Is a Zero-Day Close Possible?

Will accountants even close the books in the future? If we are to believe recent news related to AI in accounting, the future may hold the possibility of a fully automated close. Imagine that: a zero-day close!

A digital speedometer concept – accelerating and coming apart due to speed.

​Accountants that have been in the industry for decades may find this idea unfathomable because they are used to the regular cadence of time-consuming, stressful closing procedures that never seem to go smoothly. And yet, as automation becomes ever more prevalent in accounting and finance, the traditional bookkeeping role is becoming largely replaceable by software, taking with it some of the tediousness and historical pain points that have traditionally been a hallmark of the industry. Will a manual month-end or year-end financial close soon become a relic of the past? 

​Only time will tell if organizations will truly be able to get to an instant close, but the technology is already available to cut back on the length of the process significantly. As Philippa Lawrence explains in her article on how AI can help accountants achieve a zero-day close, 

’Zero-day’ may sound like a daunting goal, but in reality a continuous or zero-day close is an incremental journey — and benefits are reaped with each process improvement and task automation you make. By booking information continuously throughout the reporting period and enlisting AI [artificial intelligence] and ML [machine learning] to handle the manual, repetitive tasks, like transaction processing and number crunching, accounting teams reduce the amount of time they spend focusing on the ‘what’ and spend more time focusing on the ‘why’.

​Let’s take a look at areas where accountants can use technology to their advantage to streamline closing procedures and make incremental moves towards shortening their closing process while maintaining or improving accuracy:

Reconciliations
We all know it’s a financial close best practice to do bank and credit reconciliations more frequently, but taking the time to do them weekly instead of monthly when they are being done manually often takes time that accountants simply don’t have available. But what if you could do them weekly (or even daily!) without any additional work? With advances in technological integrations improving all the time, companies are beginning to automate their reconciliations, removing the onus of waiting until all accounts are reconciled at closing, which can save an inordinate of time for companies with many bank and credit accounts.

Invoicing and Collections
Invoice automation ensures that invoices get sent as soon as they are generated to avoid a lag in payment. Facilitating faster payments reduces the number of outstanding invoices that need to go to collections. But again, utilizing automation assists with collections procedures by taking the human effort out of the process – reminding customers to pay, automatically applying late fees/penalties, and possibly even changing credit terms on future purchases. By not having to clean up outstanding invoices or track down collection statuses at the time of close, accountants can speed up closing significantly.

Reimbursements
Employee reimbursements have come a long way in the last decade, taking much of the sting out of something that was once extremely burdensome for bookkeepers and accountants. Reimbursement apps now let employees submit expenses on the go with ease by simply taking a picture of a receipt or linking a company credit card. As a result, employees are getting paid faster than ever before and accountants have far less clean up work at the end of reporting periods than they once did. Expect that reimbursements will continue to keep pace with the industry, further automating the process as new technology becomes available.

Asset Depreciation
Companies that are still depreciating assets with excel spreadsheet formulas will need to move to more streamlined processes to speed up their financial close. Whether you are using a straight-line or accelerated depreciation model, your accounting platform should do this for you to ensure accuracy and compliance with GAAP principles. (If your accounting software does not include depreciation functionality, you may need to migrate to a more robust solution.) Relying on your software to handle depreciation not only speeds up close but also equips organizations to make more informed decisions related to replacing or disposing of assets.  

Payroll Costs
Modern payroll software makes handling payroll taxes and benefits costs far more efficient than they were previously, which helps with closing the books at the end of the year. As payroll software continues to get better integrated with accounting platforms and the rest of an organization’s systems, financial reporting and projections will be more streamlined as well, taking companies one step closer to that zero-day close goal. 
  
Financial Statements
Preparing financial statements goes hand in hand with closing the books. Companies still preparing reports manually or combining multiple autogenerated reports by hand will find huge efficiency gains in trusting their software do the heavy lifting for them. Taking the time upfront to create automated reporting rules will yield a better final product with a much smaller time investment in subsequent months.

Knowledgeable Staff
Of course, any conversation around how technology can improve close would be remiss without including a discussion around how people contribute to the improvement process as well. As AI is coming into its heyday the smartest people in every field are constantly reminding us that technology relies on people. Without the human component to build and maintain technology, it cannot be the powerful tool we are asking it to be. But with the best people in place that have the right knowhow, technology can be a powerful influence to drive the accounting industry forward. 

As our team explains when discussing how technology is transforming accounting, 

Over the last decade, accounting technology has been primarily focused on increasing efficiency. The goal has been to do more with less time required. Processing more data, managing more vendors, handling more invoices, running more reporting, submitting more complicated tax filings, carrying out more accounting functions with less personnel, and the like. But in recent years, there has been a stronger push to go further – to use technology to accomplish more than just efficient bookkeeping and accounting. Technology these days aims to do better work, not just faster work. Today’s accounting technology can also improve user experience and provide more robust and reliable data than ever before.

​When you need help implementing additional technology into your accounting activities or improving your close procedures, please reach out to us! We have a team of experienced accountants ready to help with closing, cash management, reporting, budgeting, and tax preparation. Find out more about our outsourced accounting services today!