What do closing the books reveal about a finance function’s health?

There are three reasons. One is that if it’s taking more than a week to close the books, then very likely your management is not getting information as soon as they should in order to do necessary reviews and adjustments. The second reason is that if it’s taking a long time to close the books, then you’re probably using too many resources to accomplish what really ought to be nothing more than a mechanical task. A related third reason is that if you focus in and figure out the reasons why [you] can’t close the books faster, you’re probably going to solve a lot of other issues you’ve got in [the] finance organization. So you might find out that you don’t manage the process particularly well, [or] you don’t have a continuous improvement attitude. If you look at everything else you do in your finance organization, you’ll probably see that the same problem is repeated over again in every corner — how you manage accounts payable and accounts receivable, how you deal with accounting issues, treasury management — all of these things probably are being performed at about the same level. That is to say, not as optimally as [they] should [be], in terms of process. It may be there’s a lack of training. It may be you’re not using the appropriate technology. There’s a benchmarking element, which is if you’re not closing the books within a week you’re probably doing a lot of other things wrong that need attention.