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Closing the books remotely amid COVID, best practices emerge

Philippa Lawrence Profile picture for user Philippa Lawrence November 18, 2020
Finance teams are learning how to close the books with a remote workforce. Workday's Philippa Lawrence identifies six steps towards a successful remote close.

Business woman sitting at office computer with financial graphs and statistics on monitor © Gaudilab - Shutterstock
(© Gaudilab - Shutterstock)

Finance teams have had to adapt to closing the books remotely as the COVID-19 pandemic continues, piling pressure on this crucial process. It's been a learning experience, but best practices are emerging.

Companies routinely "close the books" at the end of an accounting period, usually monthly, quarterly, or annually. The "books" refers to a company's record of financial transactions, including money coming in, money going out, and more.

This is typically a stressful time. For days, finance teams work to reconcile revenue, expenses, assets, and liability accounts. It is detailed work that matters because each financial transaction adds up to inform the big picture and what is eventually recorded in financial reports. Speed and accuracy are of the essence so executives, and even investors, get the right information in those reports upon which to base decisions.

Given the level of detail involved, closing the books even under normal circumstances can be complex and cumbersome. Sometimes, companies have data in multiple systems which adds even more complexity.

Now, finance workers remain in separate places because of the COVID-19 pandemic. Closing the books remotely adds another layer of challenge. Larger, in-person team meetings are no longer possible. Nor is it possible to stop a colleague in the hallway to double check the meaning of an email regarding an account, for instance, or to double check an entry in a spreadsheet via an impromptu, over-the-cubicle check-in.

Instead, finance workers are now connected via Zoom, telephone and email. As such, the remote close makes good communication even more important than ever. Also, it raises new challenges in terms of reconciling data, adjustments, risk assessment, process changes, and documentation control. As The Wall Street Journal reported recently:

Companies that rely heavily on cloud-computing technology to automate accruals, adjustments and internal transactions may be in for a smoother close than those that use on-premise technology on virtual private networks or enter data into spreadsheets manually.

Why? According to executives it quoted:

Virtual private networks aren't optimized for speed and spreadsheets are inherently error-prone.

Ingredients of a successful remote close

Now that Workday has closed two quarters remotely, and is about to start the third, we've identified factors other than technology that also make a big difference. Careful planning, focused communication, and an ability to be flexible are among the critical ingredients for a successful remote close. Here are six factors we identified to help ensure success during a remote close:

  • Identify "close killers." Start by asking what needs to change during the remote close. Survey risks across the finance team to get a holistic view. Does the team need updated laptops, monitors, or better home internet service? Financial controls need to operate as efficiently when working remotely as they would during any quarter end. An internal audit team review should check this.

  • Communicate. And then communicate more, and more, or as noted by Deloitte, "be transparent with employees about the changes and expectations for (the) remote close cycle." Focused communication with all stakeholders is paramount throughout the close and up to the filing of the 10-Q. Quick hallway conversations are no longer possible in a remote work environment. Also, communication is key to ensuring that emails, or other digital communications, are not misinterpreted. Checking in on a one-to-one basis, or as a team, via Slack, Microsoft Teams, or Zoom works really well.

  • Establish a controller command center. Given the new challenges of a remote close-and changes caused by the pandemic-a controller command center puts an extra spotlight on risk areas, in addition to those tracked by existing metrics and dashboards. Cash is always king and, arguably, never more important than now for many companies. As a result, it is even more important to closely track cash collections and the impact that aging accounts receivable have on other metrics. The command center will also likely include profit and loss and expense trends to enable faster decision making. With dashboards and real-time reporting, you more quickly identify issues. For instance, companies face new virus-related costs-or savings if business travel is abandoned. Tracking virus-related items will produce a better view at the numbers, with and without the COVID impact. A command center approach will make carrying this out more seamless.

  • The plan is a guiding light. A valuable guide in times of crisis and uncertainty is the ability to partner with your financial planning and analysis team (FP&A) to build a plan and assess the accounting implications. With the effects of COVID-19 and the ever-changing landscape, the plan is a guiding light to help finance leaders understand what actual numbers should look like, help identify areas that need more attention than normal, and highlight where numbers don't look quite right. For example, COVID-19 impacted event budgets when in-person events were canceled. Many planned events have prepaid expenses, which may no longer be valid. Contrasting what happened to what was supposed to happen promotes confidence, and brings focus to accounting risk areas.

  • Look at the same data. Throughout the close, review and re-review trends and dashboards, perform detailed analysis, and look for unusual items. All of this can be done as effectively remotely as in the office-with the right tools. Ensuring FP&A and accounting are looking at the same data is critical. Casual in-office conversations aren't happening to uncover inconsistencies. There's no time to reconcile data sources should there be more than one. Having everyone looking at the same data makes everything easier and more efficient, and avoids meaningless and frustrating conversations around "my data is different than yours." This keeps everyone focused on why real-time data is the way it is, and leads to a tighter and more efficient close process. This leaves more time for analysis rather than data source reconciliation.

  • Monitor and manage. Throughout the close, one constant is reviewing and re-reviewing trends and dashboards, performing detailed analysis, and looking for unusual items-all of which can be done as effectively remotely as in the office, with the right tools. It's important to monitor the process end-to-end so that, as one person finishes a task, the next person is notified that it is their turn. Technology is available that changes and automatically captures electronic information, effectively setting up an always-on audit, which can help streamline this even more.

  • Keep it human. Closing the books is stressful under the best of conditions. Doing it remotely, while colleagues face their own personal challenges, adds another layer. Focusing on the human side and maintaining relationships remains critical to regular day-to-day work as well as to the close. Zoom or Webex is a great way to check in on how people are doing. The most important thing, however, is for finance leaders to have authentic connections with their team and to make sure that team members know that they belong.

Coming out stronger

Many companies will be forever changed because of changes forced by the pandemic. Some will pursue new technologies and other digital transformations. Customer service, for example, is now less in-person and more online. E-commerce is rapidly growing. Being required to remotely close the books may entice some companies to explore new technologies, including cloud-based ones, to modernize their finance function. Technology is a great enabler, along with communication, planning, and team building.

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