Monthly consolidated financials need to be prepared within a few days
to be of use to operational leaders.
Consolidated financial statements enable organizations with a parent
company and subordinate reporting units (e.g., subsidiaries, regional
operations, or multiple locations) to report their finances as a
single enterprise for creditors, investors, operational leaders, and
other stakeholders. Preparing these statements can be a complicated
endeavor, but completing them in a timely way is critical.
The cycle time in days to complete monthly consolidated financial
measures the number of calendar days (including weekends) that elapse
between running the initial monthly business entity trial balance and
completing the agreed-upon monthly business entity consolidated
financial statements. Finance leaders should track their company’s
performance on this measure to ensure that the process for creating
consolidated statements is optimized for timely and accurate
APQC’s data for this measure shows that the fastest organizations
(i.e., those at the 25th percentile) are able to complete the regular
consolidated financial statements in four days, while the slowest
organizations (those at the 75th percentile) reported taking more than
twice as long — 10 days.
The Risks of Slow Performance
Organizations that take too long to complete their monthly
consolidated financial statements run the risk of missing key
opportunities for analysis and problem-solving. Even if finance
discovers significant issues from the previous month’s statements,
operational leaders won’t have much time to do anything about them in
the following month if they don’t get the statements in a timely way.
It’s easy to see how the damage can compound from month to month as
teams scramble to address issues that should have been discovered
Timeliness is important, but organizations also take risks when they
work too quickly. Given too little time, operational leaders will
struggle to complete their accruals, deferrals, adjustments, or other
key accounting entries. The resulting consolidated financial
statements will not present an accurate picture of the business.
The optimal cycle time for a company will depend on factors like its
size, industry, and complexity. For that reason, APQC recommends
benchmarking performance internally, within your industry, and
relative to organizations of similar size. Benchmarking from these
different vantage points helps to provide a more holistic picture of
How to Improve
Excessive spreadsheet use, manual touchpoints in the process, and
human error all increase cycle times for completing monthly
consolidated financials. The good news is there are proven strategies
for improving the process and decreasing cycle times. The following
are three of the most impactful strategies.
1. Centralize Reporting and the Chart of Accounts
Part of the challenge of completing the monthly consolidated financial
statements is that large, globally distributed companies typically
leverage multiple general ledgers and financial planning systems.
While there’s no way around region-specific compliance requirements, a
company should aim to standardize and centralize the reporting process
as much as possible — especially with regard to the chart of accounts
(COA). A lack of standardization and centralization for the COA means
reporting will take longer, especially if different business units
continually add new accounts to their COA.
Establishing robust governance structures for the COA will not only
help prevent the unnecessary proliferation of GL accounts but it will
set standards for key data elements to ensure consistency and continuity;
determine lead times to set up or change the COA; and
allow holistic thinking about how exceptions will be handled.
2. Leverage Integrated Technology
Manual approaches to data collection and a lack of integration between
systems both lead to longer cycle times for the completion of
consolidated financial statements. Simplifying data collection through
cloud-based tools addresses both of those concerns.
Cloud-based ERP tools provide visibility across an enterprise and keep
each individual and department accountable for any delays in preparing
financial statements. These tools automatically update and share
financial data across multiple systems. That helps prevent the kinds
of errors and delays that occur when finance teams prepare financial
statements manually. Implementing cloud-based ERP tools requires a
commitment of time and resources, but it’s well worth it given the
3. Train and Empower People
Before asking finance teams to reach for faster cycle times, work with
them to better understand how much time they realistically need. In
addition, ask if anything might be causing process delays. While it’s
important to complete the statements in a timely way, it’s also
important to give teams enough time to get the work done so the
financials don’t have missing or incomplete information. To ensure
greater consistency and standardization, provide training and
resources like desktop guides that lay out how the work is to be