How to stay on top

of your financial
close process

Always available, error-free and understandable — these

are the primary requirements for companies when it comes
to external financial reporting. However, there has been
an increase in the amount of time required to close and
“
The future depend on what you do today
Mahatma Gandhi
prepare external financial reporting.
Managing and optimizing the financial close process will
The closing period is usually the time with the highest bring benefits:
workload for the accounting and controlling departments. • Harmonize practices,
Late adjustments made during the financial close process • Ensure quality - Better and more relevant financial
can cause multiple issues: results in re-work to reports and information,
disclosures, increases pressure on reporting team when • Reduce lead times - Reduced number of days to close your
books,
publishing deadlines are imminent.
• Motivate teams,
• Better operation decisions,
By becoming “agile“, the closing process focuses on the • Lower finance function cost.
analysis and not just the accounting record.
The better the processes and data flows are linked together,
and the more accurate figures are available at any time
in accounting and controlling, the greater the value is
... 45% still regarded the process generated for the company.
55% as manual or mainly/more manual
However, first-class closings can only be achieved quickly
than automated.
and with high quality if the relevant data is fully available in
time.

In practice, the full potential of digital solutions is still not

being used and a mixture of IT solutions and manual work
... 62% say that the orchestration
steps — with many process and system breaks — still prevails.
of closing processes happens
38% manually, mainly manually or more
This is a considerable source of inefficiencies and presents
great potential for errors in many companies. To avoid this,
manual than automatic.
all processes and systems as well as the organizational
structure should be coordinated.
It is particularly important to look at the processes in the Financial closing solutions – the closing
financial statements from an “end-to-end” perspective
so that the causes of weaknesses can be successfully revolution
eliminated.
Technology is transforming finance, particularly in the
The typical challenges in record to report (R2R) are: area of data. Today, organizations and their finance teams
• Limited time available for analysis, have more data than ever before, thanks to increases in
• Under-optimized use of technology and automation, computer processing power, ever-growing connectivity, and
• Excessive use of excels and emails for reconciliation, the cloud and its massive storage capacity.
• Large unidentified reconciliation differences,
• Exponentially increasing volumes of data and processing To turn data into truly value-driven reporting and to
requirements,
produce financial information ever faster, finance teams
• Limited visibility into day-to day monitoring of accounting
cycle, should focus on utilizing digital solutions for closing the
• Inability to monitor reason codes for journal entries, accounts (automation and digitization of the finance
• Increasing number of adjustments and reclassifications process) and on building trust in data analytics (data and
leading to inefficiency. process analysis). This digital transformation also requires
them to think differently about the people they recruit.
Technology and digital enablers have allowed companies
to centralize their entire R2R scope, from transactional But a high degree of automation requires standardization.
processing to data reconciliation.
Process analysis will tackle these challenges at their source.
It helps to discover the “standardized” processes. Gaining a

> 40%
more than
common understanding of the status “as is” is the starting
point to identify areas for improvement regarding further
implementation of technological support.
... strive for a higher degree of automation in the
Process Mining enables users to analyze the processes, to
accounts payable, accounts receivable and general
detect those who are actually tracked and compare them
accounting processes.
to the processes theoretical, detect inefficiencies and
anomalies possible.

... more than 50% see the degree of automation on a Traditional interviews do not ensure the completeness of
“medium” level. The assessment as “medium” is the process reviews.
prevailing answer in all industries. Still 31% asses the
level as “very low” or “low”. Process Mining tools make it possible to:
• Identify bottlenecks and deviations from the target process,
• Monitor performance indicators, continuous improvement,
• View 100% of data and quantify transactions (in volume and
17% amount),
31% • Improve cost / time performance and compliance.
high or very high
very low or low
Furthermore, process mining enables to identify potentials
for improvement and helps process standardization and
52% transparency which are crucial prerequisites for automation
medium purposes.

< 10%
less than

... is the usage of “modern” techniques like process

mining and robotic process automation (RPA).
The cloud-based solutions (e.g. BlackLine) offer the With the introduction of technology in the financial close
possibility to process key accounting processes such process, companies benefit from five factors in particular:
as reconciliations, task assignments, journal entries automated workflow, earlier identification of accounting
and analyses on a centralized platform, even in very issues, data integrity, increased governance, a centralized
heterogeneous system environments. This processing and single source of truth.
replaces the complex and error-prone work in different
spreadsheets or systems on different servers and Data analysis performed during the month enables earlier
enables the finance departments to build up extensive identification of significant accounting issues, provides
transparency of the closing process and trust in real-time more time to resolve them, reduces work during closing and
data. Supporting the entire closing process across the help to manage tight closing and reporting deadlines.
company also enables the audit trail to be tracked without
interruption.

Finance teams can use machine learning and artificial Transforming the finance workforce
intelligence to build prediction models, improve outcomes
and look for underlying patterns. These models are able The finance function will benefit from team members with
to auto ‘learn’ from the data and predict outcomes to new capabilities beyond traditional finance and accounting
completely new cases. skills, including strategic awareness of new technologies
such as AI, RPA and knowledge in disciplines such as data
• Data to Insights
science and advanced statistics. This should include both
• Ability to uncover patterns with regressions,
• Understanding complex correlations between value driver. the “hard” skills required to utilize new technologies and
• Improved financial predictions data, and “soft” interpersonal and strategic skills.
• Prediction of financial KPI, revenues, balances and profit/
loss, In addition to looking at the competencies required, finance
• Increases reliability of planning, budgeting and leaders should also consider their future operating model.
forecasting, As their organization’s strategic priorities will likely change
• Transforms simplified and rigid “human” planning into
rapidly – finance and reporting should have the agility
agile data drive “AI” planning.
to change with them. Flexible models, such as managed
services, are one way to address this. Tools and data allow
EY has developed a machine-learning anomaly detector for
finance teams to work collaboratively with external vendors
journal entries (“JE(s)”):
• It develops a model to predict the amount of debits and more closely to deal with these challenges.
credits posting to each general ledger account each day. For
each day that has a significant variance for a given general
ledger account, all of the journal entries for that day related
to that account will move to anomaly detection. Digitization of the closing process will
• It identifies the outlier entries within that population.
require to rethink the operating model
Robotics can be deployed in several areas:
• Software that mimics human interaction with core systems, • Process mining tools will enable the organization to monitor
web, and desktop applications to execute processes, exceptions and identify root causes for deviations
• Combine structured and unstructured data into reports, • Machine learning will be used to build prediction model and
• Automate report distribution and collection. detect anomalies
• Policies and procedure will be updated to enable new digital
6% and automated processes
high or very high • Technology: Complex tasks like consolidation, elimination
and foreign currency revaluation functions will be
16% automated
medium • People: teams with non-accounting backgrounds, such as
50% data scientists, RPA analysts and other skill sets
none • Data: Automated finance data management process will be
28% established
very low or low

... 50% have no RPA in place with respect to the record-

to-report process, and 78% use it only on a very limited
basis or not at all.
How EY can help? EY | Building a better working world
EY exists to build a better working world,
Our CFO Services professionals focus on supporting leading
organizations in navigating this ever-changing accounting
helping to create long-term value for clients,
and reporting landscape, helping clients to tackle technical people and society and build trust in the
accounting and financial reporting issues. capital markets.

Nicolas Valette Enabled by data and technology, diverse

Partner EY teams in over 150 countries provide trust
Tel: +32 473 455 311
[email protected]
through assurance and help clients grow,
transform and operate.
Ludovic Deprez
Executive Director Working across assurance, consulting, law,
Tel: +32 478 704 394 strategy, tax and transactions, EY teams ask
[email protected] better questions to find new answers for the
Camille Marchand
complex issues facing our world today.
Senior Manager EY refers to the global organization, and may refer to one or
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