Enabling Your Finance & Accounting Organization Through Standardization
How does the Office of Finance consistently and effectively drive strategic value across the organization? Organizations must focus on transforming their Record to Report process holistically to deliver world-class levels of efficiency and effectiveness.
While finance automation can improve your time to close, achieving long-term transformation requires automation to be built upon organized and standardized workflows. Without standardized workflows, F&A teams will have difficulty managing high-volume transactions, balance sheet reconciliations, and close management processes across all entities due to inconsistencies and a lack of visibility
To improve and standardize your financial close, your organization must align the three key components of finance transformation – people, processes, and technology.
Three Key Components of Effective Period End Reporting
When period-end reports are taking longer than expected, it’s important to remember that while technology can increase the speed of processes it cannot solve all of your problems on its own. To ensure an effective close, you must first understand and optimize your staff’s involvement in the financial close by implementing clarified roles, upskilling staff where needed, and enabling the right amount of oversight from management.
Define Roles & Responsibilities and Invest in Upskilling Staff
Clarifying roles and responsibilities well in advance, with not only the finance team but any management team leading operations, is critical. Without this, the understanding of who is in charge of what pieces of the process easily become lost. Your employees cannot effectively execute their role or support the team if they do not know exactly what is expected of them and what they are responsible for. The other important thing to acknowledge is that a different skill set is needed today than was needed even just a few years ago. For your staff to be able to leverage advanced technology that is available today and become comfortable working with AI, RPA, Bots, etc., they need to understand it and be trained on it. This will not happen overnight; it requires an investment of time and effort – but the payoff of leveraging technology will improve employee morale with streamlined workflows in the end.
Management Needs to Be Involved
Management must define the process flow by creating and enforcing a standardized close calendar. Additionally, getting rid of close operations that no longer make sense or run on institutional knowledge because “that’s the way we’ve always done it,” is key to ensuring organizational policies are followed. Establishing policies is not enough though. You need to invest in modern financial close solutions like Cadency® by Trintech, to help enforce standards and policies across the Office of Finance.
Defining a standardized close process also provides an increased opportunity for collaboration between leadership teams and the CFO, which leads to better engagement throughout the entire Record to Report process. Ultimately, this will help leadership to quickly identify and resolve problem areas or bottleneck areas throughout the holistic financial close process.
Leveraging technology to enable a flawed process is a common mistake organizations make today. Many companies are trying to deploy automation for simplicity and expediency, however, the majority are just making a bad process run faster – exposing them to additional risk. It is the lack of standardized processes and lack of clarity on those processes that create “white space” and leads to the manual activities your team spends more than 65% of their time doing, adding no strategic value to the organization.
During the transformation journey, finance teams should focus on removing that “white space” by documenting what the standardized process is. Management can then ensure all teams are following the same workflows to confirm close activities are being performed the same way across the finance organization, no matter how many entities or business units, or geographies are involved. By optimizing the financial close process your team will be well organized and equipped with the right data and technology to begin bringing more strategic value to the business.
“I think one of the main reasons why we were so successful in the implementation process of Cadency by Trintech was because we took the time to review our current processes prior to implementing technology” — Janice Dailey, Accounting Senior II, Financial Systems Support, LKQ Corporation
Aligning People with Processes
Once you define roles and responsibilities within your finance team, members can begin to tackle the major processes, like reconciliations, upfront and ahead of time. Standardized workflows further grant you more agility and scalability in times of organizational change, such as mergers or acquisitions, or a department reorganization. You are able to give your finance team back that 65% of their time currently being wasted on manual activities, that offer no value to the organization, by empowering them with a financial close solution that reinforces and supports the standardized processes, thus allowing them to focus their time and effort on higher-value activities.
As time is reallocated to higher-value activities, CFOs and their finance teams are able to fulfill the evolving role of strategic advisor to the business and effectively provide insights needed to drive critical business decisions with confidence. For example, as organizations look to adapt to and future-proof their businesses based on recent changes in the world, CFO and CIO collaboration will be crucial. 2020 Forrester Consulting research reveals that finance and IT leaders believe that, by partnering together, finance processes could deliver improved procedures and increase control in the financial close process to strategically help the organization overall.
“If done right, CFO/CIO collaboration enables far more accurate and faster close process and provides more real time insight into the business health.” – Teresa Mackintosh, CEO of Trintech
Ensuring High-Quality Data
The production of high-quality data is reliant on the enforcement of clear processes and policies. Without standardized processes in place, you must rely on your team to perform tedious, repetitive manual tasks to compile the data necessary for the period-end close. Reliance on humans to move and manage, scrub and manipulate data, with minimal visibility or oversight into the process, significantly increases the risk of misstatements.
With standard, enforceable rules and controls in place to standardize and prepare data you can take the onus of manual data entry and correct repetition off of the human accountant and rely on technology for automation of routine tasks. Shifting this manual process away from human touch except where it needed for specific higher-value items or exceptions that are flagged, provides greater visibility, ensures timely completion, and increases data accuracy significantly.
“The prevalence of manual processes has hampered the ability of finance to be agile. Standardization and automation of processes is key to becoming more scalable and efficient.” -2020 Forrester Report
Enabling People & Processes Through Technology
An optimized period-end reporting process means management has equipped their team for success by establishing efficient and accurate processes that empower the people performing them. The key to tying these two elements together is the final component – technology.
When leveraging proven technology designed to support the financial close process of large enterprises, the Office of the CFO can enforce the standards and controls they have outlined. Finance and accounting staff then have clarity into what they need to do, and when they need to do it. Technology streamlines processes by adding automation that can run throughout the month to reduce the workload on low-risk, low-value tasks prior to the period end – ultimately producing a shorter period-end close cycle. The combination of people, standardized and optimized processes, and technology, in turn, increases efficiency and effectiveness.
An automated financial close solution like Cadency creates clear visibility into who is doing what and the progress of the overall close. With this process improvement, management is more informed, creating positive ripples and benefits felt throughout the entire finance and accounting team and across the organization holistically.
Cadency helps create a framework process with advanced automation built on top of it to address future needs and further streamline your processes. Organizations that rely on Cadency are producing management reports in seven days or fewer and experiencing:
- Reduction in time spent on transaction matching by up to 80%
- Reduction in accounts to be reconciled by up to 90%
- Reduction in preparation time for reconcilers by up to 70%
“We use Cadency Close to get full visibility into where we are at in the financial close process, not just during the 7-day close cycle but throughout the month.” — Janice Dailey, Accounting Senior II, Financial Systems Support, LKQ Corporation
Explore how LKQ Corporation aligned people, processes, and technology to transform their financial close process while executing over 100 acquisitions.
Written by: Karagan McConkey