As the rocky first quarter of the fiscal year comes to a close, CFOs are faced with an unprecedented task — closing their books while their finance teams and auditors are remote.
The new remote working landscape will put modern communication skills and tech capabilities to the test. As it applies to closing the books, remote-work mandates have eliminated the end-of-quarter in-person work that can speed up the financial reviews and account reconciliation, the Wall Street Journal reported Tuesday.
If ever there were a case to be made for the digital transformation of finance, OneStream Software CFO Bill Koefoed believes, it’s this crisis. "Finance has become central, and strategic, to the survival of businesses during unforeseen and challenging times," he told CFO Dive Wednesday.
At OneStream, Koefoed is carrying out finance operations primarily via video conference, which he says has improved communications. The team holds check-ins twice a day through virtual meetings.
"Since we are all working from the same finance platform and data, we are surprisingly on schedule to close this quarter," Koefoed said. "I can’t even imagine managing this close cycle without the collaboration tools and cloud finance platform to connect and unify our accounting team."
Among other things, the mass shift to remote working may serve as the jolt hesitant companies need to adopt cloud-computing technology, once and for all.
Many companies, prior to the mandated shutdowns, may not have had or used software to automate its accruals, adjustments and internal transactions, but those who have "may be in for a smoother close than those that use on-premise technology on virtual private networks or enter data into spreadsheets manually," WSJ said.
The Securities and Exchange Commission (SEC) has recognized the need for leeway. Last week, it granted affected public companies an additional extension, on top its 45-day extension granted on March 5, for filing their financial statements. However, until companies get a better idea of how long their staff will be unable to meet in person, the extension may be of little help.
Koefoed is on day one of closing his books remotely.
"Companies that have adopted cloud platforms for finance are seeing the advantages now, as the finance team has full access to the system, and all the data they need to efficiently execute the month or quarter-end close," he told CFO Dive Wednesday. "This includes collecting data from different systems, consolidating, adjusting, reconciling accounts, then finalizing and reporting their results internally and externally."
Ideally, Koefoed said, the cloud would mitigate these disruptions, to the point that the only difference in the close process is that people are working from home instead of in the office. "Of course, there are efficiency challenges with a remote team,” he acknowledged. “but companies with cloud-based applications and remote collaboration tools are in a far better position."
The book closing process, which consists of closing revenue accounts, expense accounts, the income summary account and the dividends account, almost always relies on in-person meetings with finance teams and external auditors to complete. Without the possibility of conducting business side-by-side, CFOs without the technological capabilities of cloud computing or ERP, are forced to improvise.
But despite the new reality of remote work as the rule rather than the exception, Dennis McGonigle, CFO of SEI Investments, maintains his expectations for his finance team.
"Heading into the quarter end, our message to our workforce is that attention to detail has never been more important," he told CFO Dive Monday. "We’re operating with some new workflows that didn’t exist prior. Let’s make sure we’re paying attention to detail, and that we don’t lose our controlled environment in this process."
Johnson & Johnson CFO Joseph Wolk feels the same. "I’m not expecting any lack of quality just because some of this is being done [remotely]," Wolk told the Journal last week.
Taken together, these issues of preparedness and connectivity go well beyond the quarterly close. "This crisis has dramatically slowed and even stopped business for many companies across industries," Koefoed said. "Companies are doing scenario planning much more frequently, to understand, and plan for, the impacts of the disruption to their revenue, costs and, most importantly, their cash flow."
If ever there were a case to be made for the digital transformation of finance, Koefoed said, it’s this crisis. "Finance has become central, and strategic, to the survival of businesses during unforeseen and challenging times."