Finance Performance Improvement

A very short quiz for CEOs:

1. Do you have full confidence that your finance organization can consistently produce accurate financial reports in a timely manner?
2. Does your management team argue over who has the “right” data more often than discussing the actual decisions they’re supposed to be making?
3. Does your finance organization have time each month to produce insightful analysis to go along with their reporting of financial and operating metrics?

If you answered ‘NO’ to any of these questions, it’s time to get your financial house in order.

The Monthly Financial Close Process is one of the most fundamental indicators of the efficiency of your financial infrastructure, and is the critical platform that must be in place before your finance team can even begin to optimize its role as a true consultative business partner, assisting in achieving strategic goals and creating shareholder value.

If your finance organization is bogged down in a perpetual state of close, they have little time to focus on enhanced reporting or analytics. Visibility to accurate financial information and underlying operating metrics are critical to your management team in any economic environment, but particularly in times of uncertainty, where rapid and knowledgeable responses to changing business and market dynamics are imperative.

Some common indications of inefficiency in the financial close process:

• Close process exceeding 5 day benchmark
• Finance resembles a fire-drill during the monthly close process
• All other finance activity shuts down during month-end close
• Reports are too late, too difficult to understand, overly complex, suspect or often revised
• Differences between internal and external financial reports; conflicting internal reports
• Reports are usually created in spreadsheets
• Limited capacity or ability to report operational metrics or KPIs
• Disparate and disconnected business and financial systems
• Multiple, nonstandard or overly complex charts of accounts (the basic ‘bones’ of the accounting system)
• Financial documents (including spreadsheets) created and stored on individual computers within and outside of finance
• Repeated organizational difficulty identifying potential financial, economic, or business model surprises far enough in advance to correct them
• Formal ‘constructive’ comments from your auditors around lack of timely reporting, period-end cut-off errors, lack of supporting documentation, lack of consistent processes and /or excessive audit adjustments of any kind

How to resolve?

Improving the month-end close is not about adding staff or increasing costs, instead it’s about…

• Reducing manual effort
• Improving workflow
• Increasing data integrity
• Leveraging existing technology
• Optimizing skills

A well-planned, incremental approach towards adopting a set of basic best practices is critical to driving efficiency & accuracy into the financial close cycle. 

OpenView Venture Partners is an operationally-focused Boston venture capital firm that provides growth capital to expansion stage companies. Much of the team’s success has been driven by our active role in providing our portfolio companies with strategic value-add services and highly practical operating expertise. Helping finance teams optimize their financial close process is just one example of the actionable best practices process support we can provide.