Part 12 in the “Continuous Accounting Action Plan” series
The advent of “continuous” is touching every aspect of the enterprise. Customer interactions are 24×7. Product processes are agile and use continuous development to achieve better visibility and accountability. Marketing has long shifted from one-off campaigns to continuous lead flow. Sales teams are interacting continuously with their prospects across channels. So, it’s no wonder than continuous thinking has finally arrived in finance and accounting.
In our final post in this series, we’ll share a roundup of some tips on how to apply the latest continuous methodologies to everything from your financial close processes to your budgeting and planning activities.
Tip 1: Create a gameplan
If you’re a finance or accounting leader, connect with your team to create a gameplan. We’ve provided a sample, but every organization is different. Build the plan based on a review of your current processes. Just as importantly, establish some quick wins.
Tip 2: Consider benchmarking to identify opportunities
One of the challenges we hear a lot is simply knowing where to start. Where is the low-hanging fruit? Performing a review of how your organization stacks up on an organizational and process perspective is an important place to start. It’s why one opportunity is to begin with some benchmarks and see how you stack up against similar organizations. Aim to measure how individual areas stack up, such as the time to close the books or how long it takes to create financial reports.
Tip 3: Use a financial close 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 on the team with a real-time perspective on where the bottlenecks are in the process(es), and if they are improving or getting worse period-on-period.
Tip 4: Reconciliation automation can provide a quick win
Account reconciliation is a big resource drain for most accounting organizations. Automation applies matching rules, exception management, and approval workflows to enable accounting to focus on the variances, rather than manually processing each reconciliation. Enterprises like eBay and Under Armour already use this approach to shave days of work for their accounting team and enable them to spend more time analyzing balances. Moving to more real-time reconciliation processing is also a vital step towards a “soft close.”
Tip 5: Reporting tools can cut effort and increase consistency
Financial reporting automation is a tried and tested area. Report scheduling, parameterized reporting, and moving away from spreadsheets are all proven ways to accelerate internal and external report creation. Moving to one data source for financial and regulatory reporting statements cuts data redundancy and cutting and pasting for narrative reports, dashboards, and report packages across IFRS, GAAP, and local accounting.
Tip 6: Rethink how you’re using your consolidation tool
Most mature organizations have already moved away from spreadsheets to perform consolidation – but many have not changed the process itself. For example, performing more intercompany tasks in real-time during the period can speed the consolidation process at the end of the period. And if consolidation and planning are brought together into a single application, it provides the perfect vehicle to speed the planning and forecasting process that relies on consolidated results.
Tip 7: Shorten the delays between close steps
Another area of opportunity is ensuring stronger collaboration, sequencing, approvals, and level of detail in close-process steps. Financial close task orchestration enables “detail at scale,” that is, ensuring everything is checked off on the close checklist, while effectively acting as a traffic cop – a central, collaborative environment that manages what needs to be done, who needs to do it, and who needs to approve it, before the team moves on to the next task. It’s a great way to cut time in close-step sequencing and to reduce risk in one fell swoop.
Tip 8: Roboticize more using process scheduling and monitoring
Roboticized process scheduling can be especially valuable with disparate finance accounting teams to squeeze latency out of processes. For example, when the entity close is complete, scheduling can automatically proceed to download the financials remotely from the entity system, run an automation task to validate the file, and import them into the corporate financial consolidation application. Then, once all the entity files have been loaded, kickstart the financial consolidation process. Accounting teams can then use process monitoring to see which processes require human intervention (such as those that have returned an error, an exception, or require an approval).
Tip 9: Extend continuous thinking across both accounting and FP&A
Rolling forecasts and more frequent planning are all part of a continuous mindset. It ensures that plans and forecasts are more aligned with the business. Driver-based and integrated planning work well when using continuous planning. But timely data is essential to inform forecasts. By shifting to a soft close by performing more accounting tasks in real time, FP&A can gain earlier access to financial data for planning, not just waiting until after the close. So be sure to reevaluate data flows between accounting and FP&A as continuous thinking takes root.
Tip 10: Use “retrospectives” to facilitate continuous improvement
Cutting risk, effort, and time isn’t a one-off activity. It’s a journey that requires continuous improvement. Ask, “What did we do well?” and “What should have we done better?” Perform quarterly “retrospectives” to examine the overall process at a summary metric and more detailed task level to understand what has succeeded and what requires focus for the next round of improvement.
Thanks for joining us for our continuous accounting action plan series – and learning how to take the first steps to shift to the next operating model for finance and accounting.