How to Optimize Your Annual Close

For most of us, the New Year presents a fresh start. That’s not the case for Finance professionals whose fiscal year is coming to an end — they’re facing long days and weeks spent on the task of closing out 2020.

While closings may always involve some crunch time, they don’t have to be as arduous or protracted as they have been in the past. By leveraging tools that aggregate and automate financial data, Finance teams can reduce the time and manual effort spent closing the books. They can also move closer to a rolling close model that supports a more optimized year-end process. Here are some of the ways that can become a reality:

No More Ledgers: Consolidate Data Automatically

Many companies use separate systems for different departments and functions — such as HR, CRM, and ERP systems, and even spreadsheets. The data from all of these disparate sources somehow has to be united to complete annual closes, which typically is one of the most complicated and time-consuming tasks for finance teams at the year’s end. Solutions like consolidation-specific software can reconcile data from several systems, eliminating or reducing the need for manual processes. However, their cost tends to be out of reach for smaller companies, and their value for the investment is minimal since their use is limited to closings.

Tom Hood, CPA, CITP, CGMA, Chief Executive Officer, Maryland Association of CPAs, Inc., sees the value in the data. Looking back at 2020, he muses that he could have “accelerated the use of data analytics,” in areas such as “customer churn, share of wallet, and top sales by business line.” All of this data can be extremely valuable, but it can often feel overwhelming when it’s all taken together.

That’s why L. Gary Boomer, CPA.CITP, CGMA, Visionary & Strategist, Boomer Consulting, Inc., sees one important piece of advice when looking ahead to 2021. “Standardize and automate your processes,” he suggests. “There are apps that can assist, but it takes an exploratory mindset and the willingness to change. Those that learn and change faster than the competition will be the winners. Upskill and automate!”

CPM software offers a more efficient and affordable solution. With the ability to automate the process of pulling and combining data from multiple systems as well as reconcile it for intercompany eliminations, adjustments, and currency conversions, CPMs speed up financial consolidation for closings. This leaves Finance teams more time for year-end analysis and other important tasks. Plus, most versions are designed as comprehensive solutions to be used for budgeting, planning, and reporting, making them a useful time-saving tool year-round.

Let Computers Do the Work: Anomaly Detection with AI and ML

Sifting through data manually to locate suspicious transactions is increasingly impractical given the scale of information that most annual closings involve. Plus, rule-based methodologies tend to focus on outlying irregularities rather than medium-risk transactions, making this method inefficient in terms of quality as well as time. Relying on this method alone can put a company’s financial health at risk with inaccurate data and reports.

Cloud-based CPMs use artificial intelligence (AI) and machine learning (ML) for anomaly detection to comb through massive amounts of financial data more quickly, thoroughly, and accurately than humans can. In fact, AI analysis has been found from 10 to 30 times more likely to find anomalies and errors than rules-based systems.

The Anomaly Detection feature of Prophix’s CPM applies a mix of statistical modeling, rules-based testing, and ML to locate risks within data. It then applies algorithms based on industry best practices to categorize them by risk level. This gives the finance team more time to work on the resolution and also supports actionable insights that can lead to recommendations and process improvements. Essentially, AI shifts the grunt work to the machines so the humans can focus on higher-value work that benefits the business. And who wouldn’t want more time for that?

Better Planning for Easier Closings

Like all end-of-year rituals, annual closings present an opportunity to reevaluate processes and results to see where they can be refined and improved. In addition, they can provide insights into the company’s overall financial health and show where improvements need to be made. If the time it takes to complete your company’s year-end close is less than optimal, consider integrating these steps:

  • Bring in internal and external auditors early in the process. Involving audit committees at the beginning of year-end closings can provide fresh insights into your process, pinpoint potential problems you might have overlooked, and result in feedback to make closings more efficient.
  • Integrate tools and processes for better financial visibility and control. Improving financial management systems will help your company evaluate its ability to identify, react to, and respond to risks. Plus, when you have an effective system, you only have to analyze small sample sets of data for testing instead of large quantities of information — another efficiency that can optimize closings.
  • Develop a more robust reporting system. Creating processes for producing financial reports throughout the year supports efficient finance operations as well as the annual closing process by giving departments more visibility into their spending and budgets all year. This also allows departments to adjust allocation and priorities as needed, improving financial management overall.
  • Integrate a project management plan. Establish timelines, workflows, and responsibilities to manage the variety of tasks involved in year-end reporting and ensure accountability among team members.

Implementing these steps can help organize and streamline finance operations to get data and reports in order so that annual closings can be completed faster.

See More Benefits From Your Annual Closings

Manual processes and piecemeal software solutions are no longer sufficient to efficiently handle the scale of financial data that even small businesses must manage at annual closings. The automation and AI capabilities of a CPM can consolidate data and identify anomalies faster and more accurately than other systems, leaving Finance professionals with more time to focus on analysis and innovation.

By lessening the burden on team members, businesses may also choose to complete closeouts quarterly, further reducing the duration and effort of annual closings and providing ongoing insights that can lead to additional efficiencies and optimizations.

Learn how Prophix’s CPM can optimize annual closes as well as Finance management across your business: watch a demo today.



Your business is evolving. And the way you plan and report on your business should evolve too. Prophix helps mid-market companies achieve their goals more successfully with innovative, cloud-based Corporate Performance Management (CPM) software. With Prophix, finance leaders improve profitability and minimize risk by automating budgeting, forecasting and reporting and puts the focus back on what matters most – uncovering business opportunities. Prophix supports your future with AI innovation that flexes to meet your strategic realities, today and tomorrow. Over 1,500 global companies rely on Prophix to transform the way they work.