The financial performance of your business is one of the pillars of a sound business and a primary component of what makes your business attractive to others. Increased profitability demonstrates solid management and creating repeatable processes helps you achieve greater profitability.
An important area of any business is the process you use for financial closing. Last week, Proformative and Host Analytic hosted a webinar on Leveraging Technology in the Financial Close. While the webinar target audience may have been larger companies and corporations the best practices shared during the presentation are also valuable to small business.
The presentation laid out the basic steps that most businesses go through in order to close their books: Collect Data – Close – Adjust – Report – Analyze.
Chances are those steps are very close to what your business does today. While the process is important, the last step holds the key to improving your business and reaching greater profitability. The analysis of financial information and making decisions from that information are at the core of sound financial management.
Technology, usually in the form of software applications, allows small businesses to execute the closing process with greater speed and accuracy, which provides more time for in-depth analysis and decision making.
The webinar provided the following 8 best practices that will help your business close faster, have greater process control, and increase the integrity of your financial systems.
- Book of Record: Establish a book of record for your financial results. This encourages a more formal financial close process.
- Chain of Ownership: Establish and understand the ownership of financial results. This will increase accountability.
- Automate Workflow: Establish standard and automated workflows that help you adjust and perform proper closing. If you are closing using a manual process determine which elements could be automated.
- Apply Business Rules: Document and establish rules in your technology and tools that allow consistent execution.
- Verify Information Accuracy: Determine the method by which you will verify the close information and automate as many of these as possible.
- Audit Trail on Book of Record: Define and adhere to an Audit Trail, which will increase the integrity of your financial results and protect your business.
- Automate Reporting: Establish both standard and ad-hoc reports, which will provide summary and detailed information.
- Automate Management Reporting: Establish a set of management reports that will be used to manage the business and make decisions.
These 8 best practices will help your business close faster, increase accuracy, help to ensure financial integrity, and hopefully decrease the stress and frustration of your closing process. The webinar can be viewed here. (registration on the Proformative web site is required – don’t worry it’s free.)
Creating a sellable business requires a range of strategies aimed at making your business attractive to others. Growth and Profitability are two areas of Sellability that often are the first to be analyzed. Implementing systems, like a standard close process, help business owners gain greater control and reduce business risk
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