Corporate finance can be quite paradoxical at times. Crunching numbers and sifting through all of your organization’s financial data takes time. However, the C-suite wants answers now. This can be a persistent point of friction when your team is still reconciling last month.
The sense of urgency in the C-suite is understandable and necessary — today’s business environment changes fast, meaning decisions cannot wait. Delayed decision-making leads to missed opportunities and frustrated stakeholders. Executives need reliable, real-time insights, yet many finance departments are stuck in the past.
The traditional monthly close cycle is no longer sustainable. Fortunately, it is possible to transition to a real-time finance function that supports dynamic decision-making. But first, you must know where to start.
Diagnose the Bottlenecks in Your Close Process
A slow monthly close process has always been viewed as a norm in corporate finance. The question is, why? Modern analytics tools make it possible to sift through all of your data and identify why close processes are slow or inefficient.
Common culprits include:
- Manual data entry and reconciliations
- Disparate systems across departments or entities
- Lack of standardized processes
- Frequent late adjustments
- Poor data quality
Conduct a root cause analysis of your last few close cycles and look for trends. Identify which steps hold up reporting and how controls or automation could streamline things.
Create a Continuous Close Framework
Real-time finance begins with the idea of the continuous close. This model integrates reconciliation and validation into daily or weekly processes rather than compressing all of that work into a few chaotic days at the end of the month. Some key principles associated with this framework include:
- Automating transactional processes
- Performing reconciliations throughout the month
- Promoting ownership among your team
- Enabling rolling forecasts and implementing real-time dashboards
You need to change your culture and upgrade your tech. Your team must view finance as a real-time service, not a historical function.
Invest in Real-Time Data Integration
You cannot build a real-time dashboard or continuously close out your records without timely data. If your team relies on downloading files from multiple systems and combining them manually, you are already behind.
Here are some systems you will need to integrate:
- Enterprise resource planning
- Customer relationship management
- Payroll and HRIS
- Billing and collections
- Procurement and inventory platforms
Talk to your IT team and discuss practical ways to integrate critical data. They will likely need to use a phased approach to avoid disruptions. In that case, start with the integrations that can be performed the fastest while also providing the best value.
Use Dashboards to Deliver Insights On-Demand
Traditional static reports are useful for audits, but they will not meet the needs of business leaders who need answers now. A real-time dashboard can offer self-service and allow each decision-maker to focus on the metrics most relevant to their role.
Simply making the right data available can dramatically accelerate decision-making. Experienced leaders know what information they need. It is up to you to make it accessible and digestible.
Redefine KPIs
Traditional key performance indicators like net income or EBITDA are still relevant. However, you need to add more granular metrics as well. You should integrate the following KPIs into your real-time dashboard:
- Procurement cycle time
- Daily sales outstanding changes
- Real-time cost-per-unit trends
- Customer churn
Make sure each metric ties back to the company’s financial health and big-picture goals. You want to put all of the pieces together for decision-makers so they can focus on applying the data instead of spending time interpreting it.
Train Your Team to Become Advisors
Great tech is essential for creating real-time finance workflows. However, your people must evolve as well. Teach your team members to become finance data interpreters and advisors. Your employees will need the following competencies to thrive in an advisory role:
- Data storytelling that explains finance in business terms
- Systems thinking
- Collaboration with other departments
You know your team and their strengths. Offer development opportunities that build on their strong suits while addressing skills gaps within the finance department. Encourage your employees to step outside the number-crunching role and take on a more strategic identity within the business.
Start Small and Scale Fast
It is not necessary to blow up your existing workflows and start from scratch. Instead, begin with a single use case or process that will afford real value. Possible places to start include:
- Automating accounts reconciliation
- Implementing a real-time cash flow dashboard
- Launching a forecasting pilot program
Use early wins to build momentum and encourage the C-suite to invest in bolder initiatives. The idea is to show how faster insights lead to better business outcomes.
Provide Answers Faster With Analytics-Driven Finance
When an organization’s leaders want immediate answers and finance is still looking backward, it creates a gap that limits agility. The good news is that your department can close that gap and fuel the growth of the business. Are you ready to redefine the role of finance in your organization?
