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With the year ending, it’s natural to look back at the months gone by and ahead at our business (and personal) goals. Closing our books is one of the ways we do that, giving us a snapshot of the month or year just completed.
The problem is traditional close gives is an unclear view of what’s happened, when it happened, and how to react to what’s happening now. The reason is that by the time we close our books, what we’re looking at is already a month old or more.
Between the time the accounting team is given the red light to begin building the reports used for monthly close, any number of major things can happen that impact the success of a project or the company. Change and the unexpected are inevitable in construction, and it doesn’t help if decision-makers are aware of them two months later.
The answer for many construction companies is the adoption of a continuous (or rolling) close. This can provide several benefits, but it also has a few requirements to be successful.
What’s needed for continuous close?
The reason more and more construction companies are adopting a continuous close model is that technology now exists to support it. Continuous close depends on technology to bring together data from across the many disparate systems — ERP, accounting, HR, and more — that in the past haven’t played well together.
Technology is also necessary to automate many of the manual processes involved in close, allowing them to be done quickly and with little or no human intervention. While it takes days for the team to gather the data to create the reports needed to then generate a close report, it can be automated to take mere moments.
The benefits of continuous close
Adopting continuous close is a game-changer for businesses, and as the processes become more refined more and more benefits are realized. That said, it has a few outstanding benefits that construction companies can experience quickly:
- Accuracy improvements. From eliminating human error to sharing data in real-time as it happens, continuous close makes sure what you are seeing in reports is current, up-to-date, and accurate.
- Time savings and better value. Instead of accounting teams spending days and days on reporting, the technology that allows for the adoption of continuous close handles the collection and reconciling of data, letting employees focus on putting it to good use.
- Enhanced visibility. Leadership can see the big picture of what’s occurring, right now. This improves the ability to make forecasting decisions, pivot the business when needed, and control cash flow — everything finance touches.
- Faster decision-making. Because decision-makers have a more accurate, complete, real-time view of the state of company finances, and because less time is spent on the collection and reporting of data, that data can be used to quickly provide better analysis. Business moves that used to take months to realize can now happen in days.
Continuous close is itself a continuous journey, but every step of which you gain a better understanding of the company’s financial health and can make better decisions to help it thrive in the months and years ahead.
To learn more about continuous close, considerations around adopting it, and how it’s changing accounting in the construction industry, check out our recent eBook, Closing the Book on the Monthly Close.
To learn how Briq helps you to achieve a continuous close, connecting systems, and automating processes, visit briq.com/demo and try us out.