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        Ventana Research Releases Dynamic Insights Research on the Smart Financial Close

        Market research identifies key insights and best practice recommendations for organizations

        Ventana_Research_Smart_Financial_Close_Dynamic_Insights_LogoVentana Research today released its latest market research on the Smart Financial Close. We undertook this research to determine the current state of the financial close process and gain insights into how organizations can shorten the process and the benefits they are looking to achieve by doing so. Completing the financial close quickly has long been an objective for finance and accounting departments. A faster close enables them to respond more rapidly to changing business and economic conditions, providing more time to analyze results, address costs as needed and free up personnel for other duties. However, in more than a decade of tracking this metric, our research has found slow progress in departments’ performance. 

        There has been general agreement since at least the 1990s that organizations should be able to perform this task within a business week. Our research has consistently shown that companies with very similar characteristics (measured in terms of revenue, number of employees, location and industry) vary considerably in the number of days it takes them to complete their accounting cycle. The lack of connection between the structural conditions of a corporation and the time it takes to close the books suggests that the obstacles to a faster close are not innate but the result of poor process design and execution, insufficient automation of the process as well as choices made by finance executives. One of those choices is deciding — for whatever reason — not to close sooner.   

        The key finding of the research is the lack of progress in accelerating the monthly close and the retrogression in the time it takes to complete the quarterly close compared to research conducted in 2019. This suggests that although finance and accounting departments were able to rise to the challenge of disruptions and have been investing in digital transformation, the impacts of those investments have yet to be reflected in how soon they perform their monthly close. We find that 58% of participants are able to complete their monthly close within six business days compared to the 60% that we recorded in our Office of Finance Benchmark Research in 2019, a statistically insignificant difference. At the same time, the research also shows a smaller percentage of organizations are able to complete their quarterly close within six business days: 44% in 2023 versus 49% in 2019. This metric is in line with our previous Benchmark Research finding in 2014. The quarterly close is more rigorous and requires a broader set of processes, and it is likely that many departments that depend on manual processes find their close takes longer when people are not working in face-to-face conditions. 

        "A key challenge facing CFOs today is boosting the productivity of their staff,” notes Robert Kugel, Executive Director and Head of Business Software Research at ISG-Ventana Research. Many accountants left the profession over the past four years and fewer college graduates are choosing accounting careers. The accounting close is a reliable indicator of departmental productivity. Enterprises that take more than a week to complete it should investigate how technology can support process improvements to increase productivity and shorten the close. 

        The research shows that too few organizations use software automation in their process. Only 33% automate most or all of their financial close with workflows and 31% automate most or all of their reconciliations. The findings confirm that the ability to close sooner is correlated with the use of software automation tools: 54% of companies that use workflows to manage the process are able to close their quarter within six business days compared to 21% that use some automation or none at all. Perhaps one reason for this is that workflows help those administering the process to ensure tasks are started and completed on time, supervisory work is conducted on schedule, and procedures are performed in a consistent fashion. Programmed workflows enable administrators to manage by exception, providing them with more time to concentrate on things that require their experience and judgement. Another reason is that there tend to be fewer inconsistencies take place. Only 27% of those who use workflows for all or many of their processes said that they are forced to wait a noticeable amount of time for others to complete their tasks before performing theirs, compared to 47% who utilize little or no automation. 

        If you are interested in learning more about this dynamic insights research, you can view a summary of the report here. For information on how to use this research in your organization, or to purchase a copy of the research report, please click here. 

        About Ventana Research 

        Ventana Research has the most authoritative and respected market research and advisory services in the software industry and is now part of ISG. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops, and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information, and technology across business and IT functions in every industry. This benchmark research plus our tracking of thousands of software providers means we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost, and risk. 

        Ventana Research provides the most comprehensive analyst and research coverage of software providers in the industry; business and IT professionals worldwide are members of our community and benefit from Ventana Research’s insights, as do highly regarded media and association partners around the globe. Our views and analyses are distributed daily through blogs and social media channels including Facebook, LinkedIn, and X (formerly Twitter). To learn how Ventana Research advances the maturity of organizations’ use of information and technology through benchmark research, education, and advisory services, visit www.ventanaresearch.com.

        Share this: News: Ventana Research releases Dynamic Insights Research on the Smart Financial Close. Read the full release here: https://bit.ly/3MN6fWa #CFO #Finance #Accounting #SmartClose #OfficeofFinance #Business #IT

        Media: Interviews available upon request.

        Media Contact: marketing@ventanaresearch.com 

        Ventana Research

        Ventana Research

        Ventana Research, now part of Information Services Group, provides authoritative market research and coverage on the business and IT aspects of the software industry. We distribute research and insights daily through the Ventana Research community, and provide a portfolio of consulting, advisory, research and education services for enterprises, software and service providers, and investment firms. Sign up for free community membership to receive email notifications on research and insights.

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