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5 Steps to Optimising the Virtual Financial Close

  Home/Blog/Advisory/5 Steps to Optimising the Virtual Financial Close

5 Steps to Optimising the Virtual Financial Close


The world has changed, and for many firms the uncertainty and economic impact of the COVID-19 pandemic has created an urgency to react to the disruption, catching many finance organisations off guard. Their ability to access timely, enterprise-wide financial data was suddenly brought into question by a shortfall in contingency planning, exaggerated by any deficiencies in their financial close and reporting processes. The new norm is closing the books with a remote workforce and a transition from direct interaction across the office to one of virtual collaboration.

Whilst online retailers, food manufacturers and digital service-providers have experienced positive growth, many sectors have faced extreme down-turns. Firms invested in digital technologies have been better-placed to ride out the storm more easily. Other organisations struggle, hampered not just by technology or IT infrastructure, but by constraints in the distribution of knowledge and the consequences of disconnected processes.

In this blog, we take a look at how we have helped our customers adapt to the challenges of remote-working and the virtual financial close.


React Faster

Finance leaders that recognise the importance of employee engagement and productivity, and the advantages of financial close automation, enable their teams to respond with greater agility during a crisis. These firms have accelerated their use of digital solutions that introduce clear end-to-end process ownership and provide seamless integration of G/L data sources, consolidation models and stakeholder reporting tools – from the cloud. In the midst of a pandemic, this translates to more frequent reporting of cash and liquidity, the ability to model FX rate shifts, easier demand forecasting and more timely comparatives of actual results against budgets and plans.


Close Faster

Optimising the financial close depends on several factors; the efficiency, order and timing of close activities; on keeping reported information relevant; on standardising close processes; and on the use of technology to enable automation. Those considerations can be categorised under three common headings that act as building blocks for close cycle improvement:


  • The time taken to manage data collection and data loads to reporting models

  • The time taken to translate, consolidate and finalise group consolidated information

  • The time taken to report (to internal and external stakeholders)

Fast Close Optimisation


Applying this framework to a Virtual Financial Close requires understanding of a broader set of factors. Finance teams that previously operated face to face, now operate remotely, creating dependencies on IT readiness, virtual communication channels and the skills of co-workers. The de-centralization of the reporting process has highlighted challenges in operating models, that in many cases have extended the duration of each financial close. For some firms, this means making choices between speed, risk and materiality – the result of disconnected processes and legacy technologies. Pressure to provide timely business insights means compromising on control and oversight. The COVID-19 pandemic serves only to amplify deficiencies in their close processes. Consequently, a fast close in itself may no longer be the primary objective as some CFOs grapple with leading remote teams.


Work Smarter

The need to optimise existing close cycle approaches may pre-date the current crisis, however an informed approach to finance transformation, should offer value that extends beyond the current crisis.

So what are the tactical financial close and reporting considerations?

5 Steps to Optimising the Virtual Financial Close:

  1. Align the virtual close calendar with key resource availability

  2. Mitigate points of systems failure

  3. Formalise task management, monitoring and oversight

  4. Identify employee knowledge gaps and share out responsibilities

  5. Create an environment for collaboration and continuous improvement

Let’s take a look at what each step represents:


1. Align the virtual close calendar with key resource availability

A successful virtual close is dependent on collaboration across multiple systems and efficient execution of key reporting tasks at every level in the organisation. A gap assessment is critical to identifying the key knowledge workers that drive each step of the close process. Without their involvement, reliance on less experienced resources introduces risk of errors and delay. Use of centralised close calendars and reporting systems that offer role-based workflows can help guide the actions of your virtual finance team, mitigating the lack of office-based supervision.

Remote-working comes with the constraints of family life, childcare responsibilities and a potential impact of illness during the pandemic. In some companies, this has meant arranging contingency resources from other parts of the organisation or outside agencies to cover for illness, staff using a backlog of accrued leave or time-zone differences during the close.
The use of contingency resources requires clear definition of roles and responsibilities, flexibility in the close calendar and management of expectations across the wider business in the event of close period extensions.


2. Mitigate points of systems failure

Fundamental to remote working is reliable access to systems for preparers, reviewers and administrators. Office-based staff need a laptop, suitable VPN connectivity and application security privileges to gain remote access and manage normal close activities on company G/Ls and group reporting solutions. Provision of cloud-based reporting solutions makes accessibility easier and arguably reduces the pool of contingency resources required across the business.
Video-conferencing, messaging and screen-sharing tools are critical to the finance team being able to remain in contact, and critical to them being able to provide support to each other during the close.
Replacing spreadsheets and legacy applications with integrated reporting solutions avoids maintaining data across multiple applications and databases, easing dependencies on key knowledge owners across different platforms.

Thinking about the ‘plan B’ scenarios in event of a systems or technology outage is also key. All users should routinely test their access. It also makes sense for non-critical patch updates for close-related software platforms to be deferred to periods outside of the main close timetables, reducing risk of unnecessary impact on reporting.


3. Formalise task management, monitoring and oversight

Modern Corporate Performance Management (CPM) applications provide end-to-end close coverage that enable tracking of sub-ledger and ledger close processes, ensure management of data quality between ERPs and reporting tools, they help automate intercompany eliminations and balance sheet reconciliations, and facilitate processing of central adjustments on consolidation. Often such activities are managed as disparate functions rather than parts of a holistic cycle. Organising how these tasks are managed plays a key role in optimisation of a close. Whilst a close cycle may only ever be as fast as its slowest activity, systems can only improve the cycle where suitable processes have been properly defined. An integrated approach that holds each stakeholder in the chain to account, is the foundation of a successful virtual close.

Guided workflows help users provide complete and validated data, and offer mechanisms for review and internal control. Tracking dashboards ensure awareness of progress, completeness of data, and real-time visibility of the Group close status. Modern systems-based approaches create opportunity for full line of sight drill-through from output reports back to source file submissions, avoiding the need to hunt for spurious spreadsheet files to explain the supporting detail.
A dependence on manual, paper-based approaches completely exposes process inefficiencies when remote-working. Finance teams need to consider how to formalise task management, which starts with the following considerations:


  • What are the checklists of tasks for each close cycle and do they differ by close? Are those checklists standardised across the business?

  • Which activities are currently manual that could be automated? (e.g. data integration, account reconciliations, FX reserve calculations, intercompany eliminations, consolidation journal adjustments, tax provisions)

  • Who performs those tasks and what are the storyboards for each sequence of activities? Are workflow tasks completed in the right order? (e.g. data entry tasks, validation checks, review screens/reports, adjustments, consolidations, approvals and sign-offs)

  • Determine and publish the people organisation / escalation chains that ensure cover for key activities in the event of illness or holidays impacting on the close. Build in overrides to workflows that compensate for such eventualities.

  • Do you have an Accounting Handbook accessible online, that maps out how to perform each close cycle ‘on system’? Consider ‘how-to’ videos that can be accessed from the financial close system or central intranet, that mitigate risk of contingency resources not being up to speed.

4. Identify employee knowledge gaps and share out responsibilities

A remote-working approach creates distance between co-workers, and makes supervision of less experienced team members an increased risk. Office-based environments allow us to take for granted access to key knowledge owners in the process, with direct interaction easy and informal. Home-working removes that immediacy. The confidence of having a body of experience available a few desks away provides a comfort-blanket for more junior resources, and eases the preparer-reviewer-approver cycle when those individuals are responsible for key tasks in the close.
In the absence of more direct supervision, some organisations are being forced to use more experienced accountants to own tasks usually undertaken by more junior members of the team. This creates bottlenecks and can become inefficient. The knowledge gaps can give rise to the need for more formalised checkpoint calls and on-system reviews and approvals. Each role in the close should have a defined set of tasks and contingency arrangements. This requires mentoring, online access to ‘how-to’ and training guides, and promotes the need for more collaborative working, and more standardised approaches to each task.

Systems that utilise workflows and task lists that guide the user through a series of activities offer some mitigation against knowledge gaps and inexperience. A systemic approach can also generate alerts to more senior staff and prevent governance issues from being over-looked during a virtual close.


5. Create an Environment for Collaboration and Continuous Improvement

Working remotely highlights how dependent team members are on each other. Making collaboration easy is a simple step towards a more efficient virtual close. Use of video-conferencing solutions, instant messaging and document sharing technologies keeps communications flowing and informal. Most conferencing solutions offer the ability to record meetings, enabling more senior resources to provide guidance that can be recorded and played back in support of less experienced staff. Emails can be saved to a file share as evidence of manual approvals or stage sign-off. MS-Office documents can be populated dynamically from reporting systems, and reviewed as a single copy of a centralised report, with tracking of updates, changes and versions.

Procedural changes to the close cycle process can also help bridge knowledge gaps, and avoid close cycle delays. Group consolidations can be built up by entity, then by sub-group or division prior to completion at group. A staged approach enables local ‘finance user groups’ to share experience and mentor each other avoiding a dependency on a limited pool of central resources.
Bottlenecks arising from the reliance on more senior resources can also be mitigated through review of materiality thresholds. Validation differences, intercompany matching differences or journal entry volumes can all be assessed with some awareness of materiality vs reconciliation time required.

An integrated close ‘workspace’ and close tracker, helps digitise the decisions, actions and approvals that take place at each stage. Not only do such solutions provide visibility on the close, but they also enable awareness of close cycle issues. Consistent delays each close should highlight a need for process improvement, better systems integration or a need for user training. Peer-by-peer benchmarking across entities in the Group is a common approach to fast close improvement. When augmented by out-of-the-box audit reports, the need for virtual collaboration shifts from just a reviewer-approver relationship, to one of shared responsibilities and mentoring, that aides learning and close cycle efficiencies.




In comparing how our clients have adapted to the virtual close process, this varies dependent on the maturity of their CPM and close applications, and the experience of their staff. Some benefit from a fully integrated approach, others are stuck in a hybrid landscape where steps have been taken to add smart automation solutions to existing legacy technologies.

The secret to managing a virtual close is the design of a consistent close to report process. This includes assessment of the current reality, a risk-based approach to close cycle responsibilities and controls, and automation of repetitive tasks such as data source file transformations and validations, account reconciliations, eliminations and consolidation adjustments. Technology is a key enabler that is critical to providing the framework for communication, user collaboration, process automation and control.

The fundamentals of an efficient financial close remain consistent whether managed from the office or virtually. However a remote-working environment has introduced a greater dependency on technology. Thanks to the COVID-19 pandemic, the roadmap for a ‘fast close’ will never be quite the same.

To find out more about how Concentric has helped other firms optimise their Virtual Financial Close, Contact Us now to request a call back.