Oct. 29, 2024

This paid piece is sponsored by Eide Bailly LLP.

By Brad Mendel, principal

A version of this insight first appeared on EideBailly.com.

As a business leader in Sioux Falls, you understand the critical importance of a streamlined financial process, especially during year-end close. During year-end, ensuring accuracy and efficiency in your financial reporting is critical. However, many organizations struggle with outdated systems that hinder their ability to achieve a swift and precise close.

The year-end close is an inevitable part of the accounting cycle that closes the books before opening a new chapter in your organization. Temporary accounts are reset to zero, the prior period’s balance is locked in, retained earnings are updated, and the slate is wiped clean for a fresh quarter.

The quarterly and annual data collection is not a mere formality but is used to spearhead insight for the upcoming year. The financial analysis of the data is leveraged to inform budgeting, forecasting and other financial decisions. However, year-end close financial statements are valuable only when accurate.

Difficulty retrieving data across locations and a lack of uniformity in data collection all complicate a speedy and accurate close. If your business  is still operating on an on-premise system, you’re well aware of these complexities. Ultimately, on-premise systems may be harming your business and its operations more than you think.

How on-premise environments kill your year-end close

As accounting teams continue to operate with an on-premise enterprise resource planning solution, they risk halting and prolonging their year-end close by igniting an adverse chain of events, starting with data documentation and collection.

• Lack of uniformity across locations slows access to data: Within a single organization, different offices in different locations frequently use different versions of the same system or different systems entirely. When these systems don’t speak to one another or update in unison, the collection of information is not standardized. When one accounting department relies on the timely collection of expense claims and receipts from other departments, inconsistencies and formatting disparities among different systems act as a roadblock.
• Teams manually enter data: As a result, accounting teams manually collect, compile and input information into the system. This is a tedious and slow process.
• Rushed manual process leads to errors: In an attempt to recover from the setback in the financial close and meet deadlines, employees sacrifice quality for speed. However, sacrificing attention to detail inevitably results in errors, especially from manual entry.
• Rework: Accuracy is vital for balancing the books. Accordingly, accounting teams will need to reverse the process and reenter data, further prolonging the year-end close.

Solution: Cloud-hosted ERP across the organization

A cloud-hosted environment eliminates data discrepancies causing delays by unifying systems across departments and locations. With all systems updated collectively, data retrieval and communication become seamless.

Why do some organizations insist on keeping their on-premise environment?

Despite existing year-end close inefficiencies, 37 percent of organizations with ERP solutions select an on-premise environment. While it’s easy to attribute this to the effort, time and complexity of switching to a new cloud-hosted ERP solution, this is only half of the equation.

The other leading cause of hesitation is a fear of security risk. For organizations with sensitive information, data security is paramount. While many believe that an on-premise environment provides added security, that is not always the case.

It’s potentially even riskier to entrust data security to individual employees who have not been trained in cybersecurity. Cloud-hosted ERP environments shift the responsibility of security from the employee to the vendor. Users can rest assured knowing that their cloud environment provides end-to-end security via an encrypted connection between the vendor and the business.

Experience the one-week year-end close with cloud-hosted technology customized for your business

As a trusted ERP consulting partner, our experienced team at Eide Bailly will help you select and implement the right solution with the right integrations at the right time.

Let’s take the complexity out of year-end close and empower your business to thrive.