Fast Close By Christine Allegretti

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Fast CloseByChristine Allegretti
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Contents

• Introduction
• Trends
• Fast Close Overview
• Approach

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Trends

• Most companies in the survey stated they target
  6.5 working days, the average of the survey was
  8.5 working days (SA survey)

Source KPMG Race to Close, 2006
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Trends

• A survey by the Economist Intelligence Unit of
  286 senior executives in America, Europe and Asia
  on the role of the Finance function indicated
  some key priorities

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Trends
Our research showed, from a survey conducted
across a range of industries. The survey showed
the following important facts According to the
participants, the most important problem
preventing faster reporting is the inadequate
quality of the figures supplied by reporting
sites (BUs) and poor ERP systems at reporting
sites Participants were ask to give a rating of
1 (not important) to 7 (very important) for 7
different reasons for accelerating the reporting
process..
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Trends
Problems Consolidating and reporting financial
figures appears to entail more than just adding
up the numbers. Most organisations struggle every
month to meet the scheduled reporting
dates Participants were ask to give a rating of
1 (not important) to 7 (very important) for 8
different problems in accelerating the reporting
process..
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Trends

• The activities and processes most likely to be
  improved in the next two years

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Why Fast Close?

• Impact received from technology implementation in
  the finance function (SA survey)

High Impact (99 initiatives)
Medium Impact (58 initiatives)
Low Impact (10 initiatives)
Source KPMG Race to Close, 2006
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Fast Close Definition
Fast Close is accelerated financial and
management reporting in pursuit of value
creation. This is achieved by the design and
implementation of a stable and focused closing
cycle with optimal use of available
technology..providing management with the key
financial information to enable proactive
management action
By rationalising existing processes, minimising
manual effort and increasing the use of
automation and technology, Fast Close
accelerates financial and management reporting
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Why Fast Close?

• All to often, we see so called one-to-one
  implementations
• Organisations replace poorly structured
  intergalactic spreadsheets with consolidation
  packages without improving the underlying
  process.
• In consequence, the cycle time is not shortened
  significantly.
• To cut the cycle time, one must look at the whole
  information flow from source data through the
  many steps to group consolidation.
• Consideration should be given to each step in the
  information flow
• Add value to the process?
• Are non value-added and can be eliminated? and
• Can be automated and performed by the system?

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What is Fast Close?

• Fast Close is a process methodology utilising
  current best-practice Financial, Close,
  Consolidation, and Reporting theory
• Fast Close combines working smarter throughout
  the month, and at month-end, with technology
  enhancements, in order to close sooner and with
  less overtime at month-end
• Fast-close focuses on improving discipline in the
  finance area and on standardising as many of the
  pre-close, close, consolidation, and reporting
  processes as possible across the various Business
  Units / Operating Entities
• Fast-close does not mean simply closing the
  period off earlier in the month

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What is Fast Close?

• Fast Close misconceptions
• Fast close is all about financial consolidation
• Only by using a single chart of account will
  companies improve their reporting process
• Operating units or Group Consolidation are the
  only focus of attention and will provide the
  majority of the improvements in a typical project
• Improvement can be achieved by closing prior to
  month end and rolling forward
• Improvements in reporting and closing processes
  are only possible if you spend money on IT
• If you report faster you are bound to be less
  accurate

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What is Fast Close?
Fast Close

• When is Fast Close required?
• Fast Close is usually required when
• There is a complex closing and consolidation
  process, e.g. multiple business units,
  multinational
• Different accounting standards need to be adhered
  to within the Group
• The need to re-engineer closing and reporting
  procedures have been identified, e.g. month-end
  deadlines are missed or deadlines achieved with
  extensive effort from Finance

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Fast Close
What is Fast Close?
Fast Close is not just the consolidation..
Accounts Receivable (Billing)
Accounts Payable Capex
Payroll
Inventory
Closing process
Consolidation
Inter-company
Accruals Provisions
Prepayments
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Why change?
There are a number of business drivers that are
forcing organisations to focus on Fast Close
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Benefits

Enhanced Finance Function
Motivated People
Improved Quality
Cost Reduction
Speed

• More timely processes
• Increased automation
• Routine activity rationalised
• Information is complete, integrated real time
• Finance shift
• Number crunching is minimised
• Analysis time is maximised

• Increasing efficiency
• Ongoing reduction in transaction processing
  effort
• Eradication of errors reduces cost of rework
• Global consistency
• A simplified/ streamline audit is enabled

• Continuous improvement culture emerges
• Regular, faster close traps errors, minimises
  quality issues
• One set of standards for group wide integrity
• Allows standard global processes
• Single version of truth facilitates confidence
  in decision taking

• Programme instils confidence
• Moves culture to can do
• Increased focus on value add content
• Improved job spec motivates postholder
• Skills and competencies broadened, deepened to
  aid delivery

• Finance can do more than the basics
• Forward looking business focus
• Enabler for greater breadth of duties
• Development of Finance Portal
• Finance seen to add value, support the business

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Fast Close encompasses all aspects of the closing
process
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Leverage your HFM implementation / upgrade

• Use your implementation to achieve the business
  objectives

Simpler
Better
Faster
is maximised
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Leverage your HFM implementation / upgrade
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Leverage your HFM implementation / upgrade

• Clear work streams
• Consolidation (Process Application)
• Submission (Interface, Process)
• Reporting (Application, Content)
• Identify Management Project Interventions
• Project working groups
• Management interventions monitored by project
• Communication
• Formal progress reporting
• Change agents

Project structure
is maximised
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Leverage your HFM implementation / upgrade

• Key principles
• Clear objective that business can measure
• Strong sponsorship
• Involve submitting entities/divisions/subsidiaries
  (WIIFM)
• Focus on all aspects of the objective
• Identify short term and long term interventions
• Short term interventions must achieve the target
• Long term interventions facilitates easier
  achievement of objective and nice to have
• The objective is sacred all other aspects are
  negotiable

Inspired
Motivated
Involved
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Fast Close Design 5 Guiding Principles

• Solutions must not affect any business units
  service levels or ability to deliver on their
  value proposition to clients
• Solutions must be designed within the context of
  the current or proposed new operating systems and
  ERP environment
• Solutions should not unnecessarily burden either
  finance or operating staff with additional
  month-end related activities
• The fast close deadlines must be achieved without
  a material decrease in the accuracy of financial
  data (a typical minimum accuracy target of 95 is
  usually established for month-end results)
• The fast close processes must standardise the
  month-end processes across the various business
  units

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Our Fast Close Project Approach 4 Phases
Phase 1 Mobilisation
Phase 2 As-Is Review
Phase 3 To-Be Design
Phase 4 Implementation
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Questions?
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Phase 1 Mobilisation
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Phase 2 As Is Review
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Phase 3 To-Be Design
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Phase 4 Implementation