One of the most common things we hear when speaking to companies about improving their financial close process through automation is “But I already have an ERP in place.” It’s true that an ERP goes a long way towards helping manage some of the closing processes, however, there is still a great deal that is taken outside of the ERP and managed manually.

The majority of our customers are large, mature businesses that also have ERPs, including Oracle®, SAP® and NetSuite®, among others, but have identified severe challenges outside their ERP in relation to their Record to Report process.

The challenge is that in today’s complex organizations there are, in most cases, multiple feeds for information and data that is required to effectively and efficiently close the books and ensure the integrity of the period end numbers. Another big challenge is that much of this work is, by its very nature, collaborative and is taken out of the ERP and into people’s emails, spreadsheets, and telephone conversations.

The risk to the business is that these manual processes can increase the chances of bottlenecks, single points of failure, and an over reliance on key personnel who end up being irreplaceable. So what can be done to reduce these risks and ensure that all the relevant qualitative and quantitative information is tracked, stored, managed and continuously monitored and improved?

Well, Deloitte has put together a great set of guiding principles that organizations should be considering if they want to achieve a world class close, or in their parlance, the Utopian Close, and that is to ensure that your process is:

• Risk-Based: Efficient allocation of resources is based on the top-down risk assessment of the organizations
• Automated: Technology must be leveraged to allow full automation of elements of the close and to accelerate other dependencies such as data collection
• Transparent: Dashboard reporting provides management with visibility into the status of the close while highlighting areas of potential error, in near real-time.
• Consistent: Accounting procedures are applied in a uniform manner, across business units, geographic locations and outsourced services
• Segregated: There is a clear review and approval chain which supports effective oversight
• Auditable: Results of the close must be auditable by external and internal auditors and be easily accessible
• Platform Agnostic: Data must be pulled from various systems in different formats
• Timely and Efficient: Results are published in a timely manner at a low cost

The first step in ensuring that your close process meets these requirements is to get internal buy in from your executives. A great example of this is when one of our customers went to their board of directors severely concerned because they were currently managing their multi-billion dollar balance sheet in Excel. When you think of the risks associated with this, it’s clear why they decided to start out on a financial transformation project. As a result, they managed to generate $2.5 million in savings.

For more information please click on the banner below to download the Record to Report Insights Piece, “Closing Outside the ERP.”

 

Written by: Kelli Shoevlin