Financial close in the age of AI

Finance leaders are concerned about unreliable data and manual processes. The period-end closing process in particular is still poorly equipped in many organisations. This puts pressure on the financial team and leads to a lack of confidence in the resulting numbers, writes Olivier Cornet, UK country manager at Sixthfin

Reliable data is the key to successfully implementing technology like AI, so how can finance leaders relieve the burden on their teams and improve their data reliability?

Sixthfin asked over 300 in the UK about the challenges and how they see the future. The report is independent and representative of mid-sized and large UK companies.

Financial teams cite the stress of the closing workload. More than 90% of finance leaders highlight the significant impact of closing on team motivation. Deadlines are another major source of pressure in 96% of companies, as are the quality of the tools available (93%), constraints linked to parallel projects (88%), the unreliability of data (86%) and the lack of available time for analysis (86%).

The lack of time is significant. The closing process requires an intense effort over a short period, between three and eight days for 74% of companies surveyed.

Operational challenges complicate matters. According to 44% of finance leaders, the late collection of information is the main factor making the closing process more difficult. Added to this is the proliferation of manual spreadsheets (cited by 38%), reliance on certain key individuals (35%), lack of coordination between teams (34%) and difficulties with traceability and account documentation (34%).

Perhaps surprisingly, account analysis and reconciliation remain largely manual activities. Beyond ERP systems, traditional office tools still predominate, with 67% of companies using spreadsheets and collaborative tools like Teams and emails.

Only 15% of companies currently perform account analysis and reconciliation without relying on Excel or collaborative tools as core control tools. As a result, dissatisfaction is evident at all levels.

All this is happening at a time when the role of accountants and financial teams is changing. Finance leaders say that the combination of analytical thinking and the ability to adapt to new technologies is increasingly important.

The finance professional of the future needs to be capable of understanding AI outputs, identifying their limitations and validating results. The jury is still out on whether AI can speed up the closing process, although the industry is hopeful that with AI executing at greater speed, the accountant can now focus on interpretation.

The hope of AI and increased automation

The finance leaders in the Sixthfin research are looking to new technology, and specifically AI, to relieve the closing burden. More than 75% of them say they trust artificial intelligence across all closing tasks, whether for improving data reliability and detecting anomalies (80%), or reducing team workload by automating repetitive and time-consuming tasks (84%).

There is a widely understood and ambitious roadmap for the future. The main priorities are review and control activities. The areas that finance leaders are looking to strengthen include: accounts analysis (mentioned by 53%), analytical review (50%) and control of manual entries (50%). This range of priorities shows that no issue is being addressed satisfactorily.

Reliability is the key to the future, for professionals and technology

The closing process has room for improvement. 33% of finance leaders in the Sixthfin survey were not very confident in the reliability of their figures. As a result, 67% of finance leaders still consider improving the reliability of accounts a top priority.

This must come from improving the closing process to:

• Harmonise the data. Blind spots and friction can be eliminated by consolidating data from different ERPs, currencies and frameworks to create a unified standard;
• Foster collaboration. When multiple teams can work within a centralised environment, it makes it easier to verify accounts, with the ‘four eyes’ principle;
• Integrate AI. Do not rely on manual sampling to identify duplicates and fraud risks. Use AI to surface the anomalies for an expert decision;
• Train the team. Upskill the people in the finance division to combine human decision-maker with AI pilot.

The closing process is burdensome for accountants. It also weighs heavily on finance leaders: fewer than one in two finance departments consider the close management to be ‘very satisfactory’.

The Sixthfin research reveals the route out. Improving the period-end process will help to reduce operational fragility and build a finance team that is ready for the future.