Utilizing an integrated ERP landscape is critical in the financial close process.
One of the most common things we hear when we speak to organizations about modernizing their financial close process with a leading technology solution is: “But, we have already deployed a best-of-breed ERP.” It’s true, an ERP goes a long way towards helping manage parts of the financial close process. However, there is still a significant amount of work that is taken outside of the ERP each period end and managed manually, increasing the risk to your financial data.
So, how can you make the most of your ERP investment, reduce manual efforts and ensure both the standardization of processes and the integrity of your financial data?
Challenges of a Lack of Integrated ERP Landscape
Due to staff turnover, ERP residual knowledge is lost and most finance organizations find themselves struggling to maintain a single ERP instance. To this end, there often isn’t integration at the data level due to the multiple different ERP versions or instances. Because ERPs don’t support the type of workflows required to effectively manage the process, the Close ends up happening outside of the ERP.
A traditional process that is often pushed to spreadsheets is the reconciliation cycle. To complete reconciliations manually outside the ERP, massive amounts of data are scrolled through on near-endless Excel files. During this process, someone could accidentally move data, enter an incorrect number or miss a line as they’re mining the spreadsheet— creating significant risk.
By modernizing the reconciliation process, you get instant visibility into the state of the reconciliation across your organization. Dashboards are designed for each role to help prioritize work and also highlight key items such as the aging of your open reconciling items. By standardizing your reconciliations, you will be able to easily generate reports because there is consistency across the process.
Close Tasks and Activities
In many organizations, the management of close tasks is incorporated in Excel files of varying sizes and used as a checklist to ensure all the critical activities in the financial close are managed. Accountants are all too familiar with the checklist. They are not dealing with life-or-death situations, but they must pay close attention to details and be accurate. The work is filled with repetitive and time-consuming routines, such as financial reporting. It’s easy to get distracted and forget one or more of the required steps.
Using an integrated close task management solution is crucial to effectively manage financial close tasks. If you are doing this manually outside the ERP there is no way you can have the visibility you need. For the tasks themselves, ERPs are great at managing all of the quantitative information that your company produces, however, the key to an effective close process is that it is collaborative. Knowing that there is a variance between the numbers is one thing, but analyzing these and recording the explanation is another. It is this qualitative information that the ERPs aren’t good at producing, and yet is so critical to the effectiveness of the close.
Today, the soaring complexity of compliance is no longer a temporary challenge—it is a new reality. Based on our experience working with best-in-class organizations, most companies now have different layers of controls that need to be managed, increasing the complexity of their environment.
Internal control is a process; it is a means to an end, not an end in itself. Automation enhances the overall internal controls environment by documenting policies and procedures that help ensure management directives are carried out.
Technology Enables You to Simplify
The common adage in terms of speed, quality, and cost states that you can essentially only pick two. In other words, if you want something done quicker and better, you will have to pay for it. If you want something fast and cheap, be prepared to have the quality reduced.
This eBook explores the main areas and causes of “white space” outside a company’s ERP and how technology can help bridge these gaps to simplify and streamline your financial close.Download the eBook