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Reduce the Risk and Cost to Serve within Your Office of Finance by Automating Foreign Currency Valuation in SAP®

The role of the CFO has undergone a profound shift in recent years. Traditionally, their focus was on accounting, financial reporting and compliance. Today, CFOs play a more strategic role where they are expected to drive the strategic direction and success of their organizations using their knowledge and understanding of the financial position of the company. However, these legacy activities are still critical to their role and the overall financial close, so they are now just having to do more with less. Given this reality, organizations are looking for ways to automate more and more activities in their close process to free up resources for more cognitive activities such as analysis and decision-making.

Trintech is helping many organizations streamline their period-end close process by using innovative, disruptive technologies to automate close tasks within customer’s ERP(s) such as SAP® ECC, S/4HANA, Oracle EBS, etc. One of the most commonly performed tasks during month-end closing is “Foreign Currency Valuation” within SAP® ECC or S/4HANA (refer to this SAP blog for additional details). Before creating financial statements, the foreign currency valuation process needs to be performed for the transactions done in foreign currency. These transactions can vary from bills receivables or bills payables or might be intercompany money transfers that involve GL, customer or vendor accounts. It is a tedious process that needs to be performed diligently for each company code (entity) within the organization and can take hundreds of hours of manual effort every year (refer to this blog for detailed steps). If this is not done timely or accurately, it can introduce tremendous financial risk and may materially impact the financial outlook of the company.

So, what are the typical manual steps involved in the “Foreign Currency Valuation” process:

  1. Use in-house tools such as email and spreadsheets to manage the workflow for close tasks and manually keep track of the execution status
  2. Log into the ERP instance and execute F.05 
  3. Enter various parameters in multiple tabs– company code, date, valuation method, etc.
  4. Execute and confirm it ran successfully
  5. Update the status of the task in spreadsheets

As you can see, the manual approach is tedious and not only increases the time and cost of completing the foreign currency valuation but also significantly increases the risk of errors. This also increases the burden of onboarding and training if there are personnel changes. Trintech can help streamline and automate this process, reducing cost and risk simultaneously. 

Now, you may wonder why you should invest in another solution when you have already made investments in an expensive ERP system, other 3rd-Party RPA tools, or home-grown custom solutions within your ERP or have plans to move to S/4HANA. It’s important to note, ERPs act as your System of Record but they are not an effective System of Controls. By using Cadency’s System of Accounting Intelligence™ (SOAI) platform that includes the following, you not only standardize your close process but also reduce the cost to serve and reduce the risk of errors, leading to greater reliability in the financial reports produced.

In the “Foreign Currency Valuation” example, Cadency provides a seamless and completely touchless process by leveraging Cadency Close Process (System of Controls), Close Action Plan Router (System of Integration) and ERP Bots (System of Automation) to enhance controls and automation. 

With Cadency, your depreciation posting run will look like this: 

  1. Use Cadency Close to manage period end close tasks (both manual as well as automated) and its workflow
  2. Cadency Close triggers the automated task using the Close Action Plan Router (APR) integration
  3. Use Cadency’s out-of-the-box ERP Bots to run foreign currency valuation natively within the ERPs such as SAP® ECC or S/4HANA 
  4. ERP Bots use Close APR to update task status in Cadency Close
  5. Cadency Close triggers the next task setup in the close task plan

This one task when automated across all entities month over month can save hundreds of hours for your team. Now, imagine this for hundreds of other automation scenarios. 

For more information on how Cadency can transform your Office of Finance, contact us.

Written by: Mantosh Kumar