Solving the Manufacturing Industry’s Top 3 Financial Close Challenges
The manufacturing industry has always been forward-thinking in their approach to adopting new technology. From the introduction of Henry Ford’s assembly line to the usage of containerized shipping systems, the willingness to adapt has reduced costs, improved efficiency, and made organizations more competitive. This trend shows no signs of slowing down—according to a recent study, 68% of CEOs of some of the largest global industrial products companies are increasing their digital and technology investments this year. While accounting and finance are not often perceived as areas that require consistent technological advancement, adopting automated reconciliation software into your financial close process can help your manufacturing organization overcome some of your biggest challenges.
#1: Strict Enforcement of Compliance Laws
We know the manufacturing industry is subject to aggressive regulations that govern extraterritorial conduct, like the Foreign Corrupt Practices Act (FCPA) and economic laws administered by the Office of Foreign Assets Control. With an average of nearly 70 laws and regulations for manufacturing industries to adhere to, it’s no surprise that compliance is a major concern. Holistically evaluating and automating the financial close process can decrease your organization’s risk profile, streamlining and simplifying the audit process.
Organizations that adopt Trintech into their reconciliation and financial close management processes can experience a 40% reduction in internal audit effort, 20% reduction in time testing controls, and up to a 60% reduction in time supporting external auditors.
#2: Complex Intercompany Requirements
Organizations within the manufacturing industry are often subject to growing pains, whether through mergers and acquisitions or natural growth. Adding to the frequently faced challenges stemming from the complexity of intercompany processes, 54% of respondents in a recent survey indicated that their team relies on manual intercompany processing with limited counterparty visibility to support reconciliation and elimination. From the initial invoice and journal entries all the way to the final settlement value, establishing a predictable and reliable intercompany accounting process is critical to ensuring the integrity of any and all reported financial documentation.
Trintech’s intercompany capabilities allow for both detective and preventative controls to manage the intercompany process. Organizations that utilize Trintech’s software in their intercompany processes experience up to a 75% reduction in time spent on journal entry adjustments and a 62% reduction in write-offs related to reconciliations.
#3: Long-term Business Continuity
Whether it’s economic instability, health crises, or natural disasters, your organization must be prepared with a business continuity plan. With figures indicating that downtime can cost businesses up to (and over!) $10,000 per hour, business continuity in the manufacturing industry starts in finance and accounting. In addition to the management of this major financial risk, the whole organization typically looks to these teams’ leadership for reassurance and guidance in times of uncertainty. No matter the climate, the pressure to meet deadlines, produce accurate financial reporting, and stay on top of the organization’s financials is always existent, if not increased.
Organizations that implement Trintech’s automated reconciliation software are more flexible and able to futureproof their financials with up to a 76% reduction in cash shortages and a 14% reduction in the risk of revenue impact due to misstatements. Additionally, being in the cloud supports a dispersed remote workforce and gives all team members access to the data and tools they need to do their job efficiently and effectively.
While we know that ROI is vital to your business, we also understand the importance of choosing the right partner, with the right technology. Implementing a new solution can be stressful and resource-intensive, but Trintech is here to help. See why leading organizations in the manufacturing industry like ABB, Boston Scientific, and Siemens trust Trintech’s automated reconciliation software to increase visibility and control in their financial close by visiting our webpage!
Written by: Nicole Tallman