Three Practical Phases to Digital Finance Transformation: Standardizing Processes

Blog post

The reconciliation process is a critical first step in the financial close and sets the foundation for period end success. However, due to its impact on all subsequent close activities, many find reconciliations to be an extremely stressful process that results in using more resources than ‘planned’ for completion. In some organizations, nearly the entire F&A team must drop everything and reconcile. But it doesn’t have to be this way.

In this three-part blog series, we will explore real-life examples of how organizations are achieving more robust financial reporting by transforming their reconciliation process with technology.

For most organizations taking a phased approach to change is ideal and achieving an overall transformation of your financial processes is most commonly a multi-year journey. However, starting with reconciliations sets a foundation that you can build upon to continually improve other processes and increase the benefits of your technology investment.

Phase 1: Standardizing Processes

Doing things because ‘that’s how they have always been done’ is often the biggest downfall for the office of finance. To explore our first phase of transformation, we’ll look at the journey of a leading multinational clothing retailer. They originally began their finance transformation journey in order to enable more robust financial reporting with an initial goal of simply digitalizing their current manual, paper-based processes.

Their long-established reconciliation process called for reconcilers to complete Excel templates. However, there was a lack of standardization as different teams were using different templates and to further complicate the process, completed templates were printed out so supporting documentation could be attached by a staple.

Finally, once the printed reconciliation was signed and dated by the reconciler, it was ready to be approved. Although this may already seem an archaic approach, this organization’s difficulty was exacerbated by the fact that reconciliations were reconciled in a shared service center but approved at a separate office 150 miles away. The printed reconciliations wouldn’t get to the approvers until the next person happened to be driving to the other location; perhaps two or three weeks after the effective date of the reconciliation.


The challenges with this approach to the process were numerous. First, it wasn’t always clear to management whether all accounts had been reconciled. Additionally, there was a lack of visibility into the completeness, status and level of rejections in the balance sheet. There were also significant challenges when rejecting a reconciliation, as it would have to be hand-delivered back to the original preparer 150 miles away. Because this was so arduous, rejected accounts would often not get their required follow up, ultimately creating significant risk for the business as mistakes were not getting caught, let alone corrected.

Driving Change

Clearly, this is an extreme example. Most organizations will at least utilize Excel in conjunction with emails. However, this still doesn’t provide assurance that everything has been completed and followed up no accurately. And since this approach lacks an audit trail, it is difficult to see when an account has been looked at, how open items are being tracked and matched and the status of rejections.

For most organizations beginning their financial transformation journey, they are at least using a rudimentary workflow tool to enable sign-off. Once this leading retailer began driving change, the journey became more typical.

The first stage begins with the implementation of a balance sheet reconciliation tool that is connected to an ERP or source system where GL balances are automatically uploaded, ensuring that every GL account is looked at as required. With this kind of workflow in place, template standardization is enforced through the system. Furthermore, this gives an organization a head-start in preparing information and documentation when up against an external audit. The ability to instantly download a digital audit binder is essential for saving time.

Finally, the visibility that comes with an automated reconciliation solution can be immense. Being able to answer questions that were previously almost impossible such as:

    • Which reconciliations are taking the most time?
    • Where are there bottlenecks in the process?
    • Which open items do we have on accounts?

All of this enables a stepping stone onto the next phase of an organization’s finance transformation journey. By utilizing this new-found visibility, an organization is able to generate long-term continuous improvement.

To learn more about standardizing your processes, download our eBook: How to Standardize & Automate Reconciliations.

Read the complete series – Three Practical Phases to Digital Transformation
Part 1: Standardizing Processes
Part 2: Visibility and Trusting Your Numbers
Part 3: Taking a Risk-Based Approach to Reconciliations