Continuous Finance: Planning Your Journey To Better Accounting, Planning, And Performance

Elizabeth Milne

Part 1 in the “Continuous Accounting Action Plan” series

You’re not imagining things. The pace of change is accelerating, and there are no brakes. The business cycle is now continuous with a speed set to lightning.

According to Yale University, the average lifespan of a company listed in the S&P 500 has decreased from 67 years in the 1920s to 15 years today. Another study predicts that 40% of today’s Fortune 500 companies on the S&P 500 will no longer exist in 10 years.

How did we get here? Globalization and digitalization are two of the primary drivers. With businesses increasingly distributed, customers often offshored or outsourced, and operations moving to shared services, the business clock has changed to 24/7. But that’s not all.

Digitalization has quickened the cadence. Mobile apps allow businesses to run from anywhere, so you can now do tasks like approve a purchase order or close the books at your convenience. Use of robotics for common business processes is enabling tasks like approving sales orders or closing the books to be completed faster. Collaboration platforms are speeding engagement with and across teams. Analytics is enabling the measurement of processes and the gauging of opportunities to drive and pinpoint efficiencies. Machine learning is augmenting teams such as FP&A to improve the speed and accuracy of forecasts and plans.

Simply put, rapid technological change and digitalization are forcing organizations to reimagine processes, organizational structures, and resource allocations. Every part of the modern enterprise is seeing a shift to a continuous cycle, the acceleration of processes, and the pinpoint measurement of where to improve – whether in marketing and sales, service, or product development.

Finance is no exception. “Continuous” is arriving within every team within it: accounting, FP&A, and directly in the CFO’s office. Why does it matter? Because moving finance to a continuous model creates a more efficient, agile, and proactive function – allocating resources more effectively over the accounting calendar, while building financial planning that is more fluid and operationally relevant.

In accounting, record-to-report processes like reconciliations, reviews, and drafting of results are gradually being subsumed into tasks that occur throughout the period, not just at the end of it. Over in FP&A, forecasting has moved to rolling forecasts that offer more accuracy and are more responsive to a changing business environment. Management reporting and a consolidated perspective view of the financials based on month-end data is no longer good enough; the new expectation is that the data be available at any point during the accounting period.

Finally, measuring the efficiency, accuracy, and level of controls to learn where to improve is no longer a once-in-a-few years – or a never – task. With the business looking to finance for data and analytics, the onus is now on teams to measure and improve continuously.

Essentially, building a continuous finance strategy means creating a journey that spans three areas:

1. Continuous accounting

This fundamentally encompasses moving account and intercompany reconciliation processes from “period-end,” to “time-of.” However, it also has implications around reporting and rethinking common close tasks.

2. Continuous planning and forecasting

Think driver-based planning and a continuous feed of financial and operational data into forecasting models. Integrated planning provides a vehicle for functions to adjust as the operating environment in other functions changes. For example, a decline in a marketing-leads model might mean a change in sales team assumptions, which might impact the top-line revenue forecast managed by finance – and continuous planning can provide faster, more connected feedback than before.

3. Continuous measurement and improvement

With the increasing expectation that finance and accounting act as a business partner, and to move up the strategic value chain, it’s never been more important to apply continuous improvement. Whether it’s tracking the accuracy of forecasts – or reconciliations, or measuring the speed of report creation – or financial consolidation, or simply evaluating resource allocation devoted to different departments, measurement is key. Also, in such a rapidly changing operating environment, opportunities to improve can vary from month to month.

Creating a game plan

We get it – it’s easy to get overwhelmed. Especially when you’ve got a million other things to juggle, from just getting the books closed to getting your head around new accounting rules and regulations. But the good news is that moving to continuous finance is not an all-or-nothing proposition. There are quick wins and more strategic gains along the way. It starts with establishing a vision, getting initial momentum and success with a win under your belt, and then moving to the bigger areas. That’s why we’ve put together a game plan to overcome the inertia and get started:

Now that you’re familiar with the concept of continuous finance and why it matters to your organization and career, look for our next post, which will dive into how to set your strategy, establish a vision for what success looks like, and get buy-in from the executive team.

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Elizabeth Milne

About Elizabeth Milne

Elizabeth Milne has over 20 years of experience improving the software solutions for multi-national, multi-billion dollar organizations. Her finance career began working at Walt Disney, then Warner Bros. in the areas of financial consolidation, budgeting, and financial reporting. She subsequently moved to the software industry and has held positions including implementation consultant and manager, account executive, pre-sales consultant, solution management team at SAP, Business Objects and Cartesis. She graduated with an Executive MBA from Northwestern University’s Kellogg Graduate School of Management. In 2014 she published her first book “Accelerated Financial Closing with SAP.” She currently manages the accounting and financial close portfolio for SAP Product Marketing. You can follow her on twitter @ElizabethEMilne