Financial Close Statistics 2024 – Everything You Need to Know

• Though the rate of business failure in the first two years is around 20%, it doesn’t mean that you have to fail. ^[1]

Financial Close Latest Statistics

• According to one study, companies that use spreadsheets extensively take an average of 8.2 days to close, while those that automate most tasks take about 6.2 days. ^[2]
• One of the biggest findings from the report was that 90% of the responding organizations struggled with challenges in their financial close process. ^[0]
• However, 44% of participants also admitted that they experience data errors from manual tasks that hinder the accuracy of their reporting. ^[0]
• However, the Forrester research found that CFOs spend less than 13% of their time per workweek on matters concerning business strategy. ^[0]
• In contrast, almost 40% of time is wasted on low value tasks like cleaning or processing financial information or even searching for relevant financial information. ^[0]
• 80% of respondents said that AI will play a large or central role in their organization’s next wave of financial management technology. ^[0]
• Most businesses are currently struggling to do so, with 87% of finance professionals working overtime during the financial close, demonstrating the lack of efficient procedures in place. ^[3]
• Best performing companies can reduce the time spent preparing, reviewing and approving tasks and activities, resulting in a 40% reduction in the number of days required to close and consolidate. ^[3]
• 66% of finance professionals say they have no time for analysis. ^[3]
• With up to 88% of spreadsheets containing errors, automation removes this risk, protecting a business’s integrity and continued growth. ^[3]
• On top of that, 73% of finance professionals rate manual, spreadsheet intensive processes to be the biggest pain point in their R2R process. ^[3]
• Of the 2,300 organizations that answered this survey question, the bottom 25% said they need 10 or more calendar days to perform the monthly close process. ^[4]
• The top performers, or the top 25%, can wrap up a monthly close in just 4.8 days or less about half the time of the bottom 25%. ^[4]
• 0 seconds of 1 minute, 38 secondsVolume 75%. ^[1]
• Through research, planning, and flexibility, you can avoid many of the pitfalls of a new business and be a part of the 25% that make it to 15 years. ^[1]
• 87% said they worked overtime during the financial close process, according to a survey by Adra. ^[5]
• 60% said stress levels rise during the month end close, according to survey by FloQast, and. ^[5]
• Three fourths of the FloQast respondents said they are not fully confident in the accuracy of their last close, and 55% in the Adra survey said they trust 100% in their reported numbers. ^[5]
• For example, 90% said two years ago that they were under pressure to close faster, compared with 78% in the current Adra survey. ^[5]
• In 2013, 39% were satisfied with the quality of the close process, and that satisfaction now stands at 46%. ^[5]
• The time to complete the close has dropped some over the years 29% need at least seven days to complete a month end close, down from 33% in 2013. ^[5]
• In the FloQast survey of 259 who had responsibility for month end close, 71% said their process was “tribal knowledge,” where individuals know processes and personally pass along information as needed, instead of documented. ^[5]
• Many (73%) are still operating in a manually intensive, spreadsheet driven system that limits or takes away entirely any time for analysis (66%). ^[5]
• In that survey, 84% said they would prefer the financial close process to take up less time that could be devoted to more strategic financial projects. ^[5]
• Other top obstacles cited in the Adra survey are Coordinating and getting information from other departments (54%). ^[5]
• Not enough resources to manage workload (31%). ^[5]
• New, lower Form 1099 K threshold prompts cautions, criticisms IRS explains which meals qualify for temporary 100% expense deduction How accounting firms deal with hybrid working How CPA financial planning firms can move forward. ^[5]

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Reference

1. trintech – https://www.trintech.com/blog/2020/10/6-key-insights-from-forrester-consultings-2020-global-financial-close-report/.
2. investopedia – https://www.investopedia.com/financial-edge/1010/top-6-reasons-new-businesses-fail.aspx.
3. netsuite – https://www.netsuite.com/portal/resource/articles/accounting/financial-close.shtml.
4. accountancyage – https://www.accountancyage.com/2018/03/22/six-benefits-automating-financial-close/.
5. cfo – https://www.cfo.com/accounting-2/2018/03/metric-month-cycle-time-monthly-close/.
6. journalofaccountancy – https://www.journalofaccountancy.com/news/2017/may/overtime-stress-common-during-month-end-close-201716585.html.

How Useful is Financial Close

One of the most significant benefits of financial close is the assurance it provides to stakeholders. Investors, creditors, and regulators rely on financial statements to assess a company’s financial health and performance. By following a rigorous financial close process, companies can provide transparent and accurate financial information that instills confidence in stakeholders. This transparency is crucial for maintaining trust and credibility, which are essential for long-term success.

Moreover, financial close also enables companies to identify and rectify errors or discrepancies in their financial records. By reconciling accounts, conducting variance analysis, and performing financial audits, organizations can pinpoint inaccuracies and take corrective actions promptly. This not only contributes to the reliability of financial statements but also helps in driving financial efficiency and compliance with accounting standards.

Financial close is also instrumental in facilitating effective decision-making. Timely and accurate financial information allows management to assess business performance, identify potential risks, and formulate strategies for growth and profitability. Without a proper financial close process, companies may operate in the dark, making decisions based on incomplete or unreliable data. In today’s fast-paced business environment, speed and accuracy are paramount, and financial close plays a crucial role in delivering both.

Another aspect to consider is the impact of financial close on operational efficiency. By streamlining processes, automating tasks, and eliminating manual errors, organizations can reduce the time and resources required for closing financial books. This not only enhances efficiency but also frees up valuable resources that can be redirected towards strategic initiatives. In an increasingly competitive business landscape, companies must strive to do more with less, and an efficient financial close process can significantly contribute to achieving this goal.

Furthermore, financial close is not just a regulatory requirement but a critical management tool. It serves as a barometer of a company’s financial health, enabling management to evaluate performance, track key performance indicators, and make informed decisions. By closing the financial books accurately and efficiently, companies can better understand their financial position, cash flow, profitability, and liquidity, allowing them to navigate challenges, seize opportunities, and achieve long-term sustainability.

In conclusion, financial close is an indispensable process for any organization seeking to maintain financial integrity, transparency, and efficiency. While the effort and resources required for financial close may vary depending on the size and complexity of the business, the benefits far outweigh the costs. By prioritizing an effective financial close process, companies can enhance stakeholder confidence, drive decision-making, improve operational efficiency, and ultimately maximize long-term success.

In Conclusion

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