The month-end closing process for any company is often a stressful and chaotic process. CFOs of startups, small businesses, mid-market companies, and even large companies increasingly need faster information in order to help the CEO guide and lead the company.
A recent article in Accounting Today argues for “continuous accounting” by “automating the functions of accounting such as account reconciliations, variance analyses and transaction matching” in order to make the accounting and bookkeeping process more seamless.
The longer it takes for bookkeeping and accounting to close the month’s books, the more the harmful ripple effect on financial planning & analysis:
“Financial planning and analysis (FP&A) [is] forced to wait until month-end to do the vital work of projecting the company’s financial future, rather than building their forecasts as the days go by. When FP&A is in limbo, so is the chief financial officer (CFO). This is no way to run a modern finance organization, yet it remains the case in far too many companies.”
The author goes on to state boldly:
“This is a revolutionary concept—closing at the speed of business. Instead of pulling accountants from their basic bookkeeping functions and pushing them into an intense period of financial data summations, reconciliations, error checking and correcting, the accountants are applying the allocations and making the necessary adjustments when they can—a little bit on Tuesday, a bit more on Wednesday.”
While, undoubtedly, there will still be bottlenecks within a company’s processes and flow of information which may make difficult a truly continuous accounting cycle, there can be significant benefits related to accuracy, timeliness, and productivity.
“By making more efficient and productive use of accountants’ time and valued work, CFOs, controllers, internal audit and the accountants themselves are better able to achieve the company’s strategic objectives at less cost, with the added bonus of more meaningful work.”