How to Efficiently Execute the Close

 

Efficiency in the close process is achieved by reviewing the right data, in the right way, using the right tools.  Technology, particularly AI, can significantly reduce manual effort, improve accuracy, and accelerate the process.

 

 

1. AI-powered transaction reconciliation

 

AI can automate the reconciliation of transactions between the administrator and portfolio management system, including transaction mappings and aggregations that are often more challenging than reconciling market values.  Institutions that consistently and comprehensively reconcile both market values and transactions rely on their portfolio management system as the performance book of record.  In these cases, they can eliminate external performance calculation services thereby reducing costs and streamlining the close process.

 

2. AI-assisted journal entry preparation

 

AI can convert files from your administrator into journal entries that are ready for upload into your institution’s general ledger, eliminating the need to manually manipulate or enter data each month.

 

3. AI-driven close performance analytics

 

AI can summarize and categorize reconciliation exceptions (e.g., market value, transaction, pricing) to generate a post-mortem report with charts and month-over-month metrics on errors.  This report can provide your service provider and senior leadership with actionable insights to continuously improve the close process.

 

 

 

How to Tightly Manage the Close

 

Even with AI and the best technology in place, a successful accounting close requires disciplined execution and oversight.  Clearly defined processes, well-understood responsibilities, and accountability across both the internal team and external service providers are essential to consistently producing an accurate and timely close.

 

 

1. Establish and Communicate a Calendar

 

The accounting close calendar helps to align internal teams and service providers.  It should clearly define key dates, including the:

• • Close date
  • Cutoff date for incorporating capital statements
  • Final review and sign-off deadline

 

2. Do What You Can, When You Can

 

Rather than concentrating all close activities into a few high-pressure days, distribute work throughout the close cycle.  By doing this, the accuracy of the data will improve, and your internal team can continue to support the broader organization.  Examples include:

• • Reconcile and sign off on separately managed accounts earlier in the month
  • Complete a transaction reconciliation within 5 days after month end
  • Review and resolve identified exceptions as they arise rather than waiting for all capital statements and performance estimates to be received

 

For many endowments and foundations, a monthly accounting close within approximately 20-30 days after month end is both achievable and appropriate. However, family offices where there is more sensitivity around ownership recalculations may require additional time to receive a larger percentage of capital statements. In these cases, best practice is to complete the quarter-end close within 75–90 days after quarter-end. Rather than delaying the entire close, complete all activities that can be finalized with available information and perform ownership recalculations once the necessary capital statements have been received.

 

 

3. Conduct Regular Post-Mortem Reviews

 

Leading investment offices treat the close process as a continuous improvement exercise. Regular post-mortem reviews with both the internal team and service providers can help highlight recurring issues, address root causes, and reinforce accountability across all stakeholders.  Key metrics to track include:

• • # of market value issues found and period-over-period trends
  • # of transaction issues found and period-over-period trends
  • Average time to resolution for issues raised with service providers

 

 

 

A disciplined close process – supported by the right technology, clearly defined responsibilities, and a culture of continuous improvement – is one of the most impactful investments an institution can make.  The data reconciled and reviewed during the close is the backbone for analytics, performance, and financial reporting.  And we all know that high-quality data enables more meaningful insight, better informed investment decisions, and stronger governance.

 

 

As always, we welcome your questions and look forward to continuing this conversation.

 

 

The Union Park Consulting Team