Behind The Scenes Of Achieving A WD1 Month-End Close

Behind The Scenes Of Achieving A WD1 Month-End Close

How fast does your company close your books? Maybe not at a consolidated level (assuming there are more entities in your company) but at an entity level? Workday 2? WD3 or? This is the story of how I managed a WD1 close without any help from tech and with added complexity compared to the baseline of WD3.

We’re in Houston, the year is 2013, and I’m working as a finance manager for Maersk Drilling USA Inc. I’ve already shared some of my experiences from this role in previous articles, but this is a deep-dive into one of my major achievements.

When I arrived in 2012 we were closing our books on average on WD3 and sometimes on WD4 while at the best of months a WD2 close had been achieved. As a company, we wanted to close the books even faster so simply averaging a WD3 close was only a medium performance score. WD2 was the max so clearly getting below would be quite a challenge. Yet, that is what we did and let me tell you how. 

Going beyond the normal boundaries 

Before explaining how we did it I should probably add that we also had one thing that played to our advantage. Time zones. Why are time zones an advantage? Well, when you work in an entity that’s part of a bigger group you’re likely subject to intercompany transactions. Those transactions must be reconciled monthly. If they don’t you get a plug that messes up the reporting. If your plug was big enough your entity had to be demoted and your reporting got delayed. Being in the US meant that many entities would already have sent us their intercompany statement of transactions during the day and some even reported it in the system. That was a massive help instead of having to guess what the number would be. If you were sitting in the other end of the world say Singapore achieving a WD1 close would be virtually impossible. That said here’s the story.

During 2012 we had already done some optimization to streamline processes and spend time where it really mattered. We closed faster than the year before although it was mostly on WD2 and 3 as opposed to WD3 and 4. The biggest challenge from a process perspective was the intercompany settlements. In 2012 they had a deadline on WD2 but as such there was nothing preventing us from sending them earlier.

At an offsite for all the finance managers globally I then shared this idea with our CFO and the proper parties and said, “I think if we can change this deadline we can do a “one day close”. On one hand, I asked the organization to change when likely few saw the benefit but at the same time I also leaned out in terms of what we could then achieve. I had set us up for a hectic 2013!

The goal was clear. Achieve a WD1 close and shatter the expectations of going below a WD2 close on average (here it’s to be considered that at quarter and year-end we faced increased demands making a WD1 close virtually impossible). Here are some of the most important steps we took. 

  • Created a checklist for what needed to be done by whom and when
  • Created a detailed timeline of everything that should happen on WD-1 and WD1
  • Created automatic links between files whenever possible from previously a lot of manual entries
  • Created reconciliation files that would tell us if we had reported things correctly since several reclassifications needed to be done from the general ledger in the accounting system
  • Created a rigorous process around documenting our intercompany posts
  • Moved all activity we possible could to before month-end i.e. like continuously challenging the data from the purchasing system that was used for accruals
  • A handshake within the team to do whatever it takes to win and stay late every month on WD1 (we had until 1 am to get it done because that’s when WD2 officially started in HQ)
  • A demanding continuous improvement cycle as in many months we made mistakes that negated our WD1 close, yet I passed on no blame but was firm on us learning from the mistakes and making instant improvements 

There were a few sleepless nights trying to achieve this and I don’t remember the exact month that it happened, but WE DID IT!! And not just once but a handful of times during the year. Of course, we went out to celebrate each time we made it. If we don’t celebrate our wins we’re demanding too much of our teams and ourselves.

We went above and beyond what was considered normal and that in a year where we added more complexity going from one to four legal entities and saw the number of transactions we had to process go up with 200%! The achievement made all of us very proud and gave us a lot of credibility with the senior finance leadership team but also with the business. 

Why go for a WD1 close and what did I learn? 

You might ask the question of why we chose to go for a WD1 close. The answer is simple though. Because month-end reporting doesn’t add any value. It’s what comes afterwards where you can start to add value. Since I wanted us to become business partners I had to free up time for this. The WD1 close was just one of many initiatives that helped us get there.

The WD1 close enabled that we could send a flash report with the results on the same day so that management knew the first in the next month how the previous month turned out. That gave us more time to do the in-depth analysis which we would present on WD5. It also gave us the rest of the month to do other activities. It was a win in many ways to sacrifice that one day of intense stress every month.

What did I then learn from all of this? Let me try to summarize. 

  • Set groundbreaking goals not just incremental goals – as incremental goals don’t move the needle on anything because your competition is moving at the same speed.
  • When you have groundbreaking goals you and your teams drive to achieve them instantly increases – it’s just not very inspiring to go for incremental.
  • Have a plan with what you’ll use the freed-up time for – because if you don’t there’s no purpose for pushing so hard.
  • Prepare to do a lot of testing, failing, and learning before you succeed – without continuous improvement and the willingness to fail without punishment we would’ve never reached the goal.
  • Celebrate your wins to truly give people a sense of achievement – and if you don’t celebrate you’ll never feel like you achieved anything because all you can see is the next goal towering in the horizon. 

Especially #3 is what I see is often missing. If you don’t know what comes next your team will lose its purpose and you’ll never achieve anything big again. That wasn’t us though and next week we’ll dig into my biggest impact case as a business partner which came shortly after we had delivered the WD1 close. It’s the coming together of the bean counters to business partner strategy and maybe one of the proudest moments of my early career. I can’t wait to share it with you!

Just before you go could you tell me what groundbreaking goals you’re currently pursuing and you’re going to achieve them?

This was the eight article in the series "My Early Career Lessons From A Decade In Finance & Accounting". You can read the previous article(s) below.

My Early Career Lessons From A Decade In Finance & Accounting

The Purpose Defining Moment In My Finance Career

Are You Looking For A Finance Job Or A Finance Career?

Here's Why You Should Take Charge Of Your Career

The Intersection Between Finance And Business Is Where It Got Interesting

The Accidental Finance Business Partner

A Young Finance Leader In The Land Of The Free

Moving Finance From Bean Counters To Business Partners

If you want to become a better business partner you should consider taking our online course "Business Partnering Explained - Value Creation Unlocked" to get a better handle on the role. It's accredited for 5.5 CPD hours.

You can read a lot more articles about FP&A, Business Partnering, and Finance Transformation below. It all start's with “Introducing The Finance Transformation Nine Box” where you set the ambition for your transformation. You should join the Finance Business Partner Forum which is part of the Business Partnering Institute's online community where we will continue to discuss this topic and you can click here to follow me on Twitter.

Your Journey To Successful Business Partnering Explained

How To Create Value Through Business Partnering

Everyone Can Adopt A Business Partnering Mindset (part of a six-article series about FP&A Business Partnering)

From Business Partner To Working Within The Business (part of an article series where I interview finance professionals about their careers in FP&A and Business Partnering)

Is Your Product Optimized For Value Creation? (part of a toolbox series where we look at what tools FP&A professionals should leverage to drive value creation)

How Business Partners Turn Analysis To Insight (part of case study series where I interview business partners about how they drive value creation using real cases)

The Future Of FP&A: Two Ways To Take The Reins

What Is The Accounting Profession Paradox?

What Defines A Finance Master?

The New Career Path For Finance Professionals

How Finance People Can Be More Successful

The CFOs Roadmap To Transforming Finance

How To Become A Finance Business Partner

Financial Analyst vs. Finance Business Partner

Finance Business Partner Is A Bullshit Job

How Business Partners Keep A Plan On Track

Anders Liu-Lindberg is a Senior Finance Business Partner at Maersk supporting our largest product and I have more than 10 years of experience working with Finance at Maersk both in Denmark and abroad. I am also the co-founder of the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with more than 8,000 members. My main goal at Maersk is to show how to be successful with business partnering and drive value creation as a trusted partner. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger with 40.000+ followers.

What a fantastic story and team. Too often accounting teams find reasons to not close faster ... somehow justifying that the ultimate customer (the business) is better served by late information!!!

Mark Cracknell

Padel Certified Coach & Business Development | CFO | CPM Specialist and Content Creator

4 年

Thanks Anders Liu-Lindberg for sharing this experience. Finance Transformation (which is how I would describe this initiative) is about process improvement and effecting change. The process improvement is the closing within 1 working day, the effecting change is about what you then do with the time created. One of my experiences that I will add is that many companies waste time being "exactly wrong rather than being roughly right". By this I mean consuming time making exact accruals and prepayments or performing exact reconciliations that are immaterial to the outcome. As others have noted, using relevant software to help with the 'entity close' process automation would free up more time or help the accountant lead a normal life! #blackline and #trintech are two specific solutions and also other #cpm platforms such as #onestream and #tagetik have some capability in this area. Unfortunately, too many companies do not invest in these tools as the business case cannot be justified! What you have demonstrated is that, if you are prepared to stick your head above the parapet and be brave, then you can achieve good things. For this I congratulate your achievement.

Ranjit Kumar CPA

CPA US | MBA Finance | Associate Director of Finance| Ex- DXC, BT , Motorola

4 年

I like and agree that month-end reporting doesn’t add any value. It’s what comes afterwards where you can start to add value'. However early close could be possible at business units/ entity level.. following same practices at organisations level may not be ideal scenario as most of systems talking each other on WD2.. and system reports are integral part of month end reporting!!

Robin Kiziak

Hardcore Financial Controller

4 年

Another great article Anders and I love how you've made it so practical. There's three points that stand out to me here: Firstly, month-end alone doesn't add any value and it's so true that it's the work that follows month end where finance can make a true impact on the business. Celebrating success is extremely important. It doesn't have to be a big party but the main thing is acknowledging that success has been achieved and making sure everyone is appreciated. Not only can this build team relationships but also helps to foster team spirit. Finally, your point about making sure you have a final goal in place as to what you will do with the spare time you have once you've created it is key. Based on the team bonding above, it's vital that everyone can get behind a joint goal. Thanks for some more great advice.

Sharul Jain

Strategic Finance Partner at Driti Advisors LLP

4 年

The part I agree most with is ' month-end reporting doesn’t add any value. It’s what comes afterwards where you can start to add value': in fact with some good practices we can try to do what usually comes after wards even before month end, a good forecast, timely entries from AP, regular fx reco and clearing of ledgers allows for analytics and decision support data being available earlier than month end.

要查看或添加评论,请登录

社区洞察

其他会员也浏览了