Ask any CFO of any complex, high-tech businesses about the challenges software companies face in their finances and they will share the same challenges. In particular, they all see that their peers too often make life difficult for themselves in grappling with some of the most basic financial processes—specifically, the monthly and quarterly close.
However, despite the monotony of the process, global or multi-subsidiary businesses that rely on a varying mix of accounting software often struggle for weeks—or even longer—just trying to boil down their results to a single balance sheet.There's nothing groundbreaking at all about the financial close process—and financial experts need to make sure that it stays that way.
The fact remains, no matter how many data conversions, spreadsheet merges and late nights reconciling data you have, these do nothing for the health of your business, and they certainly don't encourage future expansion and growth.
Difficulty Increases With Growth
To build and maintain a multi-subsidiary or multi-country business, especially in tech sector, is not an easy task.
Today’s transaction volumes are growing because high-tech companies continue to branch out to new geographies and using more social selling channels, subscription sales and mobile platforms.
With new markets come new regulators and tax codes. And revenue recognition standards continue to demand more diligence and transparency.
Mastering these challenges positions companies for smooth growth and improved margins. But spending inordinate amounts of time on quarterly close - definitely not.
Why Shorten The Financial Close Time?
Aside from liberating your skilled accounting force and allowing them more hours for more challenging tasks like revenue recognition and compliance, shortening the financial close process boosts the value of your accounting data to the rest of your organization.
The executive team and directors can hardly have much confidence in the analysis finance departments provide if finance departments can't stand behind the numbers without three weeks' notice. Why does it take so long? Are they hiding something? Are they window-dressing?
But imagine. Once your financial close becomes an automated, assembly line efficient process, you can offer meaningful real-time dashboards to middle management and C-suite executives.
You can have fresher, transparent numbers that can mean fewer surprises, and reduce the chances of an unexpected revenue miss. In fact, many of today’s fastest growing software companies owe their success to rapid 4-5 days to close their books.
Furthermore, if your company is eyeing an initial public offering or IPO, having the numbers ready at a moment's notice is very important.
Isn’t it frustrating watching companies struggle to succeed because they fail to heed the advice: “Don't sweat the small stuff"?
Financial close and consolidation needs to be "small stuff" so your business can invest time and energy in the value-added, complex processes that build successful enterprises. It’s about time we cut down financial close for IT firms!
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