Automating the financial close process: what should go right - Image by Alexander Lesnitsky from Pixabay The verification and adjustment of account balances at the end of every month, quarter or year – i.e. the financial close – triggers mixed feelings in the finance and accounting community. Bitter jokes and amusing stories about turmoil, exhaustion, and strain illustrate vividly the mundanity of the bookkeeping process.

A closer examination of the problem confirms that most typical difficulties with closing the books originated from the rudimentary tools used during the financial close. Organizational complexity, business specifics, and team sizes grow, yet manual, spreadsheet or paper-based tools dominate. Generic solutions employed in period-end workflow management have reached their capacity limits long ago and create more issues than they solve.

Digital transformation and process automation successfully address the most common challenges with financial close management. Instead of wondering what could go wrong, finance professionals should investigate how modern cloud-based solutions can achieve better results.

Streamlined, standardized balance sheet account certification

Depending on the size, the nature of the business, and the internal policies applied, an enterprise may have 500 to 2500 accounts to reconcile at period end. Certain segments such as banking perform comparisons of tens of thousands of GL account combinations. The workload is enormous and coordination relying on email attachments, and printouts is inefficient.

Performing balance sheet reconciliations manually using spreadsheets perpetuates fragmented and inconsistent close processes. Organizations, particularly with decentralized finance functions, struggle with poor visibility over key accounts and compliance shortcomings. On the other hand, financial close software serves as a central repository for all period-end roles, activities, and documentation:

  • The chart of accounts is mapped within the platform.
  • The fully configurable certification template assigned to each account prescribes the certification protocol to be followed automatically, preventing discretionary handling.
  • Accounts are classified, filtered and managed in groups with common properties and treatment, which allows monitoring and enhanced visibility on high-risk, key accounts.
  • Trial balances are extracted continuously from the general ledger and pushed through a preconfigured approval workflow – an essential optimization sparing time and manual efforts.
  • The difference between imported balance and explained balance is automatically calculated and highlighted by the system so the preparer can focus on investigation and explain that difference.
  • Account balances can be drilled down and justified through the value of the underlying transactions (or sub-ledger items) and identify exceptions.

In addition to the operational side, several analytical elements accompany financial close campaigns. A comprehensive financial close management software should also incorporate

  • journal entry creation and approval flows,
  • variance analysis of suspicious account deviations,
  • reconcilement items ageing tracker,
  • risk analysis instruments,
  • a unified storage of substantiating documentation.

Smooth period-end team collaboration

Smooth interdepartmental collaboration is a major prerequisite for successful financial close. Each accountant within the organization has to prepare their accounts and pass them forward for review and approval. Full visibility is often hard to achieve in matrix and complex hierarchical organizations with multiple cost centres and distributed teams. It is even harder when the period-end process is built upon a messy exchange of shared spreadsheets, emails, and file repositories.

Paperless, near-real-time digital collaboration orchestrated in a unified, secure software environment can benefit stressed finance teams enormously. Each member has a clear overview of their place in the chain of events and a tailored space to organize and track their tasks. Moreover, wherever input from a colleague is required, or an update needs a background explanation, the financial close platform produces a detailed audit trail. The system assembles and syncs all process steps, ensuring participants are notified and prompted to take action. Bottlenecks are thus easily spotted and tackled.

Close task management

The period-end close process consists of co-dependent tasks with specific owners. Each participant follows a checklist of activities with strict deadlines. Individual task completion is often bound to the output provided by colleagues and, in turn, provides input further down the line. Delays and lapses inevitably affect the job of co-workers. Informal status checks and feedback make an unnecessary distraction.

Financial close software delivers a new dimension of visibility on individual and departmental level task management. Tasks are organized in calendars and arranged by priority and role to make pending items and real-time status visible to all parties involved. Configurable system reminders and progress notifications keep everyone interested in the loop for enhanced control.

New trial balances imported in the financial close tool automatically overwrite the old data and resets the approval cycle upon detected movement in the account. Meanwhile, unchanged balances remain unaffected and up for advance in the approval chain. The automated workflow eliminates clutter and redundancy, reduces turnaround, and improves visibility.

Reporting features for full management awareness

In manual and spreadsheet-based close processes, reporting requires excessive efforts to retrieve, summarize, and update data. Managers bearing responsibilities for dozens of people within a department/group of departments or hundreds of certification accounts usually find it difficult to follow through every aspect of the close workflow and identify obstructions – accidental or chronic.

Active progress tracking in reconciliation and financial close solutions can be performed via customizable dashboards with user-defined sets of widgets. They are graphic, real-time representations of key indicators concerning the certification functionality, including:

  • count of outstanding accounts,
  • account status,
  • breakdown by account and user,
  • total currency value remaining to certify charted across days

The capability to effortlessly shift between granular and aggregated overview helps pinpoint disruptions and prevent delays.

Reliable internal controls and robust financial reporting

The financial close process is subject to regulatory scrutiny, particularly for publicly traded companies. For example, in the USA, the Sarbanes-Oxley Act of 2002 (SOX) enforces financial disclosure and statutory reporting standards to protect investors from false or misleading information. Companies should demonstrate adequate internal controls, data integrity, and segregation of responsibilities in the course of financial statement preparation.

Financial close best practices suggest a minimum of two approval levels for monthly account attestation. Three plus levels can be required for the quarter-end or year-end certifications. The roles within the automated workflow are fully aligned with the internal chain of responsibilities – primary and backup, first and second line, Preparer, Reviewer, Approver, Manager, and Auditor. High-definition access controls regulate group and individual authorizations to view and edit certification accounts.

Concerning full auditability enabled in digital platforms, any user-initiated changes are captured in a granular audit trail together with the supporting documentation. The system puts auto-check points such as mandatory attachments to substantiate the certification. Hands-off system certification is another audit-proof optimization that can be applied for accounts meeting certain business rules (e.g. low risk, from specific categories, zero or unchanged balance status). The events in the audit trail can be filtered by account, time, user, or type of operation or exported and analysed for efficiency gaps.

The period-end close craziness has just peaked. This is the right time to ask yourselves – do you have to put up with more of the same when there is a better way?


Since 2011, ReconArt has driven innovation in reconciliation software technology and helps a global client base establish robust, flexible and scalable data reconciliation processes. ReconArt delivers an enterprise class, entirely web-based reconciliation platform leveraged by a varied portfolio of customers from every industry, size, and geography.

ReconArt integrates all transactional matching, account reconciliation, and financial close management processes in a secure and auditable environment with a strong focus on best practices, regulatory standards, and compliance mechanisms. The ReconArt SaaS solution ushers in dramatic efficiencies into clients’ existing manual processes generating time savings and reinforcing precision.

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