Any savvy chief financial officer knows the monthly close can be a reliably tough task. They also know the close requires tight controls, which aren’t always easy to come by.
The monthly close is an uphill climb. 92% of CFOs say they’re not “satisfied” with the quality of their firm’s month-end close process in a recent Trintech study.
Some company finance specialists say a big key to a successful monthly close is injecting a healthy dose of artificial intelligence and machine learning into the process.
In a recent research note for CFO Dive, Tony Klimas, president of Horváth US, a global management consulting firm based in Atlanta, Georgia, says CFOs are already seeing “the writing on the wall” with the monthly close are turning to technology to boost process efficiency.
Klimas cites a recent Gartner survey showing that 45% of executives say the buzz over OpenAI’s ChatGPT “prompted them to increase investments.”
Additionally, his own company’s analysis shows “that it’s possible to automate more than 70% of the typical closing process.”
“This can free up time for finance staff to focus on value-added activities such as decision support and commentary,” Klimas notes. “Additionally, these new technologies can also reduce the overall size of teams focused on closing the books.”
CFOs and accounting team leaders who leverage “first-level” digitization technologies, such as business intelligence (BI) tools that feature AI and ML code, can gain a big advantage with their monthly closes.
“BI technology can enable companies to quickly and accurately access, tabulate, analyze, and visualize accounting data, as well as provide business leaders with critical insights that can inform decision-making and drive process improvements,” Klimas says. “BI technology can also help organizations identify areas for further optimization of accounting functions and track the impact of their efforts over time.”
By linking AI tools to the monthly close, CFOs can merge different information technology systems and applications. That, Klimas says, “helps companies eliminate silos within accounting departments, such as accounts payable, accounts receivable, inventory management, and payroll, to name a few.”
Additionally, better data sharing and collaboration “can lead to more streamlined processes and faster decision-making,” he adds.
In the past 20 years or so, monthly closing process shifts have come more by evolution than revolution. That evolution is fueled by the increased and adept use of AI and ML, which transforming the monthly close and making it more simple, highly automated, and efficient, Klimas says.
“The monthly close should not be a laborious effort, and companies taking advantage of the latest technology can now make it a value-added activity in addition to freeing up time to work on strategic initiatives,” he notes.
Brian O’Connell, a former Wall Street bond trader and best-selling author, is a prominent figure in the finance industry. With a substantial background as an ex-Wall Street trader, he has authored two best-selling books: ‘The 401k Millionaire’ and ‘CNBC’s Creating Wealth’, demonstrating his profound knowledge of finance and investing.
Brian is also a finance and business writer for esteemed national platforms and publications, including CNN, TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, and Fox News.
