What is a Fast Close?

A fast close refers to the release of financial statements for a reporting period as quickly as possible. To do so, the accounting department must work through a standard checklist of closing activities, such as billing all customers, conducting a bank reconciliation, and assigning a valuation to the ending inventory.

What are Fast Close Metrics?

The ability of the accounting department to conduct a fast close can be tracked with a variety of fast close metrics. The most obvious metric is to track the number of hours from the end of the reporting period to the date and time when the financial statements are released. At some point, this general measure will reveal performance of just one or two days, at which point more specific measurements may be needed. Other measurements related to closing the books that may be of use are:

Gross number of adjusting entries. Transaction errors must be corrected, and their correction delays the closing process. Thus, investigating the gross number of adjusting entries can be used to track down issues that are delaying the close.
Review errors. Note the types of errors found during the initial review of the financial statements. This information can be used to track down and correct underlying problems that can be prevented during future closing processes.
Completion times. Further refine the duration of the closing process to focus on each category of activities that must be completed, to understand not only how long they take, but also how they are impacted by other steps in the closing process. Some of these measurements by activity type are:
- Time for subsidiaries to forward their results to corporate headquarters
- Time to close the processing of period-end cash
- Time to finish processing accounts payable
- Time to issue billings to customers
- Time to close payroll and record accrued wages
- Time to count and value ending inventory
- Time to issue related management reports