The Reporting Automation Playbook for Private Equity Funds
Perfect Your Financial Closing with a Post-Close Review
Congratulations on making it through yet another financial close. Yeah, it could've gone a little smoother but, what's done is done, right? Before you put the experience behind you, however, let's postpone happy hour or your post-close weekend getaway for a few minutes and get a bit honest. Could the process have gone better? Doesn't it seem like you're always dealing with the same nagging issues every time your team tackles your closing?
Embark apologizes for being Debbie Downer when there are good times to be had, but your closing is too important to not take a better course of action. If you're feeling a tinge of guilt as you're reading this, it might be the subtle realization that your close process needs a bit of work. But don't fret, our friend, because it's nothing that a well-planned and consistent post-close review process can't handle. Stick around for a few minutes and we'll show you how something simple can pay dividends on your closing process from here on out.
The Post-Close Review for Beginners
Sometimes things are exactly as they sound. The post-close review is a post-mortem with your team that occurs within a few days of your closing. It's an opportunity to sit down with everyone involved and discuss what went right, what went wrong, and brainstorm on ways to improve your closing with more efficiency, speed, and accuracy.
Your review doesn't necessarily have to be long and drawn out. In fact, as it becomes more of a norm, you'll find the review sessions get more streamlined and insightful over time. Naturally, if your closing involved a notable event or significant transaction -- or anything else our handy close checklist can help you with -- there might be a few more things to discuss. However, the point to the review isn't to force your team into another dreary meeting, but to find ways to improve your closing and make everyone's lives easier.
While we touched on the post-close review when discussing reasons behind slow or inaccurate financial reporting, it's an important topic that often gets shoved aside and deserves a closer look. So on that note, let's go through what’s involved in a comprehensive and productive review, including a few best practices to ensure yours is as beneficial as possible.
Build Around a Consistent Framework
Whoever runs the show come closing time is usually the best person to lead the post-close review. Depending on the organization, that could be the CFO, Controller, VP of Accounting, or a few other titles. They should have insight into the full spectrum of your closing process and authority to lend gravity to the proceedings, just to make sure everyone takes the review as seriously as they should.
Once you have a ring leader in place, build your review around a framework that will provide both consistency and impact over time. While the specific factors to discuss might change from company to company, concentrate on the overall efficiency of your closing process at first, determining if it was as smooth and timely as it should have been.
Likewise, discuss any hurdles that might have come up along the way, both new ones and repeat offenders. This is a vital component of your review, allowing your team to address such issues and, perhaps more importantly, identify the root cause of each. Sometimes those causes can be as simple as needing to refine a control, whereas other times as significant as outdated technology or insufficient, misaligned talent. Either way, the only way to ensure a better closing next time around is to address those issues and find adequate solutions.
Throughout the meeting, most companies find it beneficial to seek multi-tiered feedback from the group, getting perspectives from different angles and levels rather than an isolated focus. Granted, this is easier said than done in larger companies where more people are involved in the closing. In those instances, managers can sit in for their team rather than having to rent the symphony hall down the street to hold your review. Remember, a communicative atmosphere serves the meeting and your closing process best, so encourage review meeting procedures that improve feedback and create an open dialogue.
Post-Close Review Best Practices
We understand we were a bit vague on the inner workings of a post-close review, but that's because they tend to be somewhat unique and specific to every company. However, since you likely already do something similar in other departments, use a format and review process that already works well for you, at least as you’re finding your post-close review sea legs. To get you up and running on the road to smoother closings, though, here are a few best practices that most companies find useful.
Timing Is Everything
You know the adage, don't put off till tomorrow what you can do today? Well, truer words have never been spoken when it comes to your post-close review. The sooner you hold your review, the better since both the process itself as well as any issues are still fresh in everyone's minds.
Get It On the Calendar
Depending on the circumstances and your company, different department heads and stakeholders could be involved in your closing process and, thus, your post-close review. Given everyone's busy schedules, it just makes sense to get the review on the calendar as soon as possible so everyone has plenty of advanced notice. Since attendance should be mandatory, don't give anyone an excuse for skipping out by saying they didn't know about it or couldn't fit it in.
To make sure the review goes smoothly, managers should come prepared to discuss any hurdles they experienced or deviations from their expectations. Obviously, this includes a list of things that went well along with any pain points.
As mentioned, a designated individual with authority over your accounting should guide the meeting to keep it on track and on point. Don't confuse authority with authoritarian, though, because the review is meant to be an open discussion, albeit a guided one. Ideally, your post-close review should be a targeted conversation that focuses on identifying, improving, and solving issues in your closing to make each closing better than the last.
Your first few post-close reviews will likely produce quite a few to-do items. Stay organized with a list of those items, assigning an individual with the follow-up and timeline to complete each task. In most companies, leaving those critical items open-ended is the same as burying them in the courtyard to be forgotten. Also, make sure someone is assigned to take minutes for the meeting itself, tracking which individuals are tasked with particular follow-up items.
Final Thoughts from Embark
Your financial closing is too important to not give it proper attention. Don't let your post-close review get brushed aside for the inevitable big projects and surprises that arise during standard operations. Likewise, the post-close glee that engulfs your team after every closing should never take precedence over your review meeting.
If you're diligent and consistent with your reviews, it will soon become a part of your management strategy and culture. Also, your review isn't just about identifying what went wrong, but an affirmation of your successes as well. If your closing was smooth as silk with no hiccups or delays, don't cancel your review meeting but, instead, use it as an opportunity to commend everyone on a job well done and recognition for good work. Ingraining those moments of celebration into your processes and culture will improve your office environment, job satisfaction and, ultimately, your post-close process. Now, how's that for full circle?