pressure to provide insightful reporting faster than ever, and many struggle to complete the financial close effectively, despite its importance. Moreover, many lack confidence in the integrity of their close process.
CFOs and controllers face challenges such as data inconsistency, regulatory complexity, ineffective technology integration, lack of standardization in reporting, reliance on manual processes, and time and resource constraints—issues that contribute to inefficiencies and errors.
An effective close
Delays or inaccuracies in financial reporting can result in misinformed business decisions, regulatory non-compliance and loss of investor confidence, among other negative consequences. On the other hand, an effective financial close not only ensures accuracy and compliance but also delivers strategic insights that support proactive, enhanced decision-making.
An optimized financial close:
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Reduces time to finalize financial statements |
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Facilitates compliance with regulatory requirements |
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Enhances the accuracy and reliability of financial reports |
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Enables deeper financial analysis for better decision-making |
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Supports strategic financial planning and forecasting |
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Critical financial close steps
A seamless financial close process relies on several critical steps, each playing a vital role in ensuring accuracy and efficiency.
Collection of financial data
It begins with the systematic collection of financial data across various departments, including revenue, expenses and operational costs. This information serves as the foundation for a comprehensive review of financial transactions.
Account reconciliation
The account reconciliation stage that follows should ensure that recorded transactions align with supporting documentation and that discrepancies are identified and addressed. The adjustment of journal entries follows, allowing for necessary accruals, deferrals and corrections to present a true and fair financial picture.
Preparation of financial statements
Finally, the process culminates in the preparation of key financial statements—the income statement, balance sheet and cash flow statement. These reports provide a clear snapshot of the company’s financial health, equipping leadership with the insights needed for strategic decision-making.
Conquer the close
Although a robust and efficient financial close process is essential for ensuring financial accuracy, compliance and strategic insight, it remains a pain point for many finance teams, who struggle with both the resources and expertise to execute effectively.
If your team needs help meeting deadlines and optimizing your close process, we can help. Our experienced financial professionals can integrate seamlessly with your team to expedite the close or provide consulting support or project management to help you streamline workflows, reduce risk, introduce automation and improve the quality of your financial reporting.
Read more about how we worked with a manufacturing client to resolve specific accounting problems and complete the year-end financial statements and audit well ahead of schedule.
Get in touch if you’d like to discuss how we can support your team with the financial close process.
About the Author
Sridhar Kuppa is a Principal in SolomonEdwards’ Transaction Regulatory and Advisory Services practice. He is a CPA with over 15 years of consolidated financial reporting, management reporting, budget planning and analysis, and expertise in US GAAP and IFRS financial reporting. Sridhar also has experience in the manufacturing industry with special focus on revenue recognition, product profitability analysis, and inventory valuation. Sridhar has excellent leadership, communication, and project management skills.
