Part 3 in the “Continuous Accounting Action Plan” series
Thanks for joining us for the next blog in the continuous accounting action plan series. In the last blog, “Moving to Continuous Finance: Strategy and Buy-In,” we shared how to overcome inertia by identifying aligned and fruitful opportunities for improvement, strategies like benchmarking, and how to build a case for change.
However, while a comprehensive finance transformation initiative that touches all areas of the organization is typically a multi-year journey, it’s important to start with some “quick wins,” to buoy the team and show early success. What are our criteria for quick wins?
- It should deliver quantifiable, measurable value within a year, and preferably within six months.
- The initiative is complementary and accretive to existing investments.
- Finance and accounting can primarily own and manage the new process, not IT.
We’ve carved out three common examples that fit the profile in this post—in this case, focused on the financial close process. Of course, your quick wins might be different, such as being more geared to planning or analysis, if you’re already got a lock on the financial close. But whatever they are, you’ll want to ensure that they fit the three criteria above.
Fortunately, getting quick wins under your belt is much easier than it was a few years ago. With cloud computing, the de facto deployment for new applications, finance and accounting can take the lead when deploying new technology. Cloud computing removes hardware and infrastructure barriers to adoption, and in a hybrid model, can complement and integrate with existing on-premise ERP investments.
1. Gamify the financial close with a scorecard
A great way to get the accounting team thinking about process efficiency, and collaborating on ways to improve it, is by deploying a financial close scorecard. A scorecard provides everyone within the team with a continuous perspective on where the bottlenecks are in the process(es), and if they are improving or getting worse. For example, tracking metrics can provide visibility into fruitful areas and progress:
- The number of manual entries per close period
- Days late to close
- General ledger close time, time to issue management reports
- The number of adjusting journal entries
- The number of automatic entries vs. manual
- The number of account reconciliations that are manual vs. automated
Showing how key processes are trending in a scorecard can even create competition in the accounting team to improve. It also opens opportunities for employee incentives to celebrate success. A scorecard needn’t stop at only tracking process performance either. Modern scorecards enable identification of tasks that need performing, can provide detailed close checklists, and can even help with scheduling and approvals.
Here are the reasons why a financial close scorecard is a quick win:
- It can work well with existing ERP and financial reporting investments.
- It doesn’t impact transactional accounting.
- It is typically a lightweight deployment.
For benefits, a financial close scorecard helps maximize the return on process optimization initiatives by delivering an exacting view of which close processes would benefit optimization, and whether they are succeeding. If extended to task management and close checklists, it can substantially reduce the risk of important items falling through the cracks during the close.
2. Trim accounting workloads with reconciliation automation
Reconciliation automation offers one of the fastest ways to quickly improve accounting efficiency. In fact, analysts predict that by 20201, 60% of the world’s top 1,000 companies will have deployed it in some form. By using tools like robotic process automation (RPA), accounting can shift away from manual end-of-month, account transactional and intercompany reconciliations, to instead automatically process low-risk accounts, and highlight exceptions and variances that merit further investigation. Essentially, reconciliation applies sophisticated rules, data integration, exception management, and approval workflows to enable accounting to focus on the variances, rather than manually processing each reconciliation. Because modern reconciliation automation is cloud-delivered, and connects with, rather than replaces the ERP, it also fits the bill for a quick win.
The results can be impressive within a short timeframe. By using an automated, rules-based approach to reconciliations, enterprises, like eBay, shifted its financial close from ten days to three. Under Armour shaved days of work off the desks of its accounting team, who are now able to spend more of their time analyzing balances, reviewing results, and ensuring relevance and accuracy, rather than monitoring completeness and executing administrative tasks.
3. Cut disclosure and reporting redundancy
Companies upgrading their disclosure processes can achieve meaningful benefits quickly. A recent FERF study found that 78% of companies see process improvement gains and 54% are cutting four or more days from their process. Reporting technology is extremely mature, but often highly underutilized. The key is to move the process off, often repetitively cut and pasted together, Excel and Word documents, and manual data extracts.
Automated report scheduling, and parameterized reporting, are all proven ways to shave days off creating both internal and external reports. Moving to one reporting data source that drives multiple types of financial and regulatory reporting statements across IFRS, GAAP, and local accounting, in a wide range of publication formats for narrative reports, dashboards, or report packages, can dramatically lower needless data redundancy and cut and paste efforts.
Because financial reporting automation is such a tried and tested area, with predictable results, and most tools are designed to work in tandem with multiple ERP and accounting systems that are in place across corporations and subsidiaries, it also fits the bill for a quick win. With reporting improvements in reporting automation, finance and accounting can move from end-of-month reporting to on-demand reporting, an important part of achieving continuous visibility into business performance.
We’ve shared some examples of some quick wins, but what’s on your list? In the next post, we will jump forward into some of the larger areas, and cover two strategic wins around continuous accounting.
1 – Gartner, June 2017