Though 2020 has been a year for the books in many ways for most organizations, the power and utilities sector has been especially impacted. According to a 2020 mid-year report published by Deloitte, power and utilities organizations started the year strong, identifying many opportunities for growth and also transitioning into producing cleaner, greener energy.
However, when COVID-19 impacted organizations globally, it introduced five simultaneous effects on the power and utilities industry:
- The electric load shrunk with a forecasted decline in electricity consumption
- The amount of solar and wind-generated power grew
- Energy use settled into a “perpetual weekend” mode, due to the global shift to remote work
- Commercial and industrial (C&I) demand plunged and residential demand surged (also due to the widespread shift from in-office to virtual environments)
- Electric load deurbanized as the pandemic prompted many people to retreat to lower-density areas
Even in the face of a constantly changing market landscape, power and utility organizations were expected to power customers wherever they were as many transitioned to running their entire lives from home. Additionally, pressure was added to ensure continual power for essential industries such as healthcare and grocery services as they also dealt with the pandemic’s effects.
Despite the challenges, increased demand has allowed organizations to focus on new initiatives, such as customer satisfaction and growth opportunities. But power and utilities can only fully take advantage of these opportunities when they optimize and streamline their back-end financial processes, especially one of their most important processes: account reconciliation.
Challenges Associated With a Traditional Account Reconciliation Process
Accountants typically utilize spreadsheets and manual methods for their Record to Report processes. However, these methods create unnecessary complications in the reconciliation process that endanger the timeliness, accuracy and compliance— or worse, all three— of their financial reporting.
Reconciliation Problems Caused by Spreadsheets and Manual Processes
- Workflow bottlenecks (ex: rework)
- Extensive review and approval process
- High risk of inaccurate data
- Lack of process control and visibility
- Inability to offer essential virtual work capabilities
Without a solution to these issues, the power and utilities sector will struggle to take advantage of the opportunities they have been presented.
For example, the industry has started shifting to a more customer-centric mindset and higher importance has been placed on customer engagement. This was experienced throughout COVID-19 as many organizations voluntarily began to offer relief options for individuals severely impacted by the pandemic.
Without optimizing important processes like account reconciliation, the Office of Finance can’t offer organizational leadership the visibility and real-time data insights needed to focus on these areas. The account reconciliation process requires a newer, more digital approach.
Advantages of an Automated Account Reconciliation Process
Shifting your organization’s finance and accounting department from a manual process to reconciliation software will offer a wide range of benefits, including greater accuracy in the reconciliation process, standardization and timeliness of the workflow, as well as adherence to regulations. Investing in reconciliation automation software like Cadency by Trintech optimizes the account reconciliation process for the Office of Finance to help power and utilities companies take advantage of all upcoming opportunities.
Improvement of Operational Reconciliation Efficiency
A significant problem the power and utilities sector faces in the reconciliation process is the high volume of transactions that come into the Office of Finance. Cadency utilizes powerful matching algorithms to overcome this challenge by matching transaction data and automatically reconciling accounts. This helps save time especially when the transaction matching and account reconciliation processes take place in more than one entity within an organization. Additionally, Cadency saves time and resources in the journal entry process by automatically adjusting the journal entries back to the ERP.
The time that is saved with an automated reconciliation solution will allow finance and accounting to focus on exceptions and provide better data insights needed by leadership to guide the organization.
Cadency customers experience up to an 80% reduction in time spent matching transactions, and up to a 75% reduction in time spent adjusting journal entries.
Gain Visibility and Insights
Cadency offers continuous reporting capabilities as well as built-in dashboards that are needed to monitor the progress and improvement of the entire Record to Report process. This ensures that review and approvals are flowing smoothly, and the entire reconciliation process is progressing in a timely way.
Cadency reduces internal audit effort by 40% by generating an audit trail that keeps track of changes related to transactions and saves supporting documentation.
Confidence in Financial Reporting
Power and utilities is a highly-regulated industry and, as such, it is important that the reconciliation process proactively mitigates risk and inaccuracy. Cadency allows organizations to identify risk early in order to resolve it quickly. Cadency also enforces workflow standardization, as well as validates that all data is accurate, so the Office of Finance can rest assured their financial reporting is all accurate across the entire organization.
Cadency customers report up to a 20% reduction in time to test controls and up to a 10% reduction in the risk of revenue impact due to misstatement.
Cadency enables power and utility companies to overcome the inherent industry challenges they face in order to seize opportunities for engagement and growth in the market. Learn more about the ROI Cadency can bring to your company by automating high-volume reconciliations.
Written by: Ashton Mathai