As onerous as the financial close cycle can be, it is necessary for the survival of your organization. The U.S. Securities and Exchange Commission (SEC) requires publicly traded companies to provide quarterly financial reports or face fines and delisting from stock exchanges.
The SEC is diligent in its enforcement of these regulations: In fiscal years 2015 and 2016, the SEC brought more than 200 legal actions against 245 individuals. Cases like agricultural corporation Monsanto, which paid an $80 million penalty for accounting violations, demonstrate just how seriously the SEC considers financial reporting issues.
Yet despite the prospect of harsh punishments, many organizations are still struggling to meet the demands of the fast-paced close cycle. According to one enterprise survey, just 28 percent of respondents said that they trusted the numbers in their month-end close, and 39 percent believed that the quality of the close process was satisfactory. Yet a full 90 percent of respondents still replied that they were under pressure to close even faster than they already are.
Last time we checked, giving your employees less time to do something doesn’t generally improve the quality of the final product – so what can you do to resolve this paradox? Start by addressing the root causes of the underlying issues with close cycles:
- Whether intentionally or unintentionally, organizations keep valuable data locked away in departmental silos. This makes it more difficult for “outsiders” to find it and unlock its insights.
- Manual spreadsheets like Microsoft Excel documents are error-prone, and can easily be edited and rearranged. Doing important financial close activities within spreadsheet applications makes it more difficult to standardize and automate your processes.
- Reassigning employees during periods of “crunch time” is an effective stopgap measure, but it is not a lasting solution. Distracted from their original duties, employees’ work will pile up, making it harder for them to catch up and setting them back even further when the next close cycle rolls around.
The solution? A mature, battle-tested software suite for financial close: Hyperion Financial Management (HFM) on-premises and its cloud-based cousin Oracle Financial Close and Consolidation Cloud Service (FCCS).
Datavail’s roster of Hyperion experts each have a minimum of 10 years’ experience with Oracle technologies and can provide assistance throughout the upgrade to HFM or migration to Oracle FCCS, as well as offer advice about how to make your processes more efficient and how to better integrate your enterprise data.
The efficiency and speed of your financial close is a key indicator of the health of all your organization’s FP&A processes. Yet having a quick and automated financial close is a necessary condition for your business to be healthy, not a sufficient one.
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When your Hyperion environments get out of sync, don’t let your workflow get out of sync too.