Saying Goodbye to the Month-End Close and Hello to Real-Time Data


BLOG VIEW: Picture this: It’s a typical Tuesday and you head to the grocery store to buy a few things on your list. When you get home, you decide to check your account balance. Upon opening your banking app on your phone, your balance is posted at the top, and there’s a detailed list of all your recent payments and purchases including the grocery run that happened only 20 minutes ago. 

Today, the luxury of being able to see your account updated in real time isn’t really a luxury – it’s an expectation. In fact, Forbes explained that “The expectation of consumers today is that everything exists in the world of the now,” and that applies to mortgage bankers, too. When their personal finances are being updated at their fingertips, they are expecting the same results from their accounting technology at work.

Gone are the days where only accountants and the CFO looked at financial data and one could get away with only reporting once a month. As the pace of doing business increases and showing financial data to non-accountants like executives, branch managers and more becomes more prevalent, mortgage accounting technology is shifting to use the same metric of when data should be available – which is now. 

When showing financial data to non-accountants, they don’t understand why they should have to wait. They don’t have to wait to view their bank statements or to view anything else on the Web, so why should they have to wait until the end of the month to view the transactions that happened that day? As an ex-auditor, I understand there are a number of entries that accountants can’t make every day, but the pressure is on to make up-to-the-minute information available to those who have been given the task of growing the company.

In the past, there was a mindset that you could wait until month end to record certain activity. Not only is the demand for up-to-date data making this approach go away but there is also a new realization that if you record things daily, there is just less to do at month end, and that the goal should be to level out the peaks and valleys of the accounting work load.

Older accounting systems were geared for monthly reporting. Most systems were based on batch processing and the oldest only let you post those batches monthly. In those systems, the earliest one would see financial data was weeks after month end.

However, the architecture of today’s technology lends itself to process the most up-to-date information, in real time. As the transactions are entered, the financial data is available for branch managers, executives and the accounting department to pull the reports and analyze the data.

Mortgage accounting technology needs to be better suited to this new paradigm, with the ability for transactions to be posted to the general ledger immediately. This way, a branch manager or executive can view financial data on the company, a branch or even a loan at any time – rather than waiting until the end of the month. Allowing access to the most up-to-the-minute information will give management more time to react to a negative situation or an opportunity to exploit.

Additionally, accountants may be accustomed to looking at a balance sheet, an income statement and a cash flow statement, but for the data to truly be effective to people outside the accounting department, financial reporting needs to be easier to view, concise and clear – the drill downs need to be obvious, the graphics have to be meaningful and the information needs to be easy to understand.

Saying goodbye to the month-end close may sound like the end to ensuring the data is entered correctly – but it’s not. Accountants aren’t saying goodbye to reviewing the data, and will still need to ensure that transactions have been entered correctly.

Although, instead of waiting until the end of the month, the data will be entered more frequently and accessible for non-accountants to view, but the accounting department will still have cycles to check transactions, retaining the ability to confirm that all the data is entered correctly. Those “cycles” may well happen on a monthly basis. What appears to be going away is the idea that nothing can be reported until the month is closed. 

Perhaps the best part of having this data available is that it expands the number of control points across the company. For example, if a branch manager notices that their branch was incorrectly charged for something, he or she can call the accounting department to have someone correct the issue, increasing engagement and collaboration across the company.

Ultimately, saying goodbye to the month-end close gives more access to the most up-to-date data and better reporting to accountants, branch managers, executives and more. Pulling reports and analyzing data should be as easy and reliable as picking up your phone and checking your bank statement. Having access to real time data helps branch managers see where their branch stands and helps executives see how the branches are stacking up.

Brian D. Lynch is the founder and president of Irvine, Calif.-based Advantage Systems, a provider of accounting and contract management tools for the mortgage banking and real estate industries.

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