Due to the lack of confidence around the accuracy of their financial reporting, finance organizations are undertaking Record to Report (R2R) transformations that target the goals of lowering cost, increasing operational support, reducing risk and improving controls. With the emergence of leading technologies such as Robotic Process Automation (RPA) in the office of finance, more businesses are looking for a framework to help drive a flexible implementation model that scales over the years as their R2R journey evolves.
At Trintech, in partnership with our customers, we have developed a Record to Report Automation Framework to help address this need. As you can see below, this framework is built on six pillars, which enables customers to start (or enhance) their R2R journey, achieve cost savings and reduce their risk – all while scaling with their business as they discover increasing value quarter after quarter and year after year.
ERP Connectors are pre-built tools that enable you to extract GL balances, sub-ledgers, FX rates and additional information from your system/s of record (ERP, 3rd party systems, etc.) to feed into your system of controls. ERP connectors can also help you validate and post your journal entries back to your ERP, as needed. These can be prebuilt for certain ERPs, such as SAP® and Oracle®, but they can also be universal connectors* that enable you to work with any ERP, so you’re spared the effort of creating custom-built ERP file extracts. These are valuable for every R2R project as they lower the cost and time involved to get the solution operational.
APIs are Cloud Services that enable customers to develop custom, fully automated integrations that are specific to their needs. One Trintech customer with an in-house Journal Entry system wanted to receive all the benefits of an integrated close management system, while still maintaining their unique JE process. After implementing Cadency®, they developed a custom API program that updated close tasks as various journal entries were completed, and triggered journal entries to occur as other close tasks started. Leveraging the bi-directional nature of the Close API to trigger activities and receive updates allowed them to solve their unique needs.
Similar to ERP connectors, third-party RPA connectors provide value to customers who want to automate the GL-balance extract or JE posting. These connectors are especially valuable to a company which may use a niche ERP system, such as a COBOL-based mainframe system or otherwise restrictive ERP deployments that prevent an easy move to more recent technology. An RPA tool such as UIPath can be configured to perform a task like login to the ERP system, gather or post information and then pass that information back to Cadency or Adra via the RPA connector again.
ERP Bots are software agents that run on the ERP systems and are triggered by activity in the R2R process via the ERP connector. This pillar allows the company to trigger advanced, time-saving workflows on their ERP systems thereby reducing time and risk by eliminating the need for humans to remember to start them and eliminate manual errors which may occur. For example, during a posting of intercompany journal entries to an ERP system, you may want to post the AP and AR entries concurrently, validating they both occur, or roll-back the change.
This unique sequencing, validation and error-handling routine enables you to skip the human review and can be extended to trigger tax calculations or invoice creation on the AP/AR entries. ERP Bots are a high-value extension of ERP connectors that customers who are advanced in their R2R journey will value and implement to maximize continuous efficiency and risk-controls.
Risk Intelligent RPA is process-specific automation that is purpose-built for the use case, and then configurable in a way that drives deeper automation to reduce the risk of human error and identify key items that require human review. This is different from third-party RPA solutions such as UIPath or Blue Prism, which are process-unaware and designed to work across a variety of systems (ERP, CRM, Server Management, etc.). In the R2R process, GL reconciliation automation benefit from the use of Risk Intelligent RPA, which looks at the risk profile of accounts in order to determine which can be reconciled without human interaction, which can be considered in a subsequent period and then those which require human review (or even additional levels of human review).
Looking ahead, the future of R2R automation will leverage Artificial Intelligence (AI) to scientifically determine risk and drive better outcomes. For example, as a journal entry is created, AI will determine the risk in real-time based on algorithms and enable humans to see this information as they process the journal entry. RI RPA will further leverage that information to automate the process. This technology also utilizes machine learning so that it improves over time. This powerful aspect of R2R AI, along with the other five pillars of the R2R Risk Intelligent RPA framework, works independently and together simultaneously to create value.
Check out our next blog as we dive deeper into Trintech’ Record to Report Automation Framework Pillar 1 – ERP Connectors.
Written by: Michael Ross, Chief Product Officer at Trintech