Better practice studies and bench marking studies are two ways for organisations to measure their effectiveness and the level of service they are providing to internal and external clients.
Better practice studies are often confused with bench marking studies, an unfortunate mistake that leads many organisations that could gain substantial benefits from participating to overlook them.
In brief, bench marking studies focus on quantitative measures and thus organisations can assess where they are in the ranking, i.e. what percentile they are at. Such studies require good information systems and a substantial commitment in time, in liaison with fellow participants, fine tuning definitions and collecting comparable data. For example, even the definition of an employee needs to be agreed upon.
Where are you in these ratings on month-end close
| Top Performers | |
| 1. Have adopted a virtual close where we can get up-to-date net result numbers at any point in time and thus month-end numbers are available immediately with only commentary to follow on day one | Top 1% |
| 2. We have a printed set of rules for preparing accounts and materiality is clearly stated and set for the entire organization | Top 25% |
| 3. All inter-company transactions are first posted to an inter-company software and both subsidiaries are updated automatically | Top 1% |
| 4. Accounts payable, accounts receivable and inventory are all closed off before month-end | Top 50% |
| 5. Have strict control on all adjustments allowing them to off-set each other before making a decision to adjust month end numbers | Top 25% |
| 6. Monthly financial report is less than five pages | Top 25% |
| 7. Close-off on the same day each month e.g., the nearest Friday to the calendar month end, could be the 29th or the 2nd | Top 1% |
| 8. All planning, forecasting and reporting performed in a robust application | Top 1% |
| Bottom performers | |
| 1. Month-end close takes over 8 working days | Bottom 25% |
| 2. No formal agreed rules on materiality so adjustments levels vary amongst the individual accountants | Bottom 25% |
| 3. Myriad of inter-company adjustments each month which can take a day or two to resolve | Lower 50% |
| 4. Accounts payable, accounts receivable and inventory are all closed off after month-end | Lower 50% |
| 5. All adjustments are posted until the general ledger is closed off | Lower 50% |
| 6. The monthly financial reports is over 15 pages | Bottom 25% |
| 7. Close off each month-end at calendar month-end | Lower 50% |
| 8. Excel is still our main tool and there is a reluctance to change | Lower 50% |
If your responses are more aligned to the poor performers you should definitely access my toolkits. Here are a sample of them. All of these will guarantee you improvements if implemented.
Lean Practices to Transform Your Finance Team – Toolkit (120 page Whitepaper + electronic templates)
One-Page Finance Team Reporting Templates (90 page Whitepaper + electronic templates)
20+ System Improvements for the Finance Team – Toolkit (100 page Whitepaper + electronic templates)