The Push Toward "Proactive": A Month-End Close Maturity Model

Stage 3: Automated

Naturally, once a close process has been clearly documented, inefficiencies become clearer.

The next stage in maturity requires a concerted effort to automate manual work across the close process by evaluating all components of the close for possible efficiency gains. 

While arriving at the Documented stage consisted of creating a clear month-end checklist, the focus of the “Automated” stage is eliminating the manual work involved in as many of the checklist tasks as possible.

This stage heavily relies on a strong accounting tech stack and typically translates to a faster close with greater accuracy, even as the company scales and accounting headcount remains constant.  Team members increasingly shift from “preparer” to “reviewer” roles, with automation across the tech stack taking the first pass at manual tasks.

Core Characteristics of the Automated Stage

• ERP integrations with core tools, like those for payroll, payment processing, or AP reduce manual data entry across the month and streamline month-end accuracy checks
• Controls are validated with a systems audit report, instead of a manual compensating control 
• Reconciliations are all housed in a central location, integrating workpapers and ERP trial balances, and recons are auto-submitted or simply reviewed 
• OCR is used to scan bank statements and large documents, automatically pulling key balances used for reconciliation or other workflows
• Adjusting journal entries are drafted on auto-pilot for review and posting by team members
• Prior periods are automatically monitored for any shifts and team members are notified of changes to investigate 
• Discovery work in Excel is cut to a minimum with exact transactions flagged since accounts were last reconciled 
• AI-handles the first pass at scanning every transaction and identifying key drivers of change in flux explanations
• Recurring tasks, like emails for legal accruals, have been automated each month

Key Value Provided at the Automated Stage

With a compressed close timeline, the accounting team increasingly spends more time on analysis and pulling insights from underlying data. Flux explanations provide a clear portrait of material changes in the business and reporting is reliable, actionable, and fast enough to inform a larger array of business decisions. 

With less time spent on manual, recurring tasks, the accounting team is now able to provide real line of sight into business operations and has the bandwidth to tackle special projects that move the business forward, like research into tax implications or partnering on a redesign of the sales commissions structure. 

At this stage, the team is starting to be seen as true strategic partners to the business.

How to Progress Beyond the Automated Stage

The close is in good shape by this point and investments in documentation and automation are paying off with accurate, timely, and audit-ready financials. Progressing to the next stage requires focusing in two areas: pre-close workflows and relationships outside of the finance team.

Again, using the starting point of your month-end checklist, begin by identifying where an ongoing check would reduce time spent during month-end. For teams on Numeric, this typically involves putting in place their first set of transaction monitors to catch items like transactions without a vendor or where JEs were booked to specific accounts. The focus is largely on flagging transactions that may be anomalies in real-time. 

On the relationships front, a proactive close involves a high amount of collaboration with teams outside of finance to provide the business with actionable insights. Invest in understanding what insights from financial data would enable better decision-making, who on the team is the best point of contact to deliver those insights to, and the cadence of reporting needed for that specific department.  

Stage 4: Proactive 

The final stage of close maturity is documented, automated, and increasingly proactive with the bulk of the traditional “month-end” close being completed in real-time.

The close is also proactive in the level of integration with the business — every close relays clear insights into what is happening with the business, department-level analytics to drive decision-making, and conversations with core stakeholders that translate financial data into improved operations. 

Ultimately, at this phase the significance of “month-end” reporting actually begins to decline – at nearly all times the accounting team is able to pull meaningful reporting and provide a snapshot of the business’ health. The month-end close exists to drive a higher level of accuracy and proper controls, but financial data is actionable at nearly every moment.

Core Characteristics of the Proactive Stage

• Transactions are continuously and automatically flagged when missing key fields, like vendor, or when tagged to the wrong account using ongoing monitoring
• The accounting team elevates key anomalies, areas of concern, or growth opportunities across the month the moment that trends become apparent to the leadership team
• Beyond a month-end package, the accounting team is committed to deliverables and reporting that align largely with when those insights are most helpful for the business — at nearly all times the team could run a P&L with an actionable level of accuracy 
• FP&A and accounting workflows are intertwined, with a month-end process that is “modular”, core accounts are passed over to FP&A first to enable timely analysis 
• Reporting at month-end includes practical insights on what was learned about the business 

Key Value Provided at the Proactive Stage

At this stage, the value of the accounting team is clear — the team acts as strategic advisors to the business, informing decision-making with strong financial data. 

The accounting team is integrated into the business, playing a role in navigating conversations on finance implications for acquisitions, new product rollouts or pricing models, or shifts in compensation structure. With stronger real-time financial data, the business is now able to make mid-month pivots (ex. Advising to up marketing campaign spend after analyzing revenue performance), without the delay of month-end reporting. 

At this stage with far less time spent on manual closing activities and more work shifted across the month, the lines are blurred between the FP&A and accounting teams, with the entire department focused on explaining the “why” and implications of financial data. 

The accounting team consistently has time to benchmark performance, ask for vendor discounts, and tackle technical accounting or tax projects with material impact. 

How to Use The Month-End Close Maturity Model 

In producing the month-end maturity model, our goal is to provide accounting teams with shared language and a framework to drive continuous improvements in their month-end close. 

For Controllers or CFOs, use the model as a lens to pinpoint where your team stands and chart the path to a stronger month-end close.

• Leverage the framework when starting a new position to quickly gauge month-end maturity and inform your first 30-60-90 plan as a new Controller.
• Share the model with your team — is the entirety of the accounting team aligned on your current stage? 
• Use the model as a reflection tool to inform quarterly or annual goal setting and planning:
  
  • What would need to change for you to confidently claim that your team had advanced to the next stage?  
  • What areas of the close are perhaps behind the sophistication of other steps? Ex. AP is well organized and automated where possible, but flux analysis consistently takes 4+ days
  • What are concrete steps that if taken inch your team closer to a more mature close process? 

Additional: The Close Maturity Scorecard

For the most thorough evaluation of your close process, consider layering the maturity model with our financial close scorecard. 

This scorecard provides evaluation criteria for eight distinct categories, all of which we formed after speaking with accounting teams about their internal close KPIs. They are as follows:

• Data readiness
• Process clarity
• Controls & accuracy
• Close speed
• Exception management
• Business insight
• Team sustainability
• Continuous improvement

To use the template, score your team’s performance for each category using a 1-7 Likert scale where 1 = Strongly disagree; 2 = somewhat disagree; 3 = slightly disagree; 4 = neutral, and so on and so forth.

By measuring progress via the scorecard, it’s easier to assess if your team seems to be moving up in the month-end close maturity model as well.

The Month-End Boost: How Numeric Can Help

Numeric works with accounting teams across the close maturity model to implement well-documented, automated, and proactive month-end processes with close automation software. 

For teams looking to take their close maturity from “Ad Hoc” to “Documented”

Get started with Numeric’s close checklist, a project management tool purpose-built for accounting teams. There, you can organize your month-end close process, map out dependencies, and provide full visibility on the status of your close.

With Numeric’s AI Insights, you can also generate exec-ready reports of close performance to-date and see which tasks are moving slower than usual versus prior periods.

For teams looking to take their close maturity from “Documented” to “Automated”‍

Numeric enables teams to automate reconciliations, leverage AI for flux analysis, and reduce the manual work involved in their month-end close. 

Cash reconciliations, one of the most tedious workflows in accounting, can be automated by 90+% using Numeric’s Cash Management tool. Teams like Brex rely on Numeric’s cash tooling to automate JE posting, match 90+% of their cash accounts, and sync up to each of their hundreds of bank accounts.

For teams looking to take their close maturity from “Automated” to “Proactive”‍

Numeric empowers accounting teams with real-time transaction monitoring to flag anomalies and ensure compliance with accounting policies. With flexible reporting and search tools, teams use Numeric to quickly elevate insights to the business and integrate more closely with the FP&A function.  

Interested in exploring how to uplevel the maturity of your close process? Schedule a conversation with our team.