3-week reporting cycles are a choice - why not aim for a zero-day close (part 1)?

A slow reporting pattern is common in many firms. 

Common and hard to break free from. Firms are left chasing their tails each month because you can’t get ahead on September’s reporting when you’re still catching up with August (or even July).

Your business and its clients suffer when the process is this protracted; it isn’t convenient or enjoyable for anyone. Is it a stretch to say that end-of-month reporting can be a delightful experience? Maybe. But it could certainly be less frustrating and more rewarding. All it really takes is switching the focus from ‘How it’s always been done’ to ‘What makes for a better customer experience?’.

In my view, several factors converge to slow end-of-month reporting down: 

• The process needs reimagining

• People (including clients) can be disorganised

• Not enough communication is happening (between teams and with the client)

• Data is often disjointed

• And technology can be a limiter.

Process has to be top of that list because a zero-day or reduced close hangs on it. 

Fix the process, and you’ve got something new for people to adopt (the next challenge is bringing people along on the journey). Your data will naturally need cleaning up or organising to deliver that process, and it’ll become clear what technology you need and what technology you don’t (and what can help speed up a people process when there are high volumes of data involved).

You might have seen OpenAI’s CFO recently proclaim that they were going to make the zero-day close possible, but at its core, it’s not a technology problem to solve. Largely all it takes is a better process - and that’s been an option for firms long before OpenAI came along.

How do I know this? Because I know companies who’ve done it. 

Cisco, for example, managed to close and report within 48 hours of its year-end, and that was a $20 billion revenue business over 20 years ago. In addition to that, we (me and my team at PwC NL) were able to report our opinion to the PwC US team within another 48-hour window after that.

If it was possible there, I knew it would be possible for flinder and our clients. And it’ll be possible for your firm too.

If, like I was, you’re dissatisfied with how you’re working with clients and how hectic the month-end feels, these are just some of the changes we implemented to make monthly reporting faster. And this list excludes anything AI-related. It’s a list of requirements that any firm could pick up and run with if it’s ready to change.

We:

1. Changed the mindset to pull work forward within the month (not after)

2. Increased bank reconciliation frequency

3. Communicated clearly and timely of open items

4. Condensed (documented and shared) close calendar and timeline

5. Worked with operations to speed up sales invoicing

6. Pulled accruals/prepayments/depreciation work forward

7. Operated a 3+1 on key reconciliations

8. Held a pre-close call

9. Prepped management reporting and commentary based on what we knew

10. Ran a period-end soft close

The first 5 of these I’ll go through in detail in this newsletter. In Part 2 (next week for subscribers, I’ll cover the other 5, and I’ll also unpack how we got there. These considerations can help firms find their own reduced close solution if what we did at flinder doesn’t feel like a fit.