Inefficient financial close might be costing you more than you think

​In spring 2024, a record number of US companies failed to file their annual financial reports on time. Among them, chemicals giant Chemours and Barbie manufacturer Mattel. In fact, 16 of the companies that missed the deadline had market capitalizations over $1 billion. The impact was huge, leading to declines in stock prices and the suspension of top executives.

It was a stark warning for companies of all sizes, highlighting how even the largest, most well-resourced companies can fall victim to late reporting. But for Financial Service Institutions (FSIs), in particular, there are big lessons to learn from these mistakes.  

FSIs’ reputations rely on the accurate and timely publishing of financial reports, and have even more to lose when poorly-adapted legacy processes slow their financial close. Fines from regulators are the most obvious consequence, while an inefficient financial close can also lead auditors to classify the organization as higher risk, increasing its verification fees which, if the company is public, will result in a drop in share price. 

Metro Bank, for example, saw hundreds of millions of pounds erased from its share value in 2019 and fines totaling £15.4 million from the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) following reporting errors. It was fined a similar amount in 2024 for failure to monitor potential money laundering due to further data-input errors.  

The repercussions can extend far beyond a single company too. In the spring of 2024, New York Community Bancorp’s announcement of a significant delay in its financial close reports sent its stock price tumbling, and sparked wider alarm throughout the regional banking sector. Coming off the heels of Silicon Valley Bank’s collapse, the delay amplified market anxieties and highlighted how timely reporting can maintain stability and trust across the financial industry.  

But the true impact of inefficient financial close extends beyond financial statements and market reactions. 

The hidden costs of a late close

Misspent resources 

Relying on manual processes to reconcile and substantiate increasingly complex data sets can take teams as much as 18 days to close, and if new staff are brought on to support this extra workload, the potential for human error is high.

Equally, when teams are using too many, often incompatible, tools, the organization will be spending money on software that they don’t need, while creating inefficient workflows – further increasing the opportunity for errors, all of which contribute to an inefficient financial close.

Company-wide loss of confidence 

Accumulating inaccuracies undermine confidence in the reports, eroding trust and impacting the entire organization: 

• Employees: Team members responsible for financial reports will face burnout trying to combat inefficiencies in every close cycle. Over time, this creates increasing dissatisfaction and stress, leading to disengagement and a loss of trust in their organization’s ability to handle the complexities of financial close effectively.  

• The CFO: With data siloed across multiple systems, CFOs lack a unified, reliable view of the business, market trends and emerging opportunities. This erodes confidence in the accuracy of the data, delaying critical strategic decisions. At a time when agility and responsiveness are key for FSIs, this hesitation can result in missed opportunities and costly delays.

• Investors: Financial closing outcomes often underpin the relationships with boards and FSIs. Late, inaccurate or incomplete reports signal deeper organizational issues, shaking investor confidence.

Structural changes will help you regain trust in your data 

A lack of reliability – whether in the timeliness of financial reports or the quality of their data – can cast doubt across a whole industry. To prevent this, organizations need to tackle inefficiencies at their roots.  

This transformation begins by consolidating data onto a unified platform. A single source of truth will not only help to eliminate data replication, but unify finance teams and cut maintenance costs. At the same time, automating the most taxing and error-prone tasks like reconciliation will greatly reduce manual work. In the process, organizations will produce faster, accurate reports. 

SAP Fioneer’s Financial Control has the power to do this and more. Consolidated onto the SAP S/4HANA platform, it has the breadth and versatility to tackle the expansive and evolving data sets that FSIs deal with. Up to 80% of processes can be automated with Financial Control, and our workflow management allows FSIs to streamline reconciliation, adjustment and balance sign-off activities. This establishes a proven audit trail with integrated compliance standards – a key aspect of maintaining trust with auditors and other outside stakeholders.

Ultimately, Financial Control helps FSIs quickly make sense of data, providing actionable insights that teams can use to stay competitive, and ultimately rebuilds trust in the financial closing process.