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FinanceFebruary 26, 2024

What can be done differently in 2024 to improve your financial close process?

Read this blog to answer this question.

The consolidation process is at the heart of statutory, management, regulatory and performance reporting yet FSN’s 2022 research shows that many organizations are ill-prepared for the accelerated pace of change and new information requirements in the post-pandemic era. 

With less than 50% of automation initiatives meeting their objectives, but with data volumes ‘running away’ and the promise of more regulatory reporting changes in the pipeline, there is a pressing need to drive change. 

So, the obvious question is what are CFOs going to do differently in 2024, to future proof their processes and respond more agilely to market pressures? 

It’s a relatively simple question to pose, but the answer is far from straightforward, even for a process as well established as financial reporting. An effective response commonly leans on every aspect of an organization including the burden of legacy systems, data quality management, skills, resources, strategic alignment, and the support of the C-Suite. And there isn’t a standardized blueprint for success because every organization commences its transformation journey from a different starting point. However, there are some guiding principles. 

Know your legacy systems 

Finance functions know they are entering an era of unrelenting speed and information demands, so the first step is to jettison technology that doesn’t match up to these new demands. 

An honest appraisal of what you have is an important starting point.  Many organizations are saddled with unnecessary complexity, overlapping software tools, poor levels of standardisation, damaging automation gaps and perversely, the best parts of legacy systems are frequently under-utilised and exploited.   

Fill in the automation gaps 

ERP (or financial management) systems remain central and pivotal to the modern finance function, yet their primary purpose is as a system of record. As such, they are not necessarily suited to a step-change in speed and information delivery in financial reporting. So organizations need to look creatively at how they can supplement the ERP with additional workflow capability, robotic process automation and of course modern systems for financial consolidation. CPM systems (Corporate Performance Management) bring the advantage of a broad range of specialist capability including extensive reporting, analytics and disclosure management, as well as budgeting, planning and forecasting in one environment. 

Guard and control your data 

Data quality management and governance is becoming the pre-eminent concern in many organizations as poor data quality acts as a brake on progress, as well as a major reason why improvement initiatives fail. Organizations must invest in data lineage, understanding the source(s) of all data used in the business and its relationships. But future proofing the business means that any data architectures must be extendible on demand, scaling to new regulatory and other information needs that arise. This requires clear lines of responsibility and ownership of data as well. And the rewards are immediate – Group Finance teams need insight, control and speed from their consolidation and modern CPM allows them to achieve it with  ERP integration (and the integration of other systems), real-time collaboration with users and highly flexible reporting. The process is faster, the insights are immediate, and the decision-making is data-driven. 

Prepare the organization for change 

Organizational change is harder than most people imagine, yet it is people, not technology alone, that make the difference between success and failure. Future proofing a major transformation, means aligning proposed changes to the organization’s strategy as well as aligning people to the process and each other. It requires a change plan, a formidable commitment to communication, and extensive engagement with a wide range of stakeholders. In all of this, the IT function can be a powerful ally, helping to ‘sell’ the benefits across the organization as well as contributing resources and expertise.   

Finally, the rest of the C-suite needs to be completely supportive. They need to understand the business case for change and how it will solve the problems they face now. Central to this is articulating the roadmap and how the proposed systems and process changes will deliver a new era of capability.   

It might be a cliché, but the only thing predictable about the current business environment is its unpredictability. Organizations need to be able to pivot in an instant.  What they need to do differently, is to re-imagine their legacy, apply modern automation, commit to strong data governance, and constantly infuse the organization with the need to change. Every re-organization, every acquisition/disposal and every success and challenge in the business will impact the consolidation process – the modern finance team must have its fingertips on performance across the Group from the top to the bottom. 
If you want to learn more about this topic you can check the on demand of our on demand webinar where I discuss many of the ideas raised in this blog with Sofia Papadimitriou, Head of Global Processes in Group Finance at Nilfisk, Atul Mehta, Director of Global Record-to-Report Process at Mars, and Martin Watson, Director of Strategic Accounts at Wolters Kluwer CCH Tagetik.

Watch the on demand webinar here

Gary Simon
Chief Executive of FSN & Leader of the Modern Finance Forum for CFOs - FSN Publishing Limited

Gary Simon is a highly sought after lecturer and trusted provider of 'thought leadership' and analysis about finance and business systems for CFO's around the world.
The bulk of Gary Simon’s professional experience has been as a senior consulting partner with Deloitte, one of the largest professional services organisations in the world.

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