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The Evolution of the Financial Close in the Cloud Era
The financial close process represents one of the most critical and complex accounting workflows in any organization. With the migration to cloud-based ERP systems like NetSuite, the close process has evolved from a mostly manual exercise to a more automated, system-driven procedure. However, many organizations fail to fully leverage NetSuite’s capabilities, resulting in longer close cycles and increased risk of errors.
My research across multiple NetSuite implementations reveals that organizations optimizing their NetSuite close process typically reduce close time by 30-50% compared to their pre-NetSuite baselines.
Key Elements of an Efficient NetSuite Close
Period-End Closing Framework
The foundation of an efficient close process is a well-structured sequence of activities:
Pre-Close Preparation
- Establish and communicate transaction cut-off deadlines
- Review master data (GL accounts, entity relationships, exchange rates)
- Run preliminary verification checks for anomalies
Primary Close Activities
- Process and reconcile all subledgers (AP, AR, inventory)
- Perform operational review of revenue, expenses, and variances
- Complete financial reconciliations (bank, intercompany, control accounts)
- Execute period-end technical procedures and close the accounting period
Post-Close Activities
- Generate financial reporting packages
- Distribute reports and conduct performance reviews
- Document issues and implement process refinements
This framework provides a logical sequence that leverages NetSuite’s capabilities while ensuring appropriate controls and validations.
Reconciliation Automation Strategies
Account reconciliation remains one of the most time-consuming aspects of the close process. NetSuite provides several capabilities to streamline reconciliations:
Bank Reconciliation Optimization
Maximize efficiency by configuring direct bank connections, implementing scheduled imports for statement data, and establishing matching rules for automated reconciliation.
Subledger-to-GL Reconciliation
Create saved searches comparing subledger totals to GL balances, develop aging analysis for reconciliation items, and implement exception highlighting for material variances. This transforms reconciliation from a manual hunting exercise to a structured exception management process.
Consolidation Strategies for Multi-Entity Organizations
Organizations with multiple subsidiaries face additional complexity during close. NetSuite’s OneWorld capabilities provide powerful consolidation tools when properly configured:
- Reconcile intercompany transactions and resolve discrepancies
- Verify exchange rates and run revaluation routines
- Create and review standard elimination journals
- Perform pre-consolidation verification to confirm all subsidiaries have completed local close
- Conduct post-consolidation validation through analytical review
Leveraging NetSuite Features for Close Efficiency
Several specific NetSuite features can dramatically improve close efficiency:
- Period Locking Strategy: Implement tiered approach with role-based access
- Saved Search Library: Build comprehensive searches for exceptions and variances
- SuiteGL Custom Segments: Enhance reporting capabilities
- Scheduled Financial Reports: Automate generation of standard close reports
- Workflow Automation: Implement approval flows for journals and accruals
The Path to a Three-Day Close
Organizations achieving a three-day close typically demonstrate:
- High transaction automation rates (80%+ through automated flows)
- Real-time reconciliation practices throughout the month
- Proactive accrual management with standardized methodologies
- Optimized resource allocation with clear task ownership
- Mature exception handling procedures with documented resolution paths
By focusing on these critical elements, finance teams can transform their NetSuite close process from a monthly scramble into a streamlined, efficient operation that provides timely financial insights while reducing team stress and overtime.
Connect with me on LinkedIn to discuss your organization’s specific close challenges and opportunities.