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        Robert Kugel's Analyst Perspectives

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        Data Plays a Key Role in the Close-to-Report Cycle

        Ventana Research recently completed an update to our last benchmark research on the financial closing process. It shows that many companies are taking longer to close today than they did five years ago. Whereas nearly half (47%) were able to close their quarter or half-year period within six business days five years ago, just 38 percent are able to do so in our latest benchmark. Similarly, five years ago 70 percent of companies were able to complete their monthly close in six days; today only half can. The research confirms that most companies (83%) view closing their books quickly as important or very important. Participants acknowledge that they can do better, saying on average that their company can cut at least two days from both the monthly and quarterly closes. Moreover, the longer it takes their company to close, the more time participants think they could save.

        Although the emphasis of the research was on the accounting close cycle, this is just the first, albeit critical step in the overall close-to-report process, which includes internal financial reporting, management reporting and external financial and regulatory reporting for companies contractually obligated to present periodic financial statements (to, say, lenders or lien holders) or statutorily required to file with a regulatory body, such as the United States Securities and Exchange Commission (SEC), the Canadian Securities Administrators (CSA) or the U.K.’s Financial Services Authority (FSC). Typically, when timely completion of a company’s close-to-report cycle fails, it is held back by process issues, software issues or data issues. Let’s focus on the last one.

        Our research consistently shows that data is a persistent – if often hidden – issue affecting how well companies execute core business processes. Typically, the data issue is proportional to the size of the organization because of systems complexity. The issue is exacerbated because people in business (rather than IT) roles usually don’t recognize that a root cause of an issue is the quality, consistency or accessibility of data (or some combination of each). Substandard data quality, consistency and accessibility have measurable impacts on the time it takes to close because the errors or conflicts they cause take time to resolve. Companies in our research that have very significant issues in these areas said they could close their books three or more days sooner if all errors were eliminated.

        Technology can contribute to a data problem in closing, too, especially when it is the desktop spreadsheet. Decades of research show that desktop spreadsheets are notoriously error-prone, even when used by skilled finance professionals and even when the spreadsheet has been rigorously audited. Our current research reveals that the heavier the use of spreadsheets in the close, the more time participants believe their company could save if all errors were eliminated. In fact, those that are substantial users of spreadsheet estimate they could save half again as much time compared to those that use them only for one-time events or complex calculations (1.7 days vs. 1.1 days).

        Instead of spreadsheets, we recommend use of dedicated consolidation software; half of companies that use it complete the close within six days. And a good way of dealing with dispersed data sources is having a centralized data warehouse for all financial data. The benchmark shows that 70 percent of participants have one, and comparing the results of companies that have a warehouse with those that do not, I estimate that the former complete their quarterly or semiannual close one day sooner than the latter and their monthly close half a day sooner.

        Data issues also confronts companies in the post-close reporting process. Almost all external and statutory filings and even some internal management and financial statements incorporate both text and numerical data. Much of the financial data comes from enterprise software such as ERP or a consolidation package. However, these reports frequently include information that a company keeps in spreadsheets as well. For accessibility and accuracy, it’s important to minimize the use of desktop spreadsheets by, say, having a central data warehouse and importing nonfinancial data (such as lease information or production data) or information that a company does not collect in its ERP system (elements of executive compensation, for instance) into this repository.

        Speeding completion of both the accounting cycle and accurate reporting of results depends on having accurate and complete data in a timely fashion. Companies that take more than five or six days to close their monthly or quarterly (or semiannually in much of Europe) books should investigate whether there is a data dimension they need to address to speed up their closing and reporting. For internal reporting, speed is important because it enables providing financial and managerial analysis to executives and managers so they can respond to opportunities and threats sooner. For external reporting, closing faster gives a company more time to prepare analyses, compose documentation and narratives and review the filings before deadlines.

        Our research shows that while some companies are able to close within a business week, half or more are taking longer. The latter have the same basic characteristics as the former, being in similar businesses of similar size with similar organizational complexity. They have similar IT environments. Yet some succeed in closing measurably faster. There may be many reasons why a finance department takes more than a business week to close but no good ones for letting it continue.


        Robert Kugel CFA – SVP of Research


        Robert Kugel
        Executive Director, Business Research

        Robert Kugel leads business software research for Ventana Research, now part of ISG. His team covers technology and applications spanning front- and back-office enterprise functions, and he personally runs the Office of Finance area of expertise. Rob is a CFA charter holder and a published author and thought leader on integrated business planning (IBP).


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        • Ventana Research’s Analyst Perspectives are fact-based analysis and guidance on business, industry and technology vendor trends. Each Analyst Perspective presents the view of the analyst who is an established subject matter expert on new developments, business and technology trends, findings from our research, or best practice insights.

          Each is prepared and reviewed in accordance with Ventana Research’s strict standards for accuracy and objectivity and reviewed to ensure it delivers reliable and actionable insights. It is reviewed and edited by research management and is approved by the Chief Research Officer; no individual or organization outside of Ventana Research reviews any Analyst Perspective before it is published. If you have any issue with an Analyst Perspective, please email them to

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