Over the past few years, there has been a rapid increase in the number of organizations implementing financial close software for their office of finance. However, despite the growth in adoption rate, automated solutions for the office of finance have been around for quite some time.
In Trintech’s 2020 Record to Report Benchmark Report, Close Management was surveyed as the 2nd biggest challenge faced by executive and senior-level managers. In order to transform their close process, leading companies have been implementing close automation software for over a decade—and the results speak for themselves. By leveraging an automated solution, organizations have seen dramatic gains in both the efficiency and effectiveness of their financial close management.
As more and more organizations adopt financial close automation software, the insights and experiences they have gained can be used to guide the roadmaps for other companies to achieve similar results. This blog will explore four key benefits the office of finance can expect to see with the implementation of financial close software, coupled with the support of an industry-leading team of experts.
Benefit 1 – Improve Visibility into Financial Close
Due to the legal ramifications for both the organization and the CFO, one of the biggest struggles organizations face within their Record to Report process is a lack of visibility. Beyond the millions in fines and lost revenue that can result from a misstatement, CFOs of publicly traded companies are required to sign off on the final reported documentation and vouch for its accuracy.
The level of confidence required of CFOs to do this is often very challenging with the current tools used by the office of finance. As organizations predominately rely upon various, disconnected spreadsheets to manually complete their Record to Report process, their inherent lack of visibility denies CFOs true visibility into the financials of the overall organization.
By moving towards a centralized automated solution, organizations gain a single all-encompassing view of their financials and an unmatched level of confidence for CFOs.
Benefit 2 – Standardize Financial Processes
As an organization grows in size and complexity, issues begin to arise. Accountants create their own home-grown processes to perform the financial close across the multiple regions the organization resides in. Additionally, issues such as regional laws and regulations add another layer of complexity to an endeavor that is already difficult to manage.
This hectic approach results in multiple bottlenecks in the workflow that force accountants to cut corners in their work in order to meet tight deadlines. But organizations that move towards standardizing their close process through automation find that both the complexity and time needed to complete the close process drop significantly.
We operate in 40 countries, have 225 entities, and buy 6-12 companies a year. With Cadency, we now have visibility into the financial close process on a daily basis, as well as harmonization and standardization across all our countries and entities. So, a close process being done in Peru is the same process being done in Germany or the United States.
Benefit 3 – Reduce Risk Levels
The manual processing required to utilize spreadsheets as a tool to complete the Record to Report process means they are inherently error-prone. While certainly not intentional, mistakes such as incorrectly transcribing numbers happen. In fact, on average, 90% of spreadsheets contain errors. These errors, if left undetected, can lead to material weaknesses in the balance sheet.
While this level of risk has been accepted in the office of finance since the introduction of spreadsheets in the 80s, organizations that implement financial close management software are able to remove this source of risk that was presumed to be a necessary evil.
Benefit 4 – Improve Accuracy of Financials
Typically, the average accountant spends most of their time on low-value, repetitive work such as cross-referencing spreadsheets for accuracy. While not a particularly engaging way for these highly educated employees to spend their time, it is necessary to help verify the accuracy of any future-reported financials.
When organizations make the jump to financial close automation, the manual verification required to ensure accuracy is done both instantly and with an increased level of effectiveness.
The technology that has historically been used by the office of finance, which is commonly spreadsheets, represents a severe risk for organizations due to the lack of visibility, standardization and control. However, by leveraging a holistic financial close automation solution that encompasses the entire Record to Report process, you can effectively manage and view a single source of truth for your company’s financial performance.
To learn more about the benefits your organization could achieve through the use of financial close software, download this white paper that presents the business case for an automated close.