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Effective financial closure management is essential for businesses to prevent costly auditing errors, yet far too many still rely on manual procedures that are prone to error.
Fremont, CA: Companies of all sizes and industries must undergo the time-consuming but important financial closing procedure. Accounting professionals check account balances and produce financial reports at the financial close to provide a precise picture of the company's financial situation. The process is time- and money-consuming and needs to be done repeatedly throughout a company's existence.
Time is money in today's digital economy. The inefficiency of present practices gets illustrated by the fact that 87 percent of finance experts put in extra time during the financial closure process, according to a study published in the Journal of Accountancy. While many businesses have started to embrace digital transformation, the finance departments, which continue to rely on various outdated methods, have not always done so.
Let's look at some of the ways automated systems and intelligent software might enhance the financial closing procedure:
• Reduce the people involved
The likelihood of inaccuracy increases with the number of participants in the financial closing. This is evident in many businesses' antiquated procedures to finish their financial closure. Adopting record-to-report (R2R) automated procedures minimizes the workforce while enhancing the accuracy and dependability of the financial data gathered and relieving some of the time constraints.
• Compile everything in a one location
Traditionally, gathering proof and paperwork throughout the financial closing process has been difficult. Accounting professionals may implement standardized workflows across their organization using specialized financial closure software, allowing even less experienced team members to follow simple, guided processes to gather data for a financial close and risk assessment.
• Shifting focus
Process automation may be helpful for organizations to design logical workflow processes that get executed with accuracy throughout the financial closure. Once operations are appropriately automated, they may be set up to happen consistently.
Staff members can return their attention to analyzing the closure since they no longer get burdened with time-consuming tasks. CFOs and finance directors may concentrate on growing the business while this is happening.
• Strict compliance
Leveraging technologies for the financial closing process would ease the burden on organizations as more stringent compliance regulations put them under more pressure. Companies may construct a complete audit trail with automated R2R technology, giving internal and external auditors access to information about workflow, priorities, and potential risks.
Although there will always be a chance of mistakes at the financial closure, technological advancements have made it simpler for accounting experts to reduce risk. Software for financial closes goes much beyond the traditional approaches used in planning programs.