Statistics
- Only 38% of organizations close their books in less than six days.
- More than 60% of CFOs report that the closing process is slowing down due to increasing business complexity and rising regulatory commitments.
- New business requirements are primarily being handled manually.
The traditional approach to month-end closing is a linear process that typically lasts a minimum of 5 days and strictly adheres to the financial calendar.
Streamlining the closing process poses several challenges that are not simple to overcome:
The solution: Continuous Closing
Adopting continuous closing allows companies to keep their financial books up-to-date in real-time, eliminating the wait until the end of the month or quarter to obtain a financial status report.
It is based on the combination of “Actuals”, which is real-time information plus short-term predictable operations (e.g., Purchase Orders, Sales Orders, Collections, Payments from low credit risk customers, Amortizations, etc.), and “Forecasts” with a higher level of uncertainty (Provisions, Impairments, etc.).
To ensure “actuals” are accurate and up-to-date highly automated accounting models are needed in which the ERP plays a fundamental role.
To ensure reliable “Forecasts” companies must:
- Record confirmed periodic operations in advance (Accruals, Deferred Purchases, Reserves, etc.)
- Define forecasting algorithms for items with a higher level of uncertainty.
Using the Continuous Closing Model
NTT DATA proposes a transformation model from a linear closing to a continuous closing based on various transformation levers that enable a seamless flow of information from data sources to closing reports.
Levers of the Continuous Closing Process
Model in Action
These are the key elements of the model applied to each dimension:
To achieve this, we can leverage different tools, for example:
Continuous Closing Benefits
- Real-time data availability for decision-making
- Time savings by using technology to reduce manual tasks
- Increase team satisfaction by reducing burdensome workload
- Release time for your finance team to focus on higher value-added tasks
- Reducing errors by automating the closing process
- Obtaining higher-quality financial information
Are you ready to adopt Continuous Closing?
