Metric of the Month: Days to Perform a Site-Level Annual Close

December 5, 2019

By Perry D. Wiggins at CFO on December 3, 2019

December marks the final month of the fiscal year for many companies. That means that the year-end closing process is here, accompanied by its attendant work spikes and stresses.

The annual close comes during one of the heaviest workload periods of the year for accountants, as month-end, quarter-end, and year-end closing processes converge in a perfect storm that sucks time and energy away from activities that support daily operations. Accounting teams that can perform the annual close faster will be able to get back to business as usual more quickly and may even have time to spend with their families for the holidays.

Data on cycle times for the annual close from APQC’s Open Standards Benchmarking Database shows that top-performing organizations (those in the 75th percentile) perform the annual close in 15 days or fewer. That’s nearly twice as fast as median performers and three times faster than bottom performers. (See graphic in article.)

While faster is generally better for this metric, every company will need to assess its cycle time for the annual close relative to peers of a similar size and complexity. Companies like Google and Facebook are naturally going to have a longer year-end closing cycle than a smaller organization like APQC. Further, a company’s stakeholders and compliance deadlines play a big role in determining how best to engineer the timing and pace of the annual close. For example, a 15-day cycle time may not leave enough time for some companies to conduct sufficient subsequent reviews of transactions after the cutoff period.

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