Fast Close – Business Drivers
Fast close benefits those who are able to achieve it by providing faster and reliable reporting. In addition there are several other business drivers behind Fast Close,
(a) Competitive Advantage
Fast close ensures faster reporting and that reporting data is transparent and reliable. Reporting is a controlling and monitoring tool to run businesses more efficiently. Instead of spending time on preparing the report, fast close provides more time for data analysis and decision making. In today’s context, faster decision making is a big competitive advantage.
(b) Stakeholder Trust
Periodicity of external reporting has undergone a paradigm shift over the years. Stakeholders take the Quarterly reports more seriously compared to a few years back when annual statements were considered significant. After so many named and famed corporate debacles, Stakeholders are increasingly looking at financial numbers, qualitative information and even the time frame in which they get this information. Faster and reliable availability of data not only empowers the stakeholders, but it also helps in establishing trust. Timely reporting is considered an indicator of a good corporate governance practice.
(c) International Accounting Standards
US GAAP, IFRS and even the local GAAP requirements are very stringent in terms of the timelines in which the quarterly filing needs to be completed. These statutory requirements build a strong case for Fast close and have associated penalties for non-compliance.
(d) Sarbanes- Oxley
Sarbanes-Oxley has strong emphasis on the data reliability and transparency of processes. Fast close ensures this with a strong emphasis on data validation using audits.
Fast close sounds beneficial and definitely has a business case for it. However, most of the corporations today take more than a week for financial close. Theory is often simple compared to implementation. There are many business challenges that make fast close a snail close. But then there are accelerators provided by SAP to overcome these challenges. I will discuss these in more detail in my next Blog.
