10 Steps to Achieve Efficiently and Accurate Consolidate and Close Process

The consolidation and close process is often tedious and time-consuming – but it doesn’t have to be. Following the 10 steps in this article can help you achieve a more efficient and accurate period close.

10 Steps to Achieve Efficient and Accurate Consolidate and Close Process
10 Steps to Achieve Efficient and Accurate Consolidate and Close Process. Photo by LinkedIn Sales Navigator on Unsplash

Table of contents

“Critical” doesn’t have to mean “painful.”
A better way to consolidate and close.
Set controls up-front
Adopt a one-system strategy for subsidiaries
Simplify your chart of accounts
Automate your allocations and recurring journal entries
Configure rules-based bank reconciliation
Create a checklist
Establish automated, rules-based eliminations
Run currency translations in real-time
Enable report drill-down
Deliver self-service insights and analysis
Same old finance systems. Same old problems.

“Critical” doesn’t have to mean “painful.”

The consolidation and close process is one of finance’s most important functions. How you manage the close has a direct influence on reporting, planning, audit, and compliance. With so many areas of the business impacted, it’s critical to get it right. Bottlenecks and errors can lead to long nights in the office, not to mention late reports to executive management.

But if every organization knows what’s at stake, why do so many still suffer through painful, inefficient closes with excessive manual processes and tedious spreadsheets? Many accountants spend most of their time simply preparing data and resolving anomalies in transaction and accounting processes— meaning they spend much less time generating reports and analyzing results. Deloitte states that controllers spend 70% of their time on traditional tasks, such as closing the books, but would like to double their time spent strategizing and driving execution.1

It really shouldn’t be this way—and it doesn’t have to be.

A better way to consolidate and close.

Mastering finance’s traditional responsibilities are essential to becoming a more strategic partner to the business. When you eliminate bottlenecks and reduce errors for each period close, you can free up time to support larger, value-adding initiatives, such as:

  • Thinking critically about how to apply new accounting standards accurately and efficiently
  • Providing meaningful insight into your business partners throughout the period and at period-end
  • Driving strategy and enabling the execution of the business’s primary objectives

As finance’s role continues to gain prominence across the organization, selecting a technology partner that offers a seamless, comprehensive, and smarter period close process is a surefire way to help elevate finance’s role across the organization.

Here are 10 steps to mastering the period close with help from the right technology.

Set controls up-front

Much of the close process is fixing errors and making adjustments. Setting the correct controls and approvals up-front helps reduce that. Modern cloud ERP systems provide approval workflow and controls and security at the foundation, which drastically reduces errors. You can be more confident in your numbers—and audits become easier, too.

Adopt a one-system strategy for subsidiaries

Shuffling data back and forth to account for subsidiaries in different systems wastes time and increases your risk of making errors. But a single finance system eliminates the need to move data, allows for standardized controls, and gives you one data source for reporting and analysis. Only having to run processes such as allocations, accruals, and consolidation once for the entire organization saves you time and reduces errors. And preparing reports in one place means you know the business is always looking at the same up-to-date numbers.

Simplify your chart of accounts

A streamlined chart of accounts can improve the close in multiple ways. On the front end, it reduces errors in transaction coding that require reclassification during the close. It also eliminates the need to manage accounts with insignificant balances and makes it easier to understand the business when viewing your financial statements.

To keep your close agile, look for a system that enables you to modify your chart of accounts, organizations, and consolidation hierarchies as your business need change, and immediately reflects those changes across processes and reports.

Automate your allocations and recurring journal entries

Run allocations in pro forma status based on pre-configured definitions without having to post/unpost before the close. Automating allocations in a core general ledger helps ensure your allocation basis is correct and eliminates the need for manual journal entries and spreadsheet calculations. Investing in a system that allows you to run allocations in draft form allows you to view the potential results in the context of your financial statements at any point of your close.

Configure rules-based bank reconciliation

Reconcile bank activity to financial transactions with embedded rules rather than manually matching transactions to bank statements. With one cloud ERP system, you can import and automatically reconcile bank activity with flexible user-defined rules and delivered workflow for managing exceptions.

Create a checklist

Formalize the close process with the workflow that defines a standard set of tasks, deadlines, and responsible parties. Automate the period close workflow by using a system that can send notifications and report packages to appropriate stakeholders at the end of the process.

Establish automated, rules-based eliminations

Set up rules for intercompany eliminations and subsidiary ownership scenarios. Using a rules-based, automated process for eliminating entries reduces cumbersome batch processing and manual intervention. Viewing consolidated results throughout the periods enables you to provide recommendations for corrective action mid-period and reduces the number of surprises at period-end.

Run currency translations in real-time

Automate currency translations in a system that can handle all types of multicurrency transactions and reporting scenarios. If you’re managing large volumes of currencies, integrate your cloud ERP system with third-party services for loading currency rates. Modern systems calculate complex translations in real-time, eliminating the need to run and re-run a batch translations process.

Enable report drill-down

Move reporting from Microsoft® Excel into a cloud ERP system to more easily drill down into the data from financial statements. Drill-down capabilities can help you better understand both the transactions that make up balance and performance drivers without having to create additional reports or moving to other tools.

Deliver self-service insights and analysis

Empower your organization to discover drivers behind the numbers by investing in self-service reporting, dashboards, and analytics. Building central reports and providing managers with the information that matters most, distributed securely in one system, helps reduce ad hoc requests to create and reformat reports and data. With less time spent managing data during the close, you can spend more time analyzing and discussing results with the business.

Same old finance systems. Same old problems.

While many tools help organizations successfully close the books and consolidate results, they often only provide incremental improvements inefficiency. Generally, traditional systems present a few major challenges:

  • Less insight: When data is stripped at every step of the close, it reduces the strategic value of financial reporting for planning and decision-making.
  • More data movement: Migrating data from sub-ledgers to the general ledger, and to external systems to close the books and produce reports, takes a lot of time and introduces a lot of risks.
  • More intervention and reconciliation: Moving data also requires reconciling it, and any issues that arise in this process can create serious bottlenecks.
  • Delayed distribution: Consolidated financials can only be accessed at period-end, limiting the ability to make adjustments mid-period when strategic decisions might have the most impact.

Source: Workday: Cloud ERP System for Finance, HR, and Planning

Published by Silvia Emma

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