PUBLISHER: QKS Group | PRODUCT CODE: 1445898
PUBLISHER: QKS Group | PRODUCT CODE: 1445898
Quadrant Knowledge Solutions Reveals that Financial Close Management Market is Projected to Register a CAGR of 17.50% by 2027.
The financial close management process is an important segment of the accounting process that allows organizational stakeholders to gain an accurate view of the organization's financial landscape. However, like all accounting processes, it can suffer from challenges like the presence of financial data at multiple locations, lack of documented protocols to handle accounting data, insufficient knowledge to handle automation solutions, lack of a centralized system to store accounting data, and fast-moving nature of reconciliation process that results in errors in manual handling. Therefore, vendors in the market are providing solutions to automate the end-to-end financial close management process. They are further enriching their products with emerging technologies such as AI, ML, big data, and cloud to reduce the burden on the accounting teams and generate error-free financial reports.
The financial close management process covers the documentation of transactions, reconciliation of accounts, documentation of monthly journal entries, reconciliation of balance sheet accounts, evaluation of accounts, preparation of financial reports, and closing system. The financial close management software offers a centralized system that enables the account departments to extract transaction data from all disparate systems and manage the month-end close timeline appropriately. The process then follows the reconciliation of subsidiary ledgers with the general ledgers, where the software integrates with all programs to accelerate the process of capturing, reconciling, recording, and matching transactions. The process then moves towards automation of documenting recurring journal entries and their archiving in a repository to simplify the process of entry matching and reconciliation. The next step of this process deals with the reconciliation of balance sheet accounts, where transactions are matched with bank statements along with the closing balance of that concerned account. The financial close management software automates the process of extracting account data, matching it with bank statements, and reconciliation of cash accounts to detect errors and streamline the cash flow in the organization. The process then moves towards evaluation, where the financial accounts are reviewed by the management. Financial close management software understands the importance of internal control and provides automation solutions for streamlining this step and providing visibility and access to the end-to-end accounting reconciliation process. The preparation of financial reports deals with the creation and maintenance of documents containing financial statements that are properly reconciled. The financial close management software facilitates an automation solution for the entire step of compiling accounting data to denote the close of the accounting period within the system.
The financial close management process deals with some of the major accounting challenges at the organizational level. Some of the common financial close process challenges consist of the presence of financial data at multiple locations, lack of documented protocols to handle accounting data, insufficient knowledge to handle automation solutions, lack of a centralized system to store accounting data, and fast-moving nature of reconciliation process that results in error in manual handling. The importance of this process and its continuous occurrence within the organization has resulted in vendors focusing more on resolving these issues by utilizing emerging technologies such as AI, ML, big data, and cloud to enrich their offerings. The financial close management software enables the accounting team and financial departments to automate the end-to-end financial close management process to overcome these challenges and allows them to focus more on strategic decisions rather than handling manual work. A few suggestions for improving the financial close management process include frequent reconciliation of accounts within the month, development of standard operating procedure with detailed instructions, expectations, & responsible parties, and an increase in time to review the closure process.
Quadrant Knowledge Solutions defines Financial Close Management as "A process of recording, verifying, adjusting, and closing of financial transactions at the end of a designated time period to produce financial reports denoting an organization's financial status." The Financial Close Management software automates the entire record-to-report process, comprising transaction recording, matching of statements with account data, consolidation of financial results, closing the books, reporting as per the requirement of the finance department, and suggestions for the current & future financial year.
Automation and the use of Artificial Intelligence: Utilization of automation tools & AI for automating the process of automated journal entry creation, account reconciliation & report is becoming increasingly prevalent in financial close management software.
Real-time collaboration & visibility: Vendors offering financial close management software are implementing real-time collaboration tools to improve collaboration between finance teams and other departments of organizations and achieve better communication and visibility into status updates, task assignments, and task completions.
Mobile Apps: Vendors are developing mobile applications that allow finance professionals to access & manage financial close processes on the go and provide real-time visibility into financial close processes through mobile applications.