The Close Process

Why the deployment of fit-for-purpose solutions is the standard enabler in driving the Finance function towards a more efficient and proactive close process. A follow up post to The Close Process: Identifying the Case for Change.

Businesses today are facing increasing levels of disruption and need to rapidly adapt to remain competitive. Use of technology beyond the standard suite of Office programs (read: Excel) to support the close process may previously have been perceived as a luxury in finance teams. However, a digital mindset with deployment of fit-for-purpose solutions is now the standard enabler driving the Finance function towards a more efficient and proactive operating model.

The C-Suite of Execs are now more focused on leveraging leading technologies to create an optimal ecosystem to increase the speed and quality of insights:

Nowhere is this more pertinent than across the month end close process.

Going digital by default – the Digital Close
The flexibility of MS Excel means it will never lose its place in the Finance toolkit but there are limits to its speed and scalability. In its place, modern finance functions are adopting fundamental new elements:

High levels of automation
Digital Labour immediately shortens the close cycle by automating manual and repeatable tasks. For example, transaction matching tools can automatically reconcile millions of transactions in minutes to identify anomalies and exceptions.

Integrated ecosystem
Seamless integration between ERPs/accounting software with secondary systems facilitate regular closure during the month, avoiding bottlenecks at month end. This maintains data quality and integrity through the automated data transfers (no more manual transformations).

Exception based approach
A ‘hard close’ where Finance teams reconcile all GL accounts every month is tedious and unnecessary. Outside of key reporting dates like quarter/year-end a risk-based approach should be adopted, using materiality thresholds to focus efforts.

Standardised execution
For larger organisations a group-wide closing and consolidation schedule with well-defined and published roles and responsibilities is key to ensuring adherence to deadlines. Greater levels of process standardisation make it easier achieve an institutionalised focus on continuous improvement.

Data quality at source
Optimised data structures are key to minimising manual interventions in the close process, e.g., using a single standard chart of accounts across all systems. This includes all dimensionality and ownership aspects of how data flows from source to reporting.

Digitalisation of the month end close takes many forms. Common areas of digitalisation where KPMG has supported Transformations are outlined as follows:

• Cloud R2R Technologies - SAAS solutions enabling standardisation, visibility, efficiencies and scalability for Finance and Accounting.
• Structured Data Lake - A well-designed data lake supported by cloud reporting tools significantly reduces the use of Excel spreadsheets to cleanse and correct data.
• Anomaly Detection - exception engines apply business rules to identify anomalies, carry out rapid transactional-level analysis and reconcile of high-volume, high-risk accounts, e.g. in intercompany.
• Process automation - Journal creation, validation and posting are systematised through configurable rules, enabling auto-approval based on thresholds and roles.
• Intelligent workflow - Actions are routed to business stakeholders and process owners who receive alerts, review information and action approvals anywhere, at any time.
• Centre of Expertise - Unresolved anomalies are escalated to a global support team for review and resolution.
• Close management - Role-based reporting provides real-time visibility of close status and provides self-service access to documentation for risk management.

KPMG Powered Finance takes a strategic, structured, and informed approach to transformation. Focusing on business outcomes, technology is used as an enabler, ensuring that business improvements are continuous and impactful. Our approach can be scaled according to need from point solution through to large ERP deployment.

KPMG Powered Finance can help you execute a digital close by automating routine activities through automation, providing off-the shelf leading practices via the KPMG Target Operating Model, helping you focus on what is important. It is designed to enable you to free up precious people resources from managing technology, processes and controls and allowing the finance function to step up and contribute to driving business performance.