The journal entry (JE) process has been a proven source of stress and anxiety for many finance teams. This is especially true for organizations that utilize manual approaches and tools such as spreadsheets to complete their journal entry process, instead of utilizing automation. Unnecessarily complex spreadsheet systems that journal entries are typically completed with create unorganized workflows that produce inaccurate data. This increases the risk profile of the organization, which creates more stress for the office of finance.
Transitioning from traditional tools to an automated journal entry solution, such as Cadency by Trintech, can decrease the risk that the journal entry process brings to the organization, while improving operational efficiency so you can meet your deadlines on time. Here’s how Cadency improves the JE process for your finance and accounting teams.
Manual vs. Automated Journal Entry
Since the creation of the spreadsheet in the 1980s, the office of finance has utilized these for their overall Record to Report. However, spreadsheets, and the manual processes that inevitably accompany them, are inefficient and error-prone. Because spreadsheets cannot easily grow with the organization, the number of documents only accumulates with no easy way to organize, search through or edit. This also contributes to a messy workflow among the entire finance and accounting team. Approvals are typically done over the phone and through email. Accountants spend an inordinate amount of time updating finance leadership on the progress of the Record to Report instead of completing the tasks within it. The inherent lack of visibility and control in spreadsheets increases compliance risk, as there is little assurance that the resulting numbers are accurate. Not only is this risky for the entire organization but causes unnecessary stress and anxiety for your team each period as they attempt to complete the close on time.
All these factors apply not only to the entire Record to Report, but the journal entry process that is a part of it.
There is a better way to perform journal entries by utilizing advanced technologies like Cadency by Trintech, with Robotic Process Automation (RPA) to save time and improve results.
Increased Operational Efficiency
Without a standardized workflow for your journal entry process, managing thousands of journal entries each close period will always be inefficient and complicated. While you can standardize a typical spreadsheet journal entry process, aspects such as entering adjustments will also be complicated, inefficient, and time-consuming. Using journal entry automation, such as Cadency by Trintech, will help your finance and accounting team create and enforce a specialized workflow. Cadency allows flexible configurations to support your organization’s specific needs within the preparer, reviewer and approval process, even with multiple systems involved. Cadency provides auto-approval capabilities in addition to using Trintech-built ERP and JE connectors to allow your team to validate, post and reverse journal entries.
Users of Cadency see up to a 75% reduction in the time it takes to prepare and review journal entries for the preparer.
While the workflow is hindered by complex approval and adjustment methods, your organization’s risk profile is also increasing due to the lack of visibility and control inherent in a process performed by spreadsheets. Not only is there very little assurance that the journal entry data is correct, but the lack of transparency affects other areas of the Record to Report, such as audits. Additionally, the time it takes to manually go through the journal entries to ensure accuracy before the close only further increases your organization’s risk. Trintech has developed capabilities that are embedded in Cadency to prevent the creation of risk in your journal entry process.
The first is Risk Intelligent RPA (RI RPA). This feature works to reduce human error in the Record to Report, including journal entry, and identify key items that require human review. RI RPA does this by utilizing the customer’s concept of risk to develop organization-specific rules to classify tasks according to the risk they present to the organization. Not only that, but it also provides a clear audit trail, so you don’t have to spend time explaining to your auditors what happened and why.
The second Cadency-specific feature that works to increase efficiency while reducing risk during the journal entry process is AI Risk Rating For JE. AI Risk Rating for JE is a capability that is inherently proactive. It allows finance teams to incorporate rules around how the journal entry is prepared and assign a level of risk to each prepared journal entry. This helps identify if a task might create a significant amount of risk down the road for an organization and prevents errors and anomalies before they happen. Not only does this save time in the journal entry process, but effectively works to reduce risk.
“Trintech’s Artificial Intelligence Risk Rating for JE will help HP continue to improve its quality of our journal entries, which in turn improves our Balance Sheet and Income Statement. Also, this feature will prevent errors from happening and allow for additional explanation on why the journal entry was entered to be leveraged by internal and external auditors. We are excited that this functionality will continue to improve the efficiency in our Record to Report process.” –HP, Inc.
Cadency by Trintech is proven to reduce potential fraud by up to 76% and revenue impact due to misstatements by 14%.
It’s time to end the unnecessary stress and anxiety surrounding your JE process by leveraging journal entry automation to increase efficiency and reduce risk. Cadency allows finance and accounting teams to meet deadlines easily, audits to progress smoothly and gives time back to busy accountants.
Discover more benefits and the ROI your organization can experience in the journal entry process with Cadency.
Written by: Ashton Mathai