Faster Close Hindered by Process Inefficiencies
Most companies want to speed their closing cycles but are hindered by process inefficiencies, according to an online survey by Kforce Finance & Accounting Staffing.
The majority of survey respondents (40.9 percent) noted that it takes 5-10 days to complete month-end, quarter-end and year-end close for internal reporting purposes. Another 27.3 percent reported a close time of fewer than five days.
Nearly 73 percent indicated that they or their executive team would like to see those cycle times reduced but are hampered by process inefficiencies (40.9 percent) and IT systems (27.3 percent). Other hindrances included poor intra-company communications, which was cited by 9.1 percent of respondents. The remaining 22.7 percent blamed a variety of issues, including billings that are input through the last day of the month, process flows, staffing and processing of invoices from vendors and subcontractors.
The survey, conducted Sept. 4-22, 2008, was designed to gauge companies’ interest in, and perceived benefits of, accelerating the close cycle and to identify the primary obstacles preventing them from doing so.
Respondents represented private (63.8 percent) and public (36.4 percent) companies, most with revenues of $100-$500 million (45.5 percent) or $501 million-$1 billion (22.7 percent). Companies with revenues in excess of $1 billion made up 18.2 percent of respondents and 13.6 percent had revenues less than $100 million. The majority of respondents held the title of CFO/VP/Controller (36.4 percent), followed by directors (22.7 percent) and managers (18.2 percent.).
When asked how frequently their organizations anticipate undertaking a “fast close” initiative to further reduce the closing cycle time, the majority (45.5 percent) said they have not yet done so, while nearly 38 percent reported annual efforts. For 18.2 percent of respondents, fast close initiatives were a one-time event or took place at least once every two years; 4.5 percent reported undertaking fast-close initiatives once every five years.
As for the benefits of a shortened close cycle, faster reporting was cited by 77.3 percent, followed by cost reductions (9.1 percent) and headcount reductions (4.5 percent). Another 9.1 percent saw no real benefits to a faster close.
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