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Course Materials

Improving the Closing Process: What It Takes

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ADP has partnered with SmartPros (a Kaplan Company) to provide

this program and SmartPros has prepared the

material within. www.smartpros.com

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4. Improving the Closing Process: What It Takes

LearningObjectives:

SegmentOverview:

Field of Study:

RecommendedAccreditation:

Required Reading(Self-Study):

Running Time:

Course Level:

CoursePrerequisites:

Advance Preparation:

Expiration Date:

Accounting

March 13, 2018

Work experience in financial reporting or accounting, or an introductory course in accounting

None

1 hour group live2 hours self-study

Update

“Improving the Closing Process: What It Takes”By Lawrence Maisel, CPA, President, DecisionVuFor additional info, go to: www.decisionvu.com

“Three Good Reasons to Automate the Last Mile of Finance”By Mary Driscoll, of American Productivity & Quality Center (APQC)For additional info, go to: www.apqc.org

See page 4–10.

33 minutes

Companies are continually seeking ways to increase theeffectiveness of their financial close process. Not only must keyinformation be communicated more quickly, but it must alsoprovide effective support for the business and for the decisionsmade by management. In our final segment, DecisionVu'sLawrence Maisel shows how improving your accounting closeprocess can result in increased financial effectiveness for yourentire organization.

Upon successful completion of this segment, you should be able to:l Recognize the benefits from improving the closing process;l Identify the warning signs that the closing process is not

efficient;l Identify the five steps that organizations should take to

improve the closing process;l Recognize best practices related to the closing process.

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A. Multiple Priorities for FinanceOrganizations

1. Oversight of transactions

2. Management of enterpriseperformance

3. Attestation of financial reporting

4. Consolidation of financial data

5. Information must:

a. Be communicated at a higherspeed

b. Increasingly support the businessneeds of and decisions made bymanagement

B. Definitions

1. Speed: Influences what we knowand when we know it

2. Agility: Impacts ability to respondquickly

3. Data: Provides insight on how bestto respond

"The key is that people are the onesthat are really going to be the groupthat interprets this information anduses it to make smarter, faster, betterdecisions."

- Lawrence Maisel

C. KPI Management Reporting Process

1. Recent KPI Studies

a. Using KPI’s will increaseprofitability by 20% by 2017

b. KPI reporting leads to betterperformance

c. Use of both leading and laggingissues

D. Maisel’s Observations

1. Accountants are comfortable withreporting results

2. However, accountants need to beginto look forward

I. Issues Surrounding the Close

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Outline (continued)

A. Bad News

1. While 80% of survey respondentsindicate measuring businessperformance is important

2. Only 56% said it was beingeffectively performed

B. Order Processing System Example

1. Provides lots of information

2. If delays in closing, can lead tomisinformation

3. Finance function has an importantresponsibility for compliance

4. HR systems provide not onlyimportant data about expenses,headcount, etc.

a. But Affordable Care Act hascreated an additional set ofregulatory reporting

i. Organizations need to haveon a timely basis to becompliant

C. Benefits from Improving the ClosingProcess

1. Timely dissemination of informationto stakeholders

2. More efficient use of resources

3. Reduction in costs

II. Challenges of Measuring Business Performance

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A. Continuous Improvement of ClosingProcess Provides Benefits for

1. Business decision makers

2. Financial executives

3. Auditors

4. Capital providers

B. Earlier Access to Data

1. Executives benefit from by havingaccess to data sooner in the closing

2. Example: two companies

a. Company A closes its books in 8days

i. Supported by benchmarkingstudies by other reputableorganizations

b. Company B closes their books in22 days

3. Difference is not just the number ofdays in the closing process

a. Company A may see a downturnin demand

i. And adjust production andinventory levels

ii. Leading to increasedprofitability

b. Company B might not adjust itsproduction schedules, buildsinventory

i. Potentially have write-downs

ii. Affect its operating profit

C. Cost Improvement Opportunity

1. Top Performer: $2.5 million savings

2. Ask clients “How are you going tospend the savings?"

a. Some of it could be saved

b. Some of it could be invested torun the organization moreeffectively

D. Eliminating Inefficiencies in theDownstream Processes

1. Develop targets

2. Understand bottlenecks andcontributors to flow

3. Identify root causes

4. Make improvements

III. Benefits of Streamlining the Close

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A. Warning Signs

1. HESS syndrome

a. Holidays

b. Evenings

c. Saturdays

d. Sundays

2. Lack of adherence to a documentedclosing schedule

3. Use of many manual adjustingentries

4. Feeder systems

5. Accounting built complicatedworkarounds

6. Significant employee turnover

7. Too many surprises

8. Being reactive vs. proactive

9. High number of kicked-out errortransactions

B. Bottlenecks: Where Do They ComeFrom?

1. Manual processes: 24%

2. Non-integrated systems: 24%

3. Staff shortages: 12%

C. Maisel’s Advice: A Five Step Approach

1. Develop a charter and achievableobjectives

2. Organize the project team toinclude affected functions andcomplimentary skills

3. Define current and target stateclosing process

4. Determine how to improve

5. Institutionalize the improvementusing Change Managementpractices

IV. Managing the Challenges

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Outline (continued)

A. Improving the Closing Process:Questions to Ask

1. Does your closing activity begin onthe last day of the month?

2. Is there time for analysis and criticalthinking?

3. Is there adherence to your closingcalendar?

4. Are there many journal entries atmonth-end?

B. The Closing Process: Best Practices

1. Integrated systems/single instance

2. Adherence to strict deadlines andcut-off schedules

3. Online access to banks, vendors, andother outside service providers

4. Electronic submissions andinterfaces

a. Validity of number of digits

b. Combination edit

5. Begin the closing schedule beforeperiod-end

6. Eliminate non-value added processes

C. Accelerating the Closing Process:Making Improvements

1. Redesign the sub-processes forgreater efficiency and accuracy

2. Assign accountabilities for meetingagreed schedules and deadlines

3. Foster a continuous culture

4. Manage the change process

a. By enabling training, educationand other communications

D. Accelerating the Closing Process:Benefits

1. More efficient processes

2. Better returns to shareholders

3. Timely availability of managementinformation

4. Better allocation of resources

5. Improved data quality

6. Better returns to shareholders

E. Key Steps

1. Define your goals

2. Establish sustainable working group

3. Prepare realistic plans

4. Be structured and practical

V. Going Forward

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1. What are some recent survey resultsrelated to business performance?

2. What are some of the benefits fromimproving the closing process? Howefficient is our closing process?

3. What are some of the warning signs thatthe closing process is not efficient? Dowe exhibit any of these signs?

4. What is the five step approach foraccelerating the closing process that Mr.Maisel suggests?

5. What are some of the questions thataccounting and finance managers shouldask about their organization’s closingprocess?

6. What are best practices relating to theclosing process?

7. What are the key steps to makingimprovements to the closing process?What should we do?

Discussion Questions

Group Live Option

You may want to assign these discussion questions to individual participants before viewingthe video segment.

4. Improving the Closing Process: What It Takes

l As the Discussion Leader, you shouldintroduce this video segment with wordssimilar to the following:

“In this segment, Lawrence Maiselshows how improving your accountingclose process can result in increasedfinancial effectiveness for your entireorganization.”

l Show Segment 4.

l After playing the video, use thequestions provided or ones you havedeveloped to generate discussion. Theanswers to our discussion questions areon pages 4–8 and 4–9.

l After the discussion, complete theevaluation form on page A-1.

Instructions for SegmentFor additional information concerning CPE requirements, see page vi at the beginning of this guide.

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s1. What are some recent survey results

related to business performance?l Recent KPI Studies

v Using KPI’s will increaseprofitability by 20% by 2017

v KPI reporting leads to betterperformance

v Use of both leading and laggingissues

l Bad Newsv While 80% of survey respondents

indicate measuring businessperformance is important

v Only 56% said it was beingeffectively performed

2. What are some of the benefits fromimproving the closing process? Howefficient is our closing process?l Benefits from Improving the Closing

Processv Timely dissemination of

information to stakeholdersv More efficient use of resourcesv Reduction in costs

l Accelerating the Closing Process:Benefitsv More efficient processesv Better returns to shareholdersv Timely availability of management

informationv Better allocation of resourcesv Improved data quality

l Based on your organization

3. What are some of the warning signs thatthe closing process is not efficient? Do weexhibit any of these signs?l Warning Signs

V HESS SyndromeV Lack of adherence to a documented

closing scheduleV Use of many manual adjusting

entriesV Feeder systemsV Accounting built complicated

workaroundsV Significant employee turnoverV Too many surprisesV Being reactive vs. proactiveV High number of kicked-out error

transactionsl Based on your organization

4. What is the five step approach foraccelerating the closing process that Mr.Maisel suggests?l Maisel’s Advice: A Five Step Approach

V Develop a charter and achievableobjectives

V Organize the project team toinclude affected functions andcomplimentary skills

V Define current state and target stateclosing process

V Determine how to improveV Institutionalize the improvement

using Change Managementpractices

5. What are some of the questions thataccounting and finance managers shouldask about their organization’s closingprocess?l Improving the Closing Process:

Questions to Askv Does your closing activity begin on

the last day of the month?v Is there time for analysis and

critical thinking?v Is there adherence to your closing

calendar?v Are there many journal entries at

month-end?

4. Improving the Closing Process: What It Takes

Suggested Answers to Discussion Questions 4 – 84 – 84 – 8

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6. What are best practices relating to theclosing process?l The Closing Process: Best Practices

v Integrated systems/single instancev Adherence to strict deadlines and

cut-off schedulesv Online access to banks, vendors,

and other outside service providersv Electronic submissions and

interfacesk Validity of number of digitsk Combination edit

v Begin the closing schedule beforeperiod-end

v Eliminate non-value addedprocesses

7. What are the key steps to makingimprovements to the closing process?What should we do?l Key Steps

v Define your goals

v Establish sustainable working groupv Prepare realistic plansv Be structured and practical

l Based on your organization

Suggested Answers to Discussion Questions (continued)

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Self-Study Option

1. Viewing the video (approximately 30–35 minutes).

2. Completing the Required Reading (approximately 25–30 minutes). The Required Reading for this segment starts below.

3. Completing the online steps (approximately 35–45 minutes).

Please see pages iii to v at the beginningof this guide for instructions oncompleting these steps.

When taking an FMN segment on a self-study basis, an individual earns CPE credit by doingthe following:

Instructions for Segment

Required Reading (Self-Study)

By Lawrence Maisel, CPA, President,DecisionVuFor additional info, go to:www.decisionvu.com

Over the past decade, the financial reportinglandscape has seen significant change.Finance executives face mounting pressure toincrease the accuracy of financial reporting,while decreasing turnaround time. Costscontinue to be highly scrutinized.Meanwhile, regulatory agencies haveintroduced a host of new standards andaccounting rules, changing materialitythresholds and requiring detailed schedulesand to complicate matters, many financeorganizations are being asked to do morewith less.

As a result, today’s finance organizationsface multiple priorities that include theoversight of financial transactions, themanagement of enterprise performance,attestation of financial reporting, and timelyclose and consolidation of financial data.

On the one hand, finance departments arealways seeking ways to increase theefficiency and timeliness of their financialclose and compliance processes. On the otherhand, not only must information be

communicated at a higher speed, but it mustalso increasingly support the business needsof – and the decisions made by –management. Within this backdrop, the paceof change in today’s business world isincreasing and is having a significant impacton the timely, accurate, and usefulness ofmanagement reporting. Consequently, thereare several key competitive essentialsnecessary to meet these market challenges:speed, agility, data, information, andeffective decision-making.

l Speed because it influences what weknow and when we know it;

l Agility because it impacts how werespond either internally or externally;

l Data because it defines the breadth anddepth of transactions or events;

l Management reporting of Informationbecause it is the vehicle that facilitatesthe interpreting of data; and

l Decision-making because it is the use ofthat interpretation or insight to driveactions that hopefully enable us toachieve operating results and profits.

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IMPROVING THE CLOSING PROCESS: WHAT IT TAKES

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In addition to these essentials, there areoperational considerations and one verycritical is the need to Accelerate theFinancial Closing process. Companiesregardless of size and industry focus mustadopt a more responsive capability tomanage the complexities of the closeprocess.

Over the years, organizations say that theyseem to be drowning in data, but still starvedfor information. How do we bridge the gapbetween the incredible amounts of data thatwe have access to, and the optimal use ofthat data to increase business performance? Itreminds me of a cartoon that I use indiscussions with my clients, as the cartoonillustrates, without interpretation, data is justnumbers. We’re rapidly entering a worldwhere everything can be monitored andmeasured. But the big problem is going to bethe ability of humans to use, analyze, andmake sense of data.

Let me further describe this issue, someconfuse business analytics or big data withinsight when in fact having access to datawithout specific intent and more importantlywithout a process to integrate into acompany’s decision management process isof limited value and potentially distracting toeffective management and decision-making.

More and more organizations are seekingbetter processes and tools to ensure that theright people have the right information at theright time, to make faster, better, smarterdecisions.

One of the tools available to Financedepartments is to adopt KPI managementreporting. According to a Gartner study[01/21/2014]:

l Using KPIs will increase profitability20% by 2017, key is directional notabsolute percentage;

l KPIs need to be forward-looking to alertand guide organizations on the best nextaction to take. In effect, be integratedinto the management process especiallyits decision management process

l Balance among leading and laggingmeasures and use of external measures tocomplement internal measures

l Linkage among KPIs so as to not createconflicts and inconsistencies.

Additionally, according to a recent IBMsurvey “measuring business performance”was the most important challenge facingCFOs; however, that survey also revealedthat while measuring business performancehad an 80% importance rating, only 56%responded that it was being effectivelyperformed. This is a major performance gapthat needs to be improved

Improving the FinancialClose Process

The financial close is like the supply chainfor financial reporting; I use the image of aniceberg, in that the end to end processinvolves many financial and operationalsystems that are not visible to the formalfinancial closing process. For example, orderprocessing needs to close in order to captureperiod revenues including various attributessuch as products, channels, etc. HR systemsneed to close and provide other peoplerelated cost such as company’s medicalinsurance expense, tax expenses, etc. So asone can describe, there are numerous systemsthat flow into the closing process and if anyof these are delayed or contain invalid data,then the closing process is at best delayed orat worse inaccurate. And ultimately,consolidation and reporting is misinformingand needs to be corrected.

The need for an improved financial closeprocess can be driven by the desire for amore cost-efficient process as well as thedemand from both external and internalstakeholders for faster, and better quality,information. But it is also key to note that, inmany organizations, the role of the financedepartment is also under transformation. Notonly must information be communicated at ahigher speed, but it must also increasinglysupport the business and the decisions madeby management. This requires a change inthe role of the finance department frommerely “provider of information” to the roleof analyst. An efficient and fast close processis key to this transformation.re

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Primary Benefits

There are three primary benefits achieved byimproving the close process. These are:

1) Timely dissemination of information tostakeholders

l Management has faster access tofinancial information for analysis anddecision making

l Increase management’s ability torespond to changes in financial results

l Often, accelerating the close initiativesresult in finding other issues, whichwhen corrected, improve the overallhealth of the organization

l Companies that disclose financialinformation faster than average aregiving their shareholders an 11.2%premium on P/E ratio

2) More efficient use of resources

l Accounting staff spends less time onthe close process and is able to focuson analysis and planning (i.e. morevalue-added activities and better use ofteam skills)

l Creation of a transferable knowledgebase to reduce training time andsustain ongoing governance, riskmanagement, and control practicesover the closing process

3) Reduction in costs

l Reduce the cost of internal resourcesnecessitated by a slow closing process;and

l Reduce audit fees by eliminatingreporting delays and increasing theaccuracy of the financial statements.

Companies that disclose financialinformation faster than average are givingtheir shareholders an 11.2% premium on P/Eratio. For example a $3.00 EPS with a 10P/E ratio is a $30 stock price. With the11.2% premium on P/E ratio, this stock

would be $33.60. I think their shareholderswould welcome this premium!

Additionally, from a monetary perspective,those companies that close faster areachieving significant cost saving comparedto bottom performers. For example, using theAPQC benchmark results [2014] found thattop performing company that close in 8 daysspend 53 cents/$1,000 in revenue less thanbottom performers that close in 22 days.Thus Top Performing companies with $500million in revenues are saving more than$2.5 million [$500 million times 53 cents,equals $2.65 million] because their closingprocess is more efficient and effectivecompared to bottom performers. When Idiscuss this opportunity with my clients I askthe question: What would you do with thesesavings?

Many financial executives certainlyunderstand the financial reporting processbut need to better understand how improvingthe close will eliminate inefficiencies indownstream processes. The best way toexplain this is to take a page out of the 6Sigma playbook: A structured review of theprocess likely will highlight key warningsignals such as:

l What and where are the bottlenecks inthe current closing process?

n 26% are attributed to manualprocesses;

n 24% are attributed to non-integratedsystems; and

n 12% are attributed to staff shortage.

l How many manual entries/adjustmentsare required during the close?

l “Hard” vs. “Soft” monthly closeprocess? Why

l What are the root causes of the manualentries/adjustments/ and of coursereconciliations?

l What tools are used to automate theclosing process?

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l What software application is used toconsolidate the financials?

l What system constraints may hinderaccelerating the close? (For example, asales system may not close until day 2 ofthe next accounting period)

l Who can be mobilized within yourorganization to assist in accelerating theclose?

These are just a few of the warning signals.

Tell-Tale SymptomsI often encourage my clients to assess thequality of their current closing processbecause there are tell-tale symptoms. Someobvious symptoms such as:

l Struggling to meeting deadlines andcutoffs

l Lack of documented closing proceduresand calendar

l Feeder systems have complicated or noautomated interfaces with the generalledger system

l General ledger system does not interfacewith the consolidation and reportingsystems (i.e., no automated reportingsystem)

l Accounting has built complicatedworkarounds, spreadsheets and manualreports

l There is significant employee turnover inaccounting and reporting

l Too many surprises (reactive vs.proactive)

l High number of adjusting journal entriesand estimates, especially manual entries

l High number of kicked-out (error)transactions

The use of process re-design techniques like6 Sigma will not only identify thesesymptoms, but also if done properly, allowsus to document the current state process andhighlights trouble spots in controls orinefficiencies, etc. It also allows us to

identify root causes and other changes thatwill improve the speed and flow ofinformation and reduce errors and therebyimprove data quality.

Additionally, it allows us to monetarize theimpact of delays so that the improvementteam can quantify cost/benefits and developproject improvement budgets and timelinesthat will deliver real value.

Getting StartedI use a 5 step approach to get started:

Step 1: Develop a charter and achievableobjectives

Step 2: Organize the project team to includeaffected functions and complementary skills

Step 3: Define current state and target stateclosing process (What is/should be done)

Step 4: Determine how to improve (e.g.eliminate, streamline, automate, etc.)

Step 5: Institutionalize the improvementusing Change Management practices

Recent research [Prosci, “Best Practices inChange Management BenchmarkingReport”] have found that using effectivechange management best practices resultedin the following: Projects achieved objectives95%, completed on schedule 71%; howeverwithout effective change managementpractices only 16% achieved objectives and6% completed projects on time.

I use a question checklist with my clients inorder to know how to improve and where toimprove the close process. Some of thesequestions are below:

1. Does your activity begin on the last dayof the month?

2. Is there little time for analysis andcritical review?

3. Does your closing exceed 8-10 calendarwork days?

4. Are manual journal entries used to postnormal activity from feeder systems?

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5. Are journal entries required forcorrections, adjustments, and reportingreclassifications in the normal course?

6. Are consolidations completed onspreadsheets?

7. Are intercompany and eliminating entriesprocessed manually?

8. Are “actuals” vs. estimates reported forinconsequential balances?

9. Does your organization use multiplefinancial systems that are not fullyintegrated?

10. Is financial information inaccessiblethrough the Web or other electronicresources?

Best PracticesSeveral best practices that I have seen are:

l Integrated systems/Single Instance whichcontribute to data quality and faster, errorfree closings

l Adherence to strict deadlines and cut-offschedules

l On-line access to banks, vendors, andother outside service providers

l Electronic submissions and interfaceswith 2 step validations (ETL)

l Beginning close before period-end (e.g.soft vs. hard close, quarter-end vs.month-end)

l Elimination of non-value add processes

Lessons LearnedSeveral key lessons learned are:

l Define Goals, Expectations, and ROE(Return on Effort)

l Establish Stakeholder group /Sponsorship

l Prepare realistic plans and assembleresources

l Internal – knows organization, culture,and process

l External – knows industry best practices,prior experiences, and objectivity

l Be structured and practical

l Quantify Benefits and ROI (Monetize theImprovement)

l Recognize Risk and Consequences

l Develop Implementation and Road Map

In summary, one take-away thought remindsme of another cartoon where soldiers withswords fighting their enemy turn away froma gun salesman and say: “No, I don’t havetime to see any crazy salesman. Can’t yousee I’ve got a battle to fight?”

With the cartoon in mind, my take-awaythought is: Accelerating the Close may seeman esoteric distraction from the day to daybusiness, but it could be the most powerfulthing you do this year.

Contact me to receive the complete checklist:lmaisel@decisionvu.com.

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By Mary Driscoll, of American Productivity& Quality Center (APQC)For additional info, go to: www.apqc.org

Until recently, the prevailing sentimentamong CFOs about the financial reportingprocess was “if it ain’t broke, don’t fix it.”That process, often called the “last mile offinance,” involves all the steps a publiclytraded company must take to close its bookseach quarter, perform accountingreconciliations, prepare consolidatedfinancial statements and publish officialdocuments that explain performance resultsto the Securities and Exchange Commission(SEC) and the investing public.

The end-to-end financial reporting processinvolves multiple steps, from closing thebooks on legal entities, to reconciliation,consolidation of results, analysis of trends,and release of results. An error at any pointon the timeline – no matter how small – canresult in a material weakness designation,intensified auditor scrutiny, and naggingconcerns among investors.

According to recent research by myorganization, the American Productivity &Quality Center (APQC), many companies arenow looking at the last mile and concludingit’s time for repairs. What has sparked thisshift? There’s not one big gorilla of a reason.Rather, three issues have converged to form apalpable argument for change.

1) Last Mile CostsFirst, the costs of financial reporting aregoing up, in part because disclosurerequirements are growing more condensedand expansive simultaneously. After thefinancial collapse of 2008-2009, shareholdersand regulators started pushing companies forincreased transparency. The idea was that ifcompanies would tell their shareholders moreabout how they conduct business, the capitalmarkets would be safer. The intent was noblebut the outcome was imperfect. CFOs nowsay they’re stuck dealing with regulatoryoverkill, and this is sending the costs offinancial reporting soaring.

For example, companies in the technology,telecommunications, aerospace, auto,electronics, industrial and jewelry sectors areamong those that will see their financialreporting costs take off as they work tocomply with the new rule on conflictminerals. Supply chains will have to bescoured for offending subcontractors.Auditing teams will need to certify thatconflict minerals do or do not exist. Legalbills will explode as companies scramble tofigure out what they need to say in officialdocuments. The cost of heedless disclosurerules could be a devastating blow to smalland medium-sized organizations.

Another dimension to the cost picture showsthat if steps are taken to make the last mileof finance less labor-intensive, a companycan capture significant savings. For thisview, APQC gathered the performance of148 U.S. organizations with annual revenuegreater than $1 billion that took the surveyon financial reporting and answered thequestion about process cost. The results werethen sorted into quartiles. The top quartile isthe performance level above which 25% ofall responses occur. The bottom quartile isthe performance level above which 75% ofall responses occur. The median is the middlevalue in a set of values that are arranged inascending or descending order.

The data shows that the bottom performersspend five times more on the process thanthe top performers. Surely, this comes as nobig surprise. CFOs have known all along thatthey could capture good amounts of savingsif they were willing to invest in processredesign and automation. But until now, theROI just didn’t seem to outweigh the hasslefactor. And the absolute cost itself, for many,was simply not blinking red in the grandscheme of things.

What has turned things around is that thecost picture, when lined up with two otherdrivers, spells the need for action. Those twofactors are:

(a) pressure to speed up reporting time; and

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THREE GOOD REASONS TO AUTOMATE THE LAST MILEOF FINANCE

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(b) pressure to ensure the potential for erroris stamped out.

2) Cycle TimeAPQC benchmarking data shows that whenit comes to cycle time, the top performersclose their books, perform all the necessarypost-close accounting steps and publishofficial statements in half the time it takesthe laggards to do the work. Organizationsthat complete their quarterly consolidatedfinancial statements and release earnings in10 or fewer days are top performers for thisprocess. Conversely, organizations thatcomplete their quarterly close-to-discloseprocess in 25 or more days are bottomperformers. The kicker: APQC analysisindicates that the top-performingorganizations for quarterly cycle time tend tospend less to perform financial reporting per$1,000 in revenue.

Why is faster cheaper? Reduced cycle timemean less time and personnel are needed tocomplete the close-to-disclose process, thusresulting in lower total reporting costs. Inother words, reducing cycle times andminimizing total cost are logicallyinterconnected, and focusing on improvingperformance in one area will inevitablyimprove performance in the other area.

Vendors of software applications thatautomate the last mile of finance are quick topoint out how their solutions help to speedthings up and bring costs down. Forexample, a well-designed piece of disclosuremanagement software will include anautomated alert system that tells person Bwhen person A has finished her required linkin the chain. Person B cannot get movinguntil that has happened. Thanks to thesoftware robot, person B doesn’t waste timeon hold or pestering person A with emailtraffic asking how she’s faring. Everybodyinvolved can do a better job of loadbalancing and multitasking.

Moreover, the software maintains detailedstatus information on each task in theprocess: who started his task when, who’s inprocess, who completed her task after havingto do a makeover and when was thataccomplished, who completed his taskwithout a glitch, etc. The softwareorchestrates a potentially unruly process andhelps senior management ensure that in theend it is well-managed. It’s not hard toimagine that a well-designed process and asound software solution could make thewhole shebang faster and cheaper for, say,the CFO of a fast-growing $2 billioncompany with more than 20,000 employeesoperating in four countries with fourdifferent currencies.

3) Legal IssuesThe third and final reason to considerautomating the last mile involves a CFO’sability to get a good night’s sleep – that is,without having to worry about accuracyissues. Research from BPM Partners showsthat 70% of organizations still rely onspreadsheet as a data source for performancemanagement and reporting, both internal andexternal. That’s a big worry when it comes tothe potential for error in official financialstatements. Spreadsheet reliance is anotorious reason why errors are introducedinto collaborative processes.

In the current era of hyper-vigilance aboutperformance reporting by large publiclytraded companies, and the punishing publicimpact of missteps in the realm ofaccounting – think of HP’s recent woes – thereasons to repair the last mile of finance aremanifold.

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