The pandemic’s impact on financial close is still being felt today

Financial Service Institutions (FSIs) face more challenges than ever in achieving an efficient financial close. Volatile market conditions, geopolitical uncertainty and climate change all contribute. However, many of these issues can be. traced back to the pandemic.

Post-pandemic inflation triggered large interest rate changes. These changes have continuously made it harder for companies to assess profitability levels for the current year, even though anticipated rates have finally started to arrive.

The sudden shift to remote work resulted in longer closing processes too. This widened knowledge gaps between employees, delaying third party data from vendors and making external data consolidation more difficult. In Q2 2020, at the height of the pandemic, a survey of filings by EY found that 60% of finance teams reported impairments and delays in reporting due to COVID-19. Almost five years later, those challenges remain.  

The pandemic exposed process inefficiencies

For forward thinking and proactive finance departments, the pandemic was a wake up call. It uncovered significant inefficiencies in internal processes around financial closing, forcing them to act fast. Manual data entry, siloed data and incompatible platforms were all quickly ironed out when organizations adapted by turning to cloud-based solutions.

The worst effects of the pandemic are now over. But many finance departments still struggle to accurately collect and report data.

Heightened market volatility has increased these challenges. Evolving regulatory requirements – including the final Basel III reforms and wider sustainability regulations – and vast geopolitical upheaval require more comprehensive data and greater transparency in financial reporting. Inaccurate or incomplete financial reports can have serious consequences. This underscores the importance of accurate, compliant and thorough data collection, management and reporting. Beyond this, FSIs are also increasingly asked to demonstrate how market shifts impact their business. This adds complexity to an already demanding process.

Overcoming these challenges remains a necessity. But it’s also an opportunity for FSIs to futureproof their financial close to counteract past, present and future volatility.  

Technology is key to financial transformation 

The top 25% of organizations are producing reports in 5 days, according to KPMG. Achieving this level of speed requires the automation of time-consuming tasks, like data validation and reconciliation. This is essential in preventing the costly errors, inconsistencies and duplication that manual work creates. 

Centralizing data on a single platform further eliminates replication errors. Platforms like Fioneer’s Financial Control are equipped to tackle the ever-increasing sets of data, without the security or error risks that come from data transference across different systems. This simplifies the audit process with integrated compliance standards and makes sure that organizations stay compliant as regulatory scrutiny increases.  

This upgrade in technology creates more overall transparency to better align teams. It also gives a better and more immediate overview of the data that CFOs use to make sense of changing market conditions. Meanwhile, the faster close will free up teams to focus on tasks like risk management and investment strategy that increase organizational resiliency more broadly. This transformation will help FSIs stay resilient regardless of the new challenges that they’ll face in the future.  

Our Financial Control is the best tool for FSIs seeking to stay ahead of their financial close process as they activate their financial transformation.   

Specifically designed for banks and insurance businesses, it’s a single source of truth for the financial close process, using automation to streamline workflow management so that FSIs can reconcile new data efficiently. With real-time data processing, enhanced visibility and advanced analytics, you can improve decision-making through data insights, providing stability both for your organization and stakeholders that rely on your insights.  

Overhaul outdated systems and processes with S/4HANA’s in-memory database, which enables seamless data consolidation and real-time customization. It builds a level of adaptability into your processes that helps your business stay ahead of the curve – and thrive in a changing environment. 

Learn more about Financial Control

Financial Control simplifies and accelerates the financial closing process by centralizing reconciliations on a secure solution integrated with SAP S/4HANA.