by Amy Pruitt, Zuora Account Executive
Before I launch into a discussion of the process and pains associated with closing the books, it should be acknowledged that companies of varying sizes will have very different experiences. A $1B Enterprise company will differ significantly from a company that is aspiring to be that $1B company. If you fall into the second category, read on:
“How long does it take you to close your books?”
When I ask this question of clients and prospective clients, 99% of the time the initial response I get indicates to me that the client is thinking “Closing the books is not on the top of my list of ‘Fun Things To Do or even to Think About‘, but it is at the very top of my list of ‘Things I Have to Do, and Do Well.’”
The actual answers I get range from “three to five days” to “two weeks”. No matter what the spoken answer is, the vibe is always, “I wish we could close the books faster, and that it wasn’t such a painful experience.” For subscription companies, there also seems to be a direct correlation between the complexity of pricing models and the time required to close the books.
In order to understand the health of your business, and take swift action to help the company maximize value, you need to accurately and quickly report on your organization’s financial results. In this process, one of the key themes you want to create and maintain is “trust.” Let’s say you are a $30M company with IPO aspirations; since a strong level of trust in your revenue line is a crucial component of the company’s eventual valuation, you must be able to reflect accurate and meaningful results. The same is true for smaller growing firms that plan to raise another funding round.
I ask the question about ‘time to close’ because Zuora makes it easier for you to close your books – accurately, quickly, and consistently- and to take full advantage of having done so.
Zuora helps by removing manual steps, integrating with other systems, maintaining an accurate subledger, making reconciliations easier, automating reporting, and keeping an accurate record of very complex inputs such as co-terminus subscriptions, payments, pre-payments, usage, delinquencies, monthly recurring charges, and non-recurring charges.
Some of the downstream effects of closing the books faster include the ability to:
- Drive business decisions at a macro level. Primarily you want to know, “What should we fix, or what should we keep doing?”
- Act decisively on the information in a timely basis. If you have information ten days earlier you can affect vital course corrections quickly, instead of getting the same results next month. You are faster and more nimble.
- Spend less time in your accounting processes and reduce the amount of manual effort required, thereby lowering your staffing requirements. Also, this allows for the ability to use ‘less expensive’ resources because the process is less complex.
So if you’re asking yourself, “How can I close my books faster?,” we’ve got a few suggestions.
- Perform a systems review. What systems do you currently have in place? To what degree do they help automate accurate transactions, processing and reporting?
- Analyze business process flow. Where are the manual steps in your closing process? Which data feeds could be synchronized or automated? For example, feeding invoice information directly into both the CRM system and the accounting system.
- Evaluate your close schedule. What activities are being done? By whom, and are the right skill sets in play? When?
Then give Zuora a call and let’s talk about your current process, how you can optimize your operations, think through ideas to help substantially reduce your close process, and see how you can manage complexity and actually turn it into trust – on your way to getting to $1B.