top of page
  • caustintanner

Enhancing Financial Close Efficiency: A Comprehensive Guide to Identifying and Implementing Process

Updated: Nov 7, 2023

A man reviewing the results of accounting close
Accounting Close


Efficient and accurate financial close processes are critical for all organizations to make informed business decisions and maintain their "financial health." However, identifying bottlenecks and streamlining arduous processes can be a complex task.

This article provides a step-by-step guide to help businesses improve their accounting close process, reducing effort and time while ensuring data accuracy and reliability.

Phase 1: Prepare for Reviewing the Accounting Close Process

Before diving into process improvements, laying the groundwork and gaining clarity on the existing process is essential.

Step 1: Project Objectives and Outcomes

Clearly define the objectives of the project, such as creating a step-by-step process map and action plan, and a communication strategy for the improvements. The identified problems include limited visibility into the end-to-end process, resource constraints, and delays in delivering financial data.

Step 2: Roles and Responsibilities

Assign specific roles and responsibilities, including a business transformation project lead and accounting staff who will gather data for assessment. Securing buy-in from the leadership team is crucial for success.

Step 3: Common Pitfalls and Keys to Success

Avoid common pitfalls like overemphasizing accuracy at the expense of efficiency or relying solely on technological improvements. Instead, focus on reducing unnecessary assurance-driven activities and improving workflow visibility through process mapping.

Phase 2: Assess the Current State of the Close Process

Understanding the current process and identifying bottlenecks are vital for targeted improvements.

Step 4: Identify Entries and Work That Can Be Moved To Pre-Close

Identify entries and reconciliations that can be prepared outside of the close cycle to improve the focus on high risk items.

Step 5: Process Mapping

Create a comprehensive process map that outlines all close activities, schedules, and ownership. This map will provide a clear visualization of the process and aid in identifying potential bottlenecks.

Step 6: Identifying Bottlenecks

Track the time taken for each activity and compare it with benchmarks to pinpoint activities causing bottlenecks. Prioritize areas for improvement based on their variance from targets and impact on the overall process.

Step 7: Root Cause Analysis

Conduct a root cause analysis for the identified bottlenecks, focusing on whether technological solutions or process improvements can address them.

Phase 3: Eliminating Unnecessary Assurance-Driven Activities

Optimize the process by reducing or eliminating activities that provide limited value.

Step 8: Improve and Simplify The Intercompany Accounting Process

Automate intercompany payables and receivables processing by leveraging an intercompany engine that makes real-time postings to the subledgers or general ledger to reduce process lags and out-of-balance accounts.

And if that isn't an option,

Reduce undiscovered out of balances during the close cycle by embracing a continuous accounting mindset that allows reconciliations to be completed before the monthly close process.

Step 9: Apply the 80/20 Rule

Apply the 80/20 rule to prioritize high risk entries and reconciliations for key accounts and distribute the rest throughout the quarter. Also, identify low-risk accounts that do not need quarterly reconciliation.

Phase 4: Streamlining Close Activities

Automate, standardize and centralize processes to improve efficiency.

Step 10: Standardization and Centralization

Evaluate activities for repeatability, frequency, and expertise required to identify those suitable for standardization or centralization.

Step 11: Automate Wherever, However, You Can

Assess activities for automation potential and implement relevant solutions. Simple SQL Reporting tools can drastically reduce the recurring and time-intensive preparation needed to support large entries. Additionally, pre-close preparation of data models can also greatly reduce the workload at month end.

Step 12: Resequencing To Accommodate Forecasting

Reorder activities based on informational importance to deliver critical data earlier in the close process.

Step 13: Identify The Most Critical Data Points Needed by Management

Assess each activity’s informational importance to pull forward those that deliver important information to stakeholders. Also, build a detailed close calendar that highlights the type and timing of information generated across the close process, ensuring stakeholders can identify and retrieve important information quickly.

Step 14: Have A Robust and Easy To Use Accounting Close Calendar

Eliminate the need to remember critical dates, assignees, entry order, and supporting reports needed month-over month. Leverage an accounting calendar and stick to the cadence it requires.

Phase 5: Communicating Process Improvements

Effective communication and accountability are key to successful implementation.

Step 15: Process Map Updates

Modify the close process map to reflect workflow, schedule, and responsibility changes.

Step 16: Cascading Guidance

Provide clear instructions to business units and staff to ensure consistent, high-quality close execution.

Step 17: Incentivization

Tie a portion of staff compensation to close performance and accuracy, emphasizing its importance.

Phase 6: Monitoring and Sustaining Improvements

Continuous monitoring and refinement are essential for long-term success.

Step 18: Review Performance and Report Improvements

Assess the effectiveness of the new close process (in metrics), document learnings, and track adoption by employees and stakeholders.

Step 19: Drive Continual Improvements

Encourage ongoing incremental improvements to maintain process efficiency.


Improving the financial close process requires a systematic approach that involves assessing the current state, identifying bottlenecks, and implementing targeted improvements. By following this comprehensive guide, organizations can streamline their close process, enhance efficiency, and make better-informed decisions to thrive in a competitive business landscape.

14 views0 comments


bottom of page