Client Profile
Our privately backed, Connecticut-based client is a global leader in industrial machinery manufacturing, specializing in extrusion and converting technology, serving the automotive, building/construction, consumer products, medical, and packaging industries. The company has grown to 1,400+ employees worldwide since it was founded 175 years ago, including manufacturing and technical facilities in the U.S., Canada, China, Germany, Finland, and more. It also maintains a network of independent sales agents and suppliers in nearly every country.
Business Challenge
The month-end close often stands as the biggest pain point in the Finance Department. Rife with time-consuming, tedious tasks like tracking down data from other departments, ensuring every transaction is recorded, and catching and correcting errors, inefficiencies often translate into long hours and missed deadlines.
While APQC (American Productivity & Quality Center) benchmarking data indicates the process should take 3-5 days, 25% of Finance teams say it consumes 10 or more.
Our client’s month-end close is complex: 12 global subsidiaries perform individual closes on 8 different ERP systems that must be consolidated into a single financial statement by the corporate Finance team. At 7 days, the client’s cycle time for completing its monthly consolidated financial statement exceeded the industry best practice of 4 days, according to APQC.
The median cycle time for completing monthly consolidated financial statements is 6 days, according to APQC.
The client’s Finance leadership planned to implement technology enablers to optimize the process. But inefficient steps led to low levels of innovation and capacity for change.
The process also lacked scalability, systematic controls, and visibility into local financial close and reconciliation activities.
Key pain points included:
- Extremely manual processes caused a high risk of errors and inefficiencies that increased cycle times. For instance, pulling data from subsidiary General Ledgers was a tedious, manual process with a high potential for mistakes in most subsidiaries. The client also relied on Excel-intensive processes for complex activities like revenue recognition accounting entries calculation and revenue reporting for the board package.
- Activities relied on tribal knowledge, with no standardized or properly documented processes.
- Knowledge was siloed to individual sites and functions, without an understanding of upstream or downstream work.
- Current volumes and activities stretched teams, limiting their capacity to absorb additional scope or activities.
- Lack of time and technology enablers limited analytical work. For instance, the manual effort required to meet closing timelines and limited reporting tools minimized the ability of subsidiaries to perform important variance analyses.
- The manual nature and level of detail available in the current process prevented corporate teams from tracing back numbers. Corporate teams also lacked visibility into activity progress and had limited visibility into supporting documents at the local level.
- No systematic enforcement of controls. For instance, there were no levels of authority or standardized format for the Chart of Accounts (COA) across subsidiaries. APQC recommends COA centralization and standardization as a top strategy for decreasing consolidated financial statement cycle times, ensuring consistency in key data elements and lead times that prevent different business