As global events and the accelerating pace of change put even more pressure on today’s CFOs, finance leaders around the world know they must accelerate their technology transformation if they want to compete and thrive. Having better financial planning today means having a smarter close.

A modern close leads to better forecasts

To create more accurate plans, as well as more predictive scenario models, planning teams need richer insights. However, it is a reality that broken and manual closure processes get in the way. A traditional close process is hampered by inefficiencies, which obstructs subsequent planning and prevents comprehensive scenario modeling from aiding predictions.

For example, a fixed accounting key may be a critical part of the record-to-report process, but it is designed to remove data and dimensionality, robbing you of the information you need to plan predictively. Moving data from one system to another, cumbersome or excessive reconciliations, and repeated summaries conspire to transform valuable accounting data. Analytics, financial planning and accounting (FP&A) teams, as a result, can find themselves at odds, having to make educated guesses or swim upstream to discover the answers.

KPMG recently underscored the importance of a modern, digital accounting close by issuing a call to finance leaders to “transform the monthly record-to-report (R2R) close process to align more closely with the organization’s strategic forecasting needs.” The message is clear: to remain relevant and effective, the close process must evolve to become smarter, more efficient and more automated.

Establishing a data center is critical to business agility

Before overhauling the closing process, companies must lay some important groundwork. Fast and successful transformations of legacy functions require the presence of an intelligent database, a single source of truth for ingesting, enriching and transforming data. This must be finance and connected to the overall system of record.

The establishment of a financial data hub provides a consistent way to view all financial, operational and historical data. Real-time, rich dimensional data allows users to better understand business performance, analyze budget versus actual data, and interrogate trends and insights. As changes occur in the data center and in business processes, it is immediately reflected downstream, so accounting and FP&A always operate with the latest information. Once an intelligent data center is up and running, modernizing specific functions (such as the closing process) becomes easier.

Simplified variant analysis

For a closer look at how smarter closing saves time and improves insight, let’s dive deeper into a use case. Variance analysis is a common and fundamental function in finance, analyzing plan versus actual. Too often, this fundamental task becomes a manual and time-consuming process, limiting the frequency of analysis and calling into question the accuracy of the data for both accounting and FP&A teams. The reasons for this are varied: teams often work from two versions of the truth (in two different systems). FP&A has questions that accounting is not ready to answer and the data needed to identify gaps or activities that caused a variance is often lost during the close process.

Spend your time in action

Close processes don’t have to be linear, reductive and highly manual. If yours still is, then you are limiting your ability to take full advantage of your cloud-based planning environment. You now have the ability to transform the closing process with automation, real-time visibility and the comprehensive data needed for teams to do their jobs quickly, efficiently and without the confusion that once defined each close. Accounting can close with confidence and FP&A can plan with more predictive forecasting.

Take it from the lived experience of someone who knows how an outdated close compares to a modern one, and what it means for finance and FP&A teams.