Part 2 in the Continuous Accounting Series.
Why did the accountant cross the road?
Because that’s what he did last year.
Before we delve into the individual aspects of the accounting and financial close, the record-to-report (RTR) process that I discussed in my last blog, let’s first address change management. The third main point discussed in the Ventana Research paper says:
- Adopt a continuous improvement approach to overcome inertia and the “we’ve always done it that way” mindset to which finance staffs are particularly prone.
This is a huge paradigm shift to overcome. The financial close process is not a “wish list” process. It is something that is mandatory, not only for regulatory reasons delegated by the government of every country, but also for the owners of private companies. Financial reporting and the delivery of financial information is essential to the operation of any organization. Your business produces financial reports, and if it works, why fix what ain’t broke?
That’s the thing—if you did it last year, just do it again and you’re good. NO! That is when organizations need to understand and embrace the move toward continuous accounting. How can you change what you are doing now to adopt the technology that exists to enable continuous accounting? Yes, you close the books every month, but is it efficient?
You need to evaluate how “continuous accounting integrates people, processes, information, and technology to achieve a transformation of the finance function and its corporate role.” (see this Ventana Research paper)
Think about that for a moment. This blog series is designed to parse the different steps in the accounting and financial close: the RTR process. The technology is there now. Your processes are based on historical processes based on traditional technologies. You need to think about how people in your accounting and financial close departments, and how your exceptional accountants (perhaps you yourself) can transform the processes that happen at the end of a period.
What processes are you doing now because you’ve always done them that way? What reports are being created because “Mary,” who worked there 10 years ago, said she needed them? Does your organization still need them? Are there more self-service tools that you can utilize to get Mary’s information out to the organization?
Let’s not cross the road just because Mary did it last year.
So, as you read the blogs in the following weeks that dissect the accounting and financial close process, think about how you can transform your accounting and close processes and how you can impact transformation.