As the next fiscal year rapidly approaches, finance professionals inch closer towards corporate financial planning and all that entails. One question the Office of Finance must ask themselves during their next planning sessions: which parts of the Record to Report could be automated?
According to a MarketWatch study, automation adoption is predicted to grow to almost $9 billion by 2026. Many, if not most, organizations have already begun implementing finance automation software into their Office of Finance, treating processes such as Procure-to-Pay or Order-to-Cash.
The next logical step is the Record to Report process. Automating the Record to Report has the potential to create value for the organization by optimizing and streamlining largely manual financial processes. When organizations do automate the Record to Report, they tend to stick to only one process: balance sheet account reconciliation.
But when CFOs, Controllers and other finance leadership take a step back to look at the holistic Record to Report, they can see the huge ROI and value automation offers.
3 Best-in-Class Automation Benefits to Consider for Next Year’s Corporate Financial Planning
#1: Risk-Based Balance Sheet Account Reconciliation Policies
Many resources in the balance sheet account reconciliation processes are focused on completing the process manually by close deadlines. But if finance took a risk-based approach to the reconciliation process, they could reduce their workloads while simultaneously increasing control and decreasing overall risk.
With a risk-based reconciliation policy, Cadency® by Trintech customer HP, Inc. moved all accounts under $1 million to be reconciled quarterly based on risk.
That’s a significant number of accounts that HP’s finance staff doesn’t have to sift through and evaluate any longer. Now, they’ve freed up time to focus on supporting their organization’s strategic initiatives and their own, with variance analysis reporting built into Cadency, their automated Record to Report solution.
#2: Defined and Automated Journal Entry Processes
One of the most time-consuming manual processes in the Record to Report is the journal entry process. An overly complex, manual journal entry process can jeopardize the accuracy of the organization’s financial statements.
According to recent Trintech polls, finance professionals agree on their biggest five journal entry challenges:
- Difficulty creating entries
- Confusing approval process
- Time-consuming posting of an entry
- Challenging overall process
- Trouble ensuring completeness of trial balance
Therefore, journal entry automation can alleviate much of the pain associated with the journal entry process. Automation allows finance professionals to create main journal entry templates, enforce approval workflow, automate entry posting, and look at audit trails — all of which simplify one of the most complicated Record to Report processes.
#3: Effective and Thoroughly Tested Compliance Framework
If organizations aren’t utilizing automation to create and enforce an effective compliance framework, they’re missing one of the biggest advantages of technology.
In common Record to Report tools like spreadsheets, controls are often inefficient and extremely low-value. With automation, finance leadership has the opportunity to drill down into challenges to enhance financial controls throughout their processes.
For example, if businesses are seeing that all controls are functioning as they should, but journals or reconciliations are consistently shown as late or incomplete, management needs to investigate processes to address the source of those flagged items.
Without controls testing, many issues within the Record to Report can go uncaught, and the impact those have on the organization’s risk profile is unknown… until it’s caught by an outside party.
Planning for Financial Success for the Next Fiscal Year
Organizations must understand that ignoring the benefits of automation will have an impact on their future success. Automating the Record to Report beyond the balance sheet account reconciliation process must come up in corporate financial planning for the next fiscal year — organizations that don’t automate necessary processes will fall behind in their markets.
Written by: Ashton Mathai