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The mantras of the closing process

The month-end-closing process is a critical financial activity in every single company. The overall process is simple as the financial team “just” needs to ensure that all relevant transactions are recorded on time, the needed reconciliations and technical close activities are performed, the necessary data and financial statements are dully analysed, and then all the key figures are reported to the relevant stakeholders.

However, with the increase in the demand of information, in an environment in which the number of transactions is ever increasing and more complex, and in which the workload can be unbalanced, this “simple” Record, Close, Analyse and Report can be extremely burdensome.

Therefore, Qiado has reflected upon which mantras should Controllers and the many other parties involved in the month-end-closing process could follow to have a more pleasant month-end-closing experience:

  • Mantra 1: Know your transactions

It may seem obvious, but it is quite easy to overlook relevant business processes and how those translate into accounting records. Some processes, such as receiving external invoices, do not abide by AR closing deadlines, therefore by implementing sound forecasting processes and by correctly configuring the vendor payment terms may allow to have less strict deadlines. On the other hand, processes such as the foreign exchange revaluation, may have a simple execution and require little preparation but can generate a large amount of data and have long system processing times without having a strong financial impact, therefore it may be relevant to consider more strict deadlines.

  • Mantra 2: Plan ahead

As a direct consequence of the previous mantra the planning for the month-end-closing process is key. Once it is clear how business processes translate into accounting records, how much time each process will require, and which interdependencies exist between processes, a backwards planning exercise can be performed to identify the preferable start date for each month-end-closing activity.

A clear information mechanism should also be in place so that all relevant stakeholders are swiftly informed of the key dates for each one of the month-end-closing activities.

  • Mantra 3: Be sure your ERP is optimized

Many ERP solutions already come with out-of-the-box automations and features, which may be extremely attractive as not a lot of effort seems to be required when trying to have an operating ERP system. Additionally, many in implementations projects a detailed blueprint approach is followed in which the major requirements of the finance users are considered to improve the system usability.

However, there may be considerable gaps between the business processes and the expectation from the finance users over such processes. These gaps come to be discovered across time and may lead to considerable stress points and difficulties during the month-end-closing.

A strategy that companies can follow is to implement first the functionalities that are critical, gradually adopt functionalities that seem interesting but for which business processes may not be yet clear, and to continuously invest in more automation as processes become better known and more standardized.

  • Mantra 4: Do not “overanalyse”

In a world of massive amounts of data not all the data points are relevant, and as in many other activities 80% of the result can be achieved in the first 20% of the time. Therefore, as a preparation exercise it is very important to have in mind the key business developments for that period and plan them into the analysis exercise. It is also important to have an expectation about the amounts and percentage changes expected for those key events.

This will allow to immediately identify which results for the period are worth to be analysed, which are “business as usual” and which are just small, unexpected results that can be overlooked.

  • Mantra 5: Consider investing in a closing solution

Everyone agrees that Excel is great, and ERP’s have done an amazing job at standardizing processes. Still information is moving a lot faster now, and data volumes are extremely large, therefore exporting data from the ERP and analysing it directly in Excel without any other automation is only reasonable in small enterprises.

The most advanced Closing solutions go beyond pure organization tools and have already integrated many analytical features as well as simplified reconciliation processes that allow end users focus on the few relevant outlying topics, instead of going through thousands or millions of transactions.

These solutions also offer a direct integration with several leading ERP systems thus avoiding the additional burden of data integration and intermediary data layers.


If you have other issues to solve, we will be happy to assist you in solving it.