Increasing rates, scarcity of raw materials, exploding energy costs, redundancies within the teams… the emergencies of this return to school are particularly numerous for the CFOs.
Because beyond managing their day-to-day duties in this challenging environment, they are at the forefront to help the company redefine its fundamentals and sustainably transform it. Colossal challenges in the area of uncertainty and instability that force them to sometimes completely rethink their processes, even if the Covid crisis has already forced them to adapt.
Among these processes, at the heart of the finance function, we find the closing of accounts. It is about stopping the recording of all bookings over the period. It allows analyzing past and current performance, implementing appropriate trading and financing strategies in constantly changing markets, but also conducting audits and reports, forecasts and business plans for various services or financial partners.
This reconciliation of the financial statements at the end of the period – whether monthly, quarterly or annually – has traditionally been a tedious process that can take weeks. However, over the years, pressure from markets, shareholders, regulators and executives has only increased, further reducing the time it takes to produce information for financial managers. In the face of this new situation, how can companies speed up the preparation of their financial statements while maintaining a high level of reliability?
The “zero day close” or the new holy grail of finance functions
In an economic environment of high volatility, intensified competition and the race for technological innovation, it is logical for companies to want to speed up their accounting processes. Dubbed “zero day close,” this approach aims to reduce closing times to a few days instead of a few weeks. In this way, it enables financial managers to analyze past and current performance, develop commercial and financial strategies adapted to the market, conduct extremely reliable audits and reports, create business plans for the company’s various stakeholders and make quick decisions anywhere in the year without additional ones mobilization of teams. The “Zero Day Close” thus enables faster and fairer decision-making and thus makes the company more agile.
At the same time, the rapid closing and publication of accounts is considered a performance indicator for financial partners and investors. Fast and successful completion is a testament to good financial health and genuine mastery of processes.
The Pitfalls of Implementing Zero Day Close
But if zero day close is hailed on paper by companies as a benefit for finance managers, implementing it remains a challenge to be overcome. In fact, such a (r)evolution can obviously only be envisaged with appropriate technological tools. A finding shared by many finance departments, because according to a study by PwC on the priorities of CFOs in 2022, 34% of them consider the automation of processes to be paramount.
However, there is a gap between the priorities of CFOs and the reality on the ground, which can be explained for a number of reasons. First, because while the crisis has been a real catalyst for the digital transformation of the finance function, remote working, finding errors and correcting them by hand are a significant impediment to Zero Day Close. When time pressure is high, especially during key closing times, automation is therefore a solution, but it still leads to changes that accounting cannot always cope with.
Tech to save the finance function
However, organizations need to bridge this cultural divide and innovate their software environment because while finance teams continue to feel the pressure to do more, the need to help other departments make decisions in a changing environment, technology is the best way to do their jobs complete orders and close faster.
In fact, by automating close processes with the aim of speeding them up, companies can move to a continuous accounting model where automation, control and period-closing tasks are integrated into day-to-day operations. The use of new technologies such as machine learning makes it possible to detect anomalies in accounting entries by comparing them to other entries for similar transactions. This allows accounting teams to identify anomalies and correct reconciliation issues as they arise, rather than at the time of close.
This approach aligns the very strict accounting calendar with other business activities, freeing finance teams to spend more time on research and analysis, focus on higher value-added tasks and significantly reduce the error rate, creating value for the entire organization .
Therefore, automation of the financial close has become increasingly essential in recent years as it gives businesses and financial managers an undeniable competitive advantage. Conversely, by delaying the adoption of automation or the adoption of a cloud-based financial system, CFOs deprive themselves of the opportunity to drive business value and develop effective strategies for the future. Increasing the power of financial tools is therefore essential to move from process management to a forward-thinking vision, but also to develop synergies between entities that have previously worked in silos. So it is indeed a revolution for the information systems, but also for the teams that have to rethink.