Talking Tech: Automating the Close & Consolidation Process

Accordion’s “Talking Tech” series explores how different CFO Technology solutions can empower finance functions to support organizational strategic initiatives – by implementing business process recommendations, optimizing operations, and capitalizing on value creation opportunities.

Now, let’s take a look at the benefits of implementing an automated close & consolidation solution.

All too often, the close & consolidation process is plagued by inefficient and error-prone systems: disparate Excel documents, inconsistent data formats, multiple systems of record (ERPs), no clear and consistent approval process, and more. Because of this, Finance and Accounting teams are forced to make manual corrections in antiquated applications, and often take far too long to produce reports or close their books. This is especially detrimental for PE-backed Finance and Accounting teams working to meet sponsors’ demands; with the fast-paced environment of private equity, a slow and complicated close process simply won’t cut it. Not only does it put high levels of strain on CFOs, but it makes it difficult for sponsors to understand and aggregate portfolio company data to get a holistic perspective on their business.

The truth is that it doesn’t have to be this way. By implementing a close & consolidation automated solution, Finance and Accounting teams can streamline consolidation, improve account reconciliation processes, and maintain process control throughout the entire close & reporting process — no manual heavy lifting required.

Here’s how a close & consolidation solution can make PE-backed companies’ lives easier:

1. Conquer the Company Data Challenge

Consider this scenario: you are a private equity-backed portfolio company whose subsidiaries operate independently. This likely means that financial transactions are spread across multiple general ledger systems, each using its own unique chart of accounts. This exposes you to greater challenges in meeting reporting and compliance requirements; for example, to fully understand your business performance, you might have to manually manipulate an enterprise resource planning (ERP) export within Excel to provide financial results. While this gets the job done, the process is time-consuming and error prone — and certainly not ideal.

Here’s where a close suite can help. A close & consolidation tool acts as a single source of truth for all external or stakeholder reporting, which means you can take data from disparate source systems and bring it together for consolidated reporting. This provides portfolio companies with a centralized, standardized, and auditable set of data, as well as an automated way to convert currencies, reconcile or match intercompany transactions, and perform equity pickup and other non-standard ownership calculations.

What’s more, these tools easily integrate both financial and non-financial data from multiple sources (files, direct connections, etc.) into one global chart of accounts. By utilizing mapping and transformation rules, data is accurately and efficiently transformed or cleansed to fit specific company needs (this process is especially helpful for onboarding newly-acquired companies, as it enables CFOs and accountants to get up to speed quickly and ensures that all necessary data is available for timely reporting).

2. Achieve Financial Accuracy

As Finance and Accounting teams know, the increasing number of necessary financial data systems (source systems, subledgers, etc.), the continued concern over internal controls, and the risk of receiving audit results with significant deficiencies have all highlighted the critical importance of improving account reconciliation processes. That said, how can portfolio companies manage a comprehensive account reconciliation process in an increasingly complex environment, while achieving a shorter and more reliable close period? Once again, we see the value of an automated account reconciliation process that can benefit financial teams by:

• Moving the account reconciliation process to one unified and centralized platform.
• Providing tracking of reconciliation workflow.
• Enabling auto-certification of reconciliations when certain criteria are met.
• Delivering powerful reporting and dashboarding capabilities to evaluate and improve the reconciliation process.

These key outcomes drastically improve overall financial accuracy, while streamlining and shortening an increasingly complex close process.

3. Ensure Streamlined Process Control

As companies grow and evolve, business processes become increasingly complex. For Finance and Accounting teams who must report to stakeholders, this complexity puts mounting pressure on process control. Implementing an automated process control tool can help release this pressure, eliminating the need for CFOs to manually move things forward and freeing them up to provide support in other ways. Sponsors also benefit from having full visibility into their portfolio company’s close and reporting process in real-time.

By leveraging the task manager tools in a close suite, companies are able to outline their financial close and other business processes in a structured and standardized format. Tasks can be easily assigned with clear deadlines (creating a culture of accountability) and can be tracked and monitored to ensure completion ahead of deadline — eliminating any uncertainty around business processes within the Finance function.

The bottom line? Implementing an automated close & consolidation solution allows CFOs to drive quick and accurate reporting while eliminating the need for manual error correction and time-consuming processes. In a single application (whether Oracle, OneStream, Anaplan, or another powerful tool best suited for your business), teams can create a synthesized home for company data, establish a disciplined account reconciliation process, develop structured process control, and more. In other words, close & consolidation solutions provide both CFOs and sponsors with real-time visibility into company performance — informing and improving business decision-making for long-term success.