In Business
How much time is your team wasting on month end reporting?
By David Parmenter
Apr 13, 2010 - 12:56:30 PM

You can catch David Speak at 1 of his 2 Irish events in 2010 at the Corporate Accountants Workshop - Monday 19th April - Crowne Plaza Blanchardstown. During the day he will be sharing his insights on “How to implement quick month-end reporting – by day 3 or less!” & “Decision based reporting – producing reports that make a difference”. This seminar is of massive relevance to Accountants in Business & Accountants in Practice who produce Management Accounts for their clients. Download brochure.

How much time is your team wasting on month end reporting?

Is your team one of the many who are sucked in by processes that have more in common with the Charles Dicken’s era that the 21st century? When I was an corporate accountant each period end was a disaster waiting to happen. Each month end (m/e) had a life of its own. You never knew when and where the problems were to come from. Always two or three days away we appeared to have it under control, and yet, each month we were faxing (email was not on the seen then!!) the result, with our fingers crossed. The last minute adjustments having negated “quality assurance” work we performed earlier leaving the result exposed to a late error. Does this sound familiar?

If so, this article will show you a way forward, a pathway blazed by some of your far seeing peers. This series of articles is based on the collective wisdom’s of over 100 CFOs, to them we owe a great gratitude. This is their story, not mine.

How do you rate on these questions?

Does it take longer than three business days for your Finance team to complete the monthly reporting package to the CEO and management?

Do team members have to burn the midnight oil to achieve this?

Are you finding that each month-end is a drama?

Are you fed up with the error rate in the finance report?

Do the month-end reports go through endless rewrites?

Is the month-end reporting process seen as a negative task for staff and management?

If you answer “No” to all of these you are one of the small minority who have got to grips with timely month-end reporting. Your story should be told!!

Based on waymark benchmarking and attendees to my “day one reporting workshop” in Australia and New Zealand, the following is a rating guide.

Rating	Day One Reporting	2 to 3 days	4 to 5 days	Over 5 days
	Exceptional performance	Better practice benchmark	Adequate performance	Inferior performance and career limiting!!

So what is Day one reporting (DOR)?

DOR is the condensing of the monthly reporting process down so that it is completed and management reports issued all within Day 1, the first day after the previous month-end. Organisations who are achieving DOR complete all of tasks below by 5pm Day 1:

• all previous months transactions processed
• accruals raised
•  consolidations complete
• reports made available to budget holders
• reports prepared for business units
• consolidated reports prepared and commentary / analysis added
• reports issued

Day one reporting has arrived in Australiasia, brought here by visionary accountants who can think outside the square. They have created a precedent that means that reporting day 5, 6, 7, or 8 working days after month-end will soon be a perilous activity for the CFO. How will you explain this time wasting to a CEO who has been used to day one reporting in their previous company?

In other words it soon will not be acceptable for organisations and career limiting for CFOs to be responsible for time consuming and costly month end processes.

Benefits to management and the finance team

As a good friend of mine, who is a CFO of a tertiary institution, said “every day spent producing reports is a day less spent on analysis and projects”. There are a larger number of benefits to management and the finance team of quick reporting, and these include:

Benefits to management	Benefits to the finance team
Reporting now plays a bigger part in the decision making process	Staff are more productive as efficiencies are locked in and bottlenecks are tackled
Reduction in detail and length of reports	Many m/e traditional processes are out of date and inefficient and these are removed
Reduced cost to organisation of m/e reporting	Happier staff with higher morale and increased job satisfaction
More time spent analysing trends, companies who report quickly say their analysis is better!!	More professional challenged finance staff
Less senior management time invested in m/e which means management can spend more time on achieving results	Finance staff spend more time shaping the future e.g. quarterly rolling forecasting, implementing new decision based tools etc.
Greater budget holder ownership as they need to be more involved in accruals, monitoring expenditure during the month as no corrections are permitted after m/e etc.	Leads to a very quick year

The impact of quick reporting on the finance team and the organisation

The impact of quick reporting is a total redistribution of work moving out of the low value process activities into the more value added areas. This is often accompanied by a change in the mix of the team, which is good news for qualified accountants.

The significance of faster month-end reporting can be seen from this comparison of three companies. From the waymark solutions benchmarking study of over 200 accounting teams, quick month-end reporting accounting teams are far more advanced in many other areas. They should be, as they have much more time on their hands.

The extent of the time wasted in reporting can be seen in the diagram below. When you recognise that most of the commentary is of little value, given that it is discussing variances against a nonsense target, the monthly budget. Such an analysis can be easily performed by your accounting function to ascertain the true cost of month end reporting in management’s and budget holders’ time.

So is DOR easy to do?

No, in fact if you approach it using conventional processes and techniques it is almost impossible! You need to think outside the square. The finance team needs to challenge the status quo and a huge paradigm shift needs to occur. Recently I was working with a finance team in a month reporting workshop. When the Financial controller kicked off the morning saying “the new goal for the month-end is five working days” there was a total silence. They have 12 dramas reporting at 8 working days!! By the end of the day there had been such a dramatic shift that the team was already planning for day three reporting!!

History of day one reporting

The writings about DOR started about 1980 and one of the first companies to do it was a American multinational. They had not realised there was a real problem until benchmarking against other companies. They found to their horror their 2 weeks to close was resulting in their company “paying more to have monthly reports later”. In other words the quicker companies had less accounting resource!! This spurred them into action and the reporting deadlines came down as follows:

• September 91 - 8 days
• March 92 - 3 days
• September 92 - 2 days
• September 93 - 1 day

They achieved this Eldorado of accounting through the above stages. They got quite quickly to day 3 reporting by applying the following:

1. All management made aware of the problem
2. Buy-in obtained (marketing)
3. Multi functional project team set up (reporting, marketing, operations, IT, production planning)
4. Project team empowered to make decisions
5. Focus was on continuous improvement and teamwork
6. They adhered to deadlines

At day 3 they hit the wall it now required a complete paradigm shift by the finance group so they carried out the following:

1. Re-engineer the month end process
2. Identified non value tasks which could be done earlier or eliminated e.g. the posting of automated journals that occurred on day 1, journals were being reviewed before entry into the G/L, last month’s production not finalised until day 2 etc.
3. They rigorously applied the Pareto principle (80/20) focusing on the big numbers and levels of relevancy were established - manual journal entry line items reduced by 80%
4. Eliminated all interdepartmental corrections at m/e, these had to be done during the month!
5. Eliminated management review of cost centres before final close as budget holders now had responsibility to resolve all issues relating to their cost centre
6. Management report condensed into one page of key indicators plus one page business unit reports
7. Used estimates to avoid slowing down the m/e process - they found that the difference between estimate and actual were never significant
8. No late changes to m/e report formats were accepted
9. Budget holders tracked activity throughout the month eliminating the usual surprises found during the close process
10. Allocations are now processed without seeing departmental spending
11. Preparations for m/e close moved before period end instead of after
12. Reconciling accounts in day 1 and 2 was replaced with variance analysis

DOR around the world

The USA is leading with prompt reporting. The virtual close for month end reporting has been achieved by organisations such as CISCO, Motorola, Oracle, Dell, Wells Fargo, Citigroup, JP Morgan Chase and Alcoa to name a few. Yet in a study performed recently by PWC no evidence was forth coming in Europe. This study based on 160 “European headquartered“ organisations indicated some frightening statistics including:

• spreadsheets were still being used for consolidations ( principally by the slow reporters)
• the top 25% regarding speed of close at month-end still ranged up to 9 working days post month-end
• 81% used spreadsheets for reporting
• 60% stated that they were dissatisfied with the their use of spreadsheets

In another study nearly 50% of respondents have introduced flash reports on day one, reporting to the a result for the P/L within +/- 10%. From my workshops most accountants stated that they could issue day one flash reports within +/- 5%!! Show me a CEO who if offered a flash one page report would not welcome it!!

David is Speaking at his most popular event The Corporate Accountants Workshop on Monday 19th April Crowne Plaza Blanchardstown. For Details of this event please view:

The Coroprate Accountants Workshop Brochure. in pdf

the event page - The Corporate Accountants Workshop online 

Call Eimear on 01 4110000

or book online

David Parmenter is the managing director of waymark solutions, a Wellington based company specialising in helping organisations measure, report and improve performance. David Parmenter is an international speaker and recognised expert on performance management. He has recently completed a series of white papers which can be purchased from his website www.waymark.co.nz Email: parmenter@waymark.co.nz This article is an extract from a white paper on “quick month-end reporting- day three or less”
waymark helps organisations streamline their: month-end reporting and annual planning process, implement quarterly rolling planning, adopt the principles of beyond budgeting, develop decision based reports, and adopt performance measures that will improve performance.

David has worked as: a senior consultant for Ernst & Young (previously Ernst & Whinney) - London and Wellington; as a project accountant for BP Oil Ltd, Wellington, and as an auditor for Arthur Andersen, UK and Price Waterhouse, NZ. David is a member of the New Zealand Institute of Accountants and is a Fellow of the Institute of Chartered Accountants of England and Wales. The Institutes in various countries have published a number of David’s articles including: “Winning KPI’s”, “Is your Board reporting process out of control?”, “When take-overs or mergers go bad”, “How to implement a balanced scorecard in 16 weeks”, “Convert your monthly reporting to a management tool”, “Are you getting enough bang for your training dollar, “Implementing 360 degree feedback”. Day one reporting Page 6 by David Parmenter waymark solutions parmenter@waymark.co.nz

View all OmniPro CPD Courses, CPD Courses, Continuing Professional Development for Accountants