This is where the technology foundation of a finance system makes a big difference. Having transactions and analytics unified in a single system where all data is stored in-memory—technology concepts explained in my last blog—enable the real-time transaction processing, consolidation, and reporting of financial data in one place. As soon as a transaction occurs with accounting impact, it is instantly available to report on and analyze within the same system. Finance is able to create consolidated reports on a daily basis if needed, across multiple legal entities and currencies, significantly reducing the amount of time it takes to close the books.
Some of our customers have cut their financial close times nearly in half. City Year, an education-focused nonprofit organization that partners with public schools to help keep students on track to graduate, sped up its monthly and quarterly close by 40 percent, while AAA Northern California, Nevada & Utah decreased its quarterly close from 10 days to five days.
These capabilities have significant implications beyond financial close and reporting. The business now has a real-time navigation system to help executives, finance, and operational leaders identify when there is an issue and correct course immediately. Imagine dashboards with current key indicators that show whether numbers are off or funds need to be shifted, or where the company might be gaining momentum in the market. Working with real-time data means that there are no surprises at period end and finance can be confident in what they are reporting to stakeholders and the street.
Financial consolidation should be collaborative, with key stakeholders across the organization providing input. Consider this scenario: finance and business partners both have access to current and accurate numbers from the same system, and can examine spend and profitability and modify plans in the moment. There is no need to reconcile numbers, no lengthy consolidation process or waiting until period-end to understand what happened.
Many vendors today are offering solutions that try to address financial close and consolidation issues, but they continue to face huge barriers, since these approaches lack real-time, forward-looking capabilities.
These solutions typically fall into two categories: the first is the traditional on-premise approach where consolidation functionality resides within the general ledger and requires linear batch processing to consolidate financial data. This takes considerable time and effort. The second type of solution sits outside of core transaction systems, requiring data to be pulled from multiple disparate ledgers to consolidate and report. Again, this approach requires time that today’s finance teams just don’t have.
With the right technology foundation, finance can simplify this complex and lengthy process and turn it into a competitive advantage that helps the business look forward. My next blog in this series looks at how finance can move towards using real-time business data—beyond just the financial numbers—to impact the business, and why the foundation of a system matters to making this possible.
(Read the next blog in this series, “Finance and the Tech Foundation: What’s Needed to Deliver Impactful Business Insights.” To start from the beginning of the series, go to “Finance and the Tech Foundation: Making Sense of Enterprise Tech Concepts, Part 1” and “Finance and the Tech Foundation: Making Sense of Enterprise Tech Concepts, Part 2.”)