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Accelerate Period End Close

In: Business and Management

Submitted By weiweimyway
Words 447
Pages 2
I currently work in the control team of a mid-size technology company, whose business is based on projects. One problem faced by the company is that the month end close process usually takes six business days, much slower than our goal within three business days. We need take actions to accelerate the close process.

I would suggest solving the problem with logical thinking style which is mostly used in the business world to make decisions. In order to find a solution, we need to start with understanding what’s behind month end close and what causes the slow process. The close process is relevant to regular data maintenance, project controlling, accounting process and financial reporting. Based on my understanding, each area has certain elements that cause the slow close in combination.

Actions should be taken in each step of month end close. Firstly, eliminate bad data and non-value added activities. Bad data is poor quality information that arises due to missing, inconsistent and erroneous data. As for any system “bad data in leads to bad data out”, this is where the initial effort to improve the month close should be invested. Secondly, improve the effectiveness of control and process. In order to avoid propagating bad data elements into good quality data, a system needs to be in place capable of preventing and/ or detecting errors before they occur. And the best practice would be use automated controls and processes (provided they have been correctly established). Thirdly, use the best technology, together with the process improvement, to generate and update simplified and automated financial documents. In conclusion, the close process would be improved and fasted through the effective and automated company system.
The case for a fast close process is becoming increasing relevant to various stakeholders of the company. From the point of internal stakeholders, faster close means more time will allocated to analysis, accurately developed budgets, forecasts leading to enhanced decision making. For external stakeholders such as investors, suppliers and clients, improved close would give them accurate and in-depth disclosure of the company’s finance conditions and hence better decisions.

The above thinking style requires us to be objective and fair enough in analyzing and decision making. However, usually people are somewhat influenced by their emotions in thinking. If I think and solve the problem with emotion, I may believe that my team-the control team- is doing a perfect job and it is the accounting and finance teams that cause the slow close process. In this way, I would only blame the others, ask them to improve, but neglect the flaw of my own team. As a result, solutions would be incomplete and unfair.

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