Four hidden costs of a legacy consolidation and close process
Why evolving your financial close and consolidation process can’t wait.
If your financial consolidation is onerous, it's probably erroneous too
Consolidation is an easy process to overlook in terms of modernization. If it works, why fix it when there are other areas which are begging for innovation?
There is a good reason why consolidation deserves your undivided attention. The white paper 4 Hidden Costs of Legacy Close and Consolidation reveals that your consolidation solution could be draining your business of critical resources in terms of time, budget, and brain power.
In this blog post, we’ll summarize:
- The key indicators of a costly consolidation process
- The cost drains of legacy consolidation systems; and,
- How to evolve financial close and consolidation with automation
Key indicators of a costly consolidation process
Do any of the following situations apply to your consolidation system:
- Your monthly or quarterly close takes longer than six days
- You haven’t replaced your consolidation software in the last decade
- Your consolidation system requires high levels of customization to perform allocations, FX/currency conversions, intercompany eliminations, and M&A
- Your close and consolidation process is divided by point solutions (so one solution for account reconciliation, one for local close, one for reporting, etc.)
If the answer is yes, you’re also likely dealing with the following consolidation issues that you may have accepted as “normal”:
- Slow data processing
- Inability to update the system to accommodate structural business changes
- IT dependency
- Proliferation of Excel workbooks
- Frequent data errors
- Lack of transparency and analytic tools
Think of a legacy consolidation system as an old smartphone. It can’t cope with the latest apps. It can’t keep a charge. And it constantly crashes. It might work, but at what cost?
How legacy consolidation system drain your resources
In the full whitepaper, we dive into the many ways legacy consolidation costs your business time, budget, and resources, but also things money can’t buy, like reputation and trust. Here is a brief overview:
Manual consolidation processes increase the risk of financial statement errors
We would all likely agree that it’s easy to gloss over a duplicate figure or miss a decimal when you’ve spent eight hours zoomed out on Excel. The chance of accounting errors and misstatements is high when consolidation processes are manually completed. To err is human, after all. A good rule of thumb is, if a consolidation process is onerous, the chances are it’s erroneous too.
Legacy consolidation systems can increase headcount and consume IT resources
Without automated systems, consolidation complexity increases to the point where it can only be addressed by an ever-increasing headcount. What’s more, legacy consolidation systems inundate IT departments with custom coding for structural changes, like M&A or new regulatory requirements, and maintenance requests for integration with operational applications. On the contrary, when consolidation is automated, staff can dedicate their time to mission-critical, value-driven tasks, like analysis and strategy.
Insights are not sufficient for decision making
In the information age, the C-suite has come to see finance as a strategic partner to the business. This makes sense when you consider that finance is at the helm of critical decision-making information and is thought to have the ability to make sense of operational effects and financial impacts.
And yet, many finance teams aren’t equipped with the tools they need to step into this new role. Consolidated data are the foundation many enterprise-level insights are based on. If the process isn’t orchestrated properly, dependant decision making processes, like reporting and analytics, are set up for inadequate outputs. In other words, the advice finance would give would be based on insufficient information.
The ROI of a modernized consolidation process is worth it
Accurate group consolidation, automated account reconciliation, faster processing, easy updates: it isn’t hard to identify the return on investment of a modernized consolidation process. And the good news is, transforming consolidation is easier than you think.
Read the white paper and learn how you can evolve your close and consolidation process now.