Controllers use many different tactics to speed up the close, but most of them find it challenging to shorten their close to fewer than seven days.
Most controllers are pursuing a close that's fewer than five days, but common tactics such as materiality thresholds do not always yield expected benefits. Gartner research suggests that controllers who struggle to shave time off their close are frequently held back by three common anchors.
Anchor 1: Materiality thresholds too low
If the materiality threshold is set too low, it will not eliminate enough work to see its benefits, and staff will spend too much time handling accounts that should otherwise be deprioritized. The reason why well-intentioned controllers frequently don't reach high enough thresholds is because they rely heavily on personal judgment and negotiation with business units when setting thresholds.
Remove subjectivity to reach high materiality thresholds. Controllers should use cost-benefit and risk analyses to more accurately assess which materiality thresholds for close inputs match the company's risk tolerance. This analytical approach (as opposed to reaching material thresholds through personal judgment and negotiation with the business) allows controllers to eliminate much more immaterial and low-value work from the close. This analytical backing also makes controllers' interactions with the business more productive since they can address fears that higher thresholds increase risk.
Anchor 2: Overly customized ERP
If the ERP is overly customized, a company likely is missing considerable efficiency gains from the best practices embedded in the software. Controllers often customize their ERP because they see their processes as unique to their organization and think these customizations will better match their controllership's processes. The problem with this approach is that it creates a "shadow-technology infrastructure" because the ERP becomes unwieldy, and staff begin looking for workarounds. When that happens, controllers may be reluctant to tell staff to stop their workarounds for fear of friction on the team. Controllers are better off selecting the technology that best meets their needs "out of the box."
Resist ERP customization efforts in order to maximize the benefits. The fastest-closing controllers match their process to their out-of-the-box modern ERP instead of customizing their ERP to match their processes. Modern ERP systems that have emerged in the last decade replicate best-in-class processes. Companies with a fast close recognize that consolidating all close work entirely within one modern ERP also disincentivizes staff throughout the organization from creating shadow ledgers or workarounds that slow down the close.
Anchor 3: Only using technology for transactional tasks
If controllers trust technology for just easy transactional tasks, they will not see a significant impact on reducing or eliminating low-value work. Gartner data shows that controllers who trust technology for only easy transactional tasks are only 3% more likely to have no low-value work than controllers who don't trust any technology at all. However, controllers who trust technology for both transactional and harder, judgment-based tasks are 24% more likely to have no low-value work than controllers who don't trust any technology at all. It is very tempting to only use technology implementation for transactional tasks, but doing so robs the controllership and its business partners of the opportunity to see bigger gains.
Start technology on the hardest challenges to build stakeholder trust. The fastest-closing controllers get senior leaders within finance and throughout the organization to trust technology solutions for the close by implementing tech solutions first on the hardest parts of the close instead of going for "quick wins." Controllers have seen firsthand how technology skepticism from even one senior business partner can hold back technology implementation in the close. Controller staff easily notice this technology skepticism from senior leaders, which encourages them to do more low-value manual work. Controllers may be tempted to use "quick automation wins" to build senior business partner trust and reduce low-value manual checking of work. However, trust in technology for low-value work does not actually reduce low-value work.
Because transactional activities were already easy and low stakes to begin with, senior business partners won't notice the benefits of applying technology to them. And if senior business partners end up finding minor errors in an "easy" activity done with technology, they will magnify them and question technology's benefits for a faster close.
Instead, controllers can win over senior business partners by starting technology on high-risk, high-scrutiny, judgment-based activities. These benefits have more potential to be noticed throughout the organization and can demonstrate clearer value gains, both of which drive trust in technology. Broader trust in technology reduces low-value work in the controllership. By building trust in technology for these more challenging activities, controllers will find it much easier to expand technology solutions to all activities within the close.
