3 Tips how Finance can improve the Month End Close process
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Here are three ways how Finance can help with getting more value out of the month-end close:
1) Budget owners need to understand the process end-to-end
Make sure your cross-functional business partners understand what is expected of them and by when. This can make a big difference with staying on a tight schedule.
It helps to explain what you’ll do with their information and why you are asking for it. If your business partners understand the importance, they’ll be more likely to prioritize it. It helps to write this down and share the document broadly so new hires don’t start from scratch.
2) It’s the budget owners’ responsibility to explain variances
It’s not the Finance team’s role to explain why actuals differ from forecasts. That’s because it simply wouldn’t yield insights that are deep enough to be actionable.
Finance makes sure budget owners have accurate and timely data on actuals and prior forecasts. And they lead the process by flagging significant variances and summarizing the explanations provided by budget owners.
3) Variance explanations need to be actionable
Finance can add value by challenging the budget owners to get to the root causes for a given variance. You know you identified the root cause when it suggests an action the business can take to address an issue or capitalize on an opportunity.
“Marketing expenses in the YouTube channel came in lower than expected.” is not a root cause.
But “Three of our top five influencers had significantly lower than expected views, so Marketing expenses in YouTube were lower than expected.” is.
It suggests an action, for example, “remove those influencers from our top payment tier”.
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