The most intractable issues that face finance departments are those that "everyone" knows must be addressed, yet somehow never are. From the results of Ventana Research's newly completed benchmark research "Trends in Developing the Fast, Clean Close," it appears that the financial close falls into this category. This is especially true for companies that take more than five or six business days (essentially one business week) to complete their monthly, quarterly or, for those that publish their financial statements only twice yearly, semiannual close.
Our research shows that in general there has been no progress in achieving fast closes. Indeed, we found that there's actually been some backsliding over the past five years, and even since our initial research on this subject in 2004.
For many years completing the financial close within five or six business days after the end of the period has been accepted as a best practice. With that has come the expectation that finance organizations that take longer should work to reduce their closing intervals. But the recent update to our benchmark research on the closing process (last done in 2007) found that many have not gotten there. This latest research actually shows that many companies are taking longer to close today than they did five years ago. Whereas then nearly half (47%) were able to close their quarter or half-year period within six business days, now just 38% can do so. Similarly, five years ago 70% of companies were able to complete their monthly close in six days; today only half can.
To be sure, closing quickly still gets lip service: The research confirms that most companies (83%) view closing their books quickly as important or very important. Yet far from making progress, the results show slow closers are regressing.