Remove the manual burden
Manual posting is the biggest bottleneck of the closing process; the preparers perform between 60% and 70% of reconciliation work. Therefore, the key to removing the manual burden is auto-certification. Hackett Group analysis suggests the superior efficiency of top-performing companies is down to greater use of process and technology-related best practices and automation of many traditionally manual tasks.
Automation eliminates costly, tedious and error-prone processes, freeing up accounting teams to focus on value-added activities. Use automation to match transactions and balances automatically and identify and report any discrepancies to be investigated by accounting staff. This focused approach will save valuable time by minimizing manual intervention but – and just as importantly – play a huge role in preventing errors and eliminating fraud.
Use pre-configured reconciliation routines
There’s no point in reinventing the wheel. Pre-configured financial tasks across standard areas including journal entry, balance sheet certification, intercompany and close task and checklist management simplify the process of comparing account balances between external sources and identifying and reporting any discrepancies. This frees up the time and resources of your finance team so they can spend less time on repetitive manual tasks and more time on value-adding analysis and investigation.
Automate review and approval workflows
Many organizations don’t have structured account reconciliation workflows. However, leaving the process to chance can lead to certifications falling through the gaps. Some automated review and approval workflow ensures all steps of the reconciliation process are completed. It also provides a full audit trail that captures every decision, whether robotic or manual and piece of evidence used for decision-making throughout the entire process.
Validate with underlying applications such as ERP or other systems of record
Despite the promise of automation, companies still devote significant resources – human and otherwise – to validating numbers against their ERP and other business systems to optimize the close process. Live integration with ERP systems, bank statements, other source systems and business applications ensures that you always have access to the most accurate data for reconciliation purposes. This improves the accuracy of financial statements and eliminates errors and risks. The solution underpins your balance sheet integrity process with fully auditable automation and builds trust to ensure reconciliations are thorough, accurate and on time.
Keep track with a progress and risk dashboard
Visibility in the reconciliation process is vital to tracking progress and minimizing risk. A dashboard lets finance professionals easily see the status and current risk of their balance sheet integrity. That includes monitoring reconciling items to understand aging and potential write-offs, as well as categorizing items to understand the root cause and fix upstream problems.
Empower your people
A training plan must be a part of the ongoing activities to make your finance and accounting team a gold standard for your organization. Skimping on this element is a false economy. Make sure you have the right people in the right jobs. Identify talent gaps and look to make those strategic hires.
Commit to continuous improvement
Meaningful attempts to increase efficiency demand examination of the entire month-end close process, as focusing solely on the final mile risks missing the causes of bottlenecks, with the likelihood of creating even more issues down the line.
Having full visibility over the full financial close – versus simply closing the books – gives a holistic view that allows you to measure and continuously improve your month-end processes to make the finance and accounting team valued by the entire business and help everyone understand the contribution that the finance and accounting team is making to the overall business goals.
Despite progress in accelerating closing cycle times and submission dates, further opportunities for improving the end-to-end account-to-report process remain. Hackett Group warns that the financial close marks the end of a process that goes on throughout the year and meaningful improvements require it to be addressed in a holistic way. The analyst highlights reconciliations and manual tasks as offering ample room for improvement.
Hackett Group’s research also suggests that the combination of greater use of best practices, a focus on eliminating process bottlenecks, spreading out workloads more evenly over the month and process improvements using technology solutions, could go a long way to achieving efficiency gains. The research states: “Putting all of these practices in place eliminates the focus on pure speed in the close, emphasizing instead a more efficient, productive and better experience for all stakeholders.”
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