The most important skill CFOs have been required to adopt recently is the ability to be flexible and quickly adapt to change.

While organizations were seeing the value in digital transformation technologies and beginning to expand their strategies to match, 2020 sent that propensity for change into overdrive. Well-thought-out financial plans, areas of improvement, and business structure had to quickly evolve and pivot as COVID-19 presented large, unexpected changes at organizations.

Even before the pandemic, many CFOs were looking to transform their functions with technology to move away from simply managing data and instead analyzing risk, driving quality, and providing business intelligence to effectively grow the business. As in any forced period of change, COVID-19 pushed CFOs to tighten their focus on digitalization and making processes more agile, effective, and efficient for the organization.

“Ten years ago, the pace of change was just starting to accelerate. Since I started this job, I’ve seen the issue of things doubling and tripling — speed to market, the speed customers expect you to do things digitally—all of that has changed dramatically. The CFO role has had to change along with it.” – Leeny Oberg, Executive Vice President and Chief Financial Officer, Marriott International Inc.

It is critically important to the success of any organization that the Office of Finance is not left behind in initiatives for digital transformation. However, before automation and advanced technologies, like Risk Intelligent RPA, Smart Bots and Artificial Intelligence, are implemented, there is an important element that cannot be omitted from financial processes: standardization.

Problems Caused by Standardization Deficiencies

Current Forrester research found that 90% of organizations struggle with their financial close process. When organizations drilled into the reasons why they struggled, several difficulties and risk factors surfaced.

• Undefined or ambiguous structure of processes (i.e.: lack of standardized processes)
• Dependence on manual processes (such as data entry) that compromise accuracy
• Poor communication between Offices of the CFO and CIO that complicate data environments

For organizations that process significant volumes of reconciliations, journal entries, close tasks and more, the impact of these factors on the organization’s risk profile is significant.

The research also revealed another reason that organizations are struggling with the close: their complex ERP landscape. Forrester found that on average, organizations use nine ERP vendors with 18 globally deployed instances. This extreme complexity causes the organization to incur risk and spend too much time on the manual processes that are required to support this ERP environment. Organizations need to address and standardize their fragmented data environments in order to create reporting that is reliable.

Why Does Standardization in the Office of Finance Matter?

In the first quarter of 2021, Accenture released a report that surveyed more than 1,300 CFOs and senior finance executives globally. The study found that current CFOs were reporting a significant evolution of the role’s responsibilities compared to their predecessors.

While the previous generation of CFOs in enterprise organizations made $100 million decisions on a monthly or quarterly basis, today’s CFOs make $1 billion decisions weekly — or even daily.

Imagine basing these $1 billion decisions every week (or every day) on data that is later discovered to be inaccurate. The stakes for accurate, reliable financial reporting are higher today than ever before, which demands solidified integrity of the financial processes that produce the reporting.

Finance Influences Strategic Activities of the Organization

Additionally, CFOs are not only expected to ensure the financial reporting is accurate but are also required to actively participate in the strategic evolution of their organizations.

For example, Accenture found that 72% of CFOs have the final say on the technology direction of the enterprise.

In response to this expanded role, 86% of CFOs have increased the frequency and scope of collaboration with their C-Suite partners such as the Chief Information Officer (CIO) and Chief Accounting Officer (CAO). CFOs today have taken on a whole new set of duties and responsibilities not limited to the finance function.

This makes it even more important that the strategic decisions they influence are based on accurate financial data and propelled by predictive insights, and the first step to achieving both is the standardization of financial processes.

How to Standardize Financial Processes

Though automation is often positioned as the “ultimate solution” for ensuring accurate reporting and access to predictive insights, process standardization is key to its success. A disorganized, flawed process that is automated still incurs error and increases an organization’s risk profile. Before automation is implemented into the Office of Finance, finance leadership needs to organize and refine processes.

Where Finance Standardization Begins

The first step to standardization is understanding the state of current processes. Finance leaders should spend time documenting their current workflows and processes through narratives, flow charts, diagrams and other necessary means. This will help expose process gaps, inter-process dependencies and triggers, the volume of current processes, and where the need for visibility exists. Some key areas of the close where standardization is especially important include:

• Close Calendar and Key Tasks: Designing and executing a close calendar that specifies when key tasks must be completed is a consistent practice of world-class organizations with a close under seven days.
• Master Data and Structures: The quality of data flowing into the close process is perhaps one of the most important indicators of how accurate the data will be when it is transformed into the reporting. Addressing data environment complexities, like the ERP landscape, is crucial to establishing control and consistency of the master data.
• Policy, Process Design and Service Placement: Evaluate if your process framework, including control structures, supports your compliance requirements. If not, how can this be optimized to properly adhere to compliance standards?
• Roles and Responsibilities: Clarify roles and responsibilities within the close process, especially when it comes to handoffs both within financial processes and upstream/downstream handoffs.

When examining financial processes, it is also important to keep the organization’s greatest resource in mind: people and their roles in the process. Are teams working on value-adding tasks or mundane, repetitive work? Determining which of these routine low-value tasks can be delegated to automation will help paint a picture of what an ideal, optimized financial close will look like for your organization.

Once finance processes are standardized then automation can be layered in to achieve the full benefits and ROI that financial transformation offers.

Finding the Right Finance Transformation Partner

Standardizing processes can be tricky, especially within a large, enterprise organization with various complexities to consider. That is why it’s important to find financial close experts that will partner alongside your organization throughout the entire financial transformation journey.

The right partner, like Trintech, will spend time with your organization to optimize your financial processes and figure out the end goals and ROI requirements so that when you start automating the financial close you are confident in the processes driving it.

“They held our hand and talked us through the process. If we were to implement another software solution, we would use our experience with the Trintech rollout as the role model.” – Panera Bread

Finance transformation is critical to support CFOs, their finance function and the success of the entire organization today, and it starts with standardization. Learn more about how to create an intelligent finance function that supports organizational success with the on-demand joint webinar discussion between Accenture and Trintech.

Written by: Ashton Mathai