The pandemic’s impact on financial close is still being felt today

Financial Service Institutions (FSIs) face more challenges than ever in achieving an efficient financial close. Volatile market conditions, geopolitical uncertainty, and climate change all play their part. However, much of the increased complexity can be traced back to the pandemic. The large interest rate changes triggered by post-pandemic inflation have continuously made it even harder for companies to determine profitability levels for the current year, even as long anticipated rates have finally started to arrive. The sudden shift to remote work resulted in longer closing processes too. This exacerbated potential knowledge gaps between employees, delaying third party data from vendors and increasing the challenges in consolidating external data. In Q2 2020, at the height of the pandemic, a survey of filings by EY found that 60% of finance teams reported impairments and delays in reporting due to COVID-19. Almost five years later, those challenges remain.  

For forward thinking and proactive finance departments, the pandemic uncovered significant inefficiencies in internal processes around financial closing, forcing them to act. Inefficiencies such as manual data inputting, siloed data and incompatible platforms were all ironed out at pace as organizations adapted by leveraging cloud-based solutions.  

However, while the worst effects of the pandemic are over, many finance departments around the world have yet to get a grip on what’s required to accurately collect and report data in today’s environment. Heightened market volatility has compounded these challenges further. Evolving regulatory requirements – including the final Basel III reforms and wider sustainability regulations – and vast geopolitical upheaval require more comprehensive data and greater transparency in financial reporting. Inaccurate or incomplete financial reports can have serious consequences. This underscores the importance of accurate, compliant and thorough data collection, management and reporting. Beyond this, FSIs are increasingly being expected to show a deep understanding of how changing market conditions affect their business, adding greater complexity to an already demanding process.  

Overcoming these challenges remains a necessity. But it’s also an opportunity for FSIs to futureproof their financial close to counteract past, present and future volatility.  

Technology is key to financial transformation 

The top 25% of organizations are producing reports in 5 days, according to KPMG. Achieving this level of speed requires the automation of time-consuming tasks, like data validation and reconciliation. This is essential in preventing the costly errors, inconsistencies and duplication that manual work creates. 

Centralizing data on a single platform further eliminates replication errors. Platforms like Fioneer’s Financial Control are equipped to tackle the ever-increasing sets of data, without the security or error risks that come from data transference across different systems. This simplifies the audit process with integrated compliance standards and makes sure that organizations stay compliant as regulatory scrutiny increases.  

This upgrade in technology creates more overall transparency to better align teams. It also gives a better and more immediate overview of the data that CFOs use to make sense of changing market conditions. Meanwhile, the faster close will free up teams to focus on tasks like risk management and investment strategy that increase organizational resiliency more broadly. This transformation will help FSIs stay resilient regardless of the new challenges that they’ll face in the future.  

Our Financial Control is the best tool for FSIs seeking to stay ahead of their financial close process as they activate their financial transformation.   

Specifically designed for banks and insurance businesses, it’s a single source of truth for the financial close process, using automation to streamline workflow management so that FSIs can reconcile new data efficiently. With real-time data processing, enhanced visibility and advanced analytics, you can improve decision-making through data insights, providing stability both for your organization and stakeholders that rely on your insights.  

Overhaul outdated systems and processes with S/4HANA’s in-memory database, which enables seamless data consolidation and real-time customization. It builds a level of adaptability into your processes that helps your business stay ahead of the curve – and thrive in a changing environment.