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As financial executives continue to face pressure to reduce costs and tighten budgets, they are looking for ways to implement a more efficient close process. Many of them are changing their paradigms – going from technology laggards to technology adopters. For many of us in financial automation software, this trend is encouraging. Before you start leveraging financial automation, it’s important to understand the three most common close process challenges you will encounter.
Challenge # 1: Inefficient Work Processes
The day-to-day close process operations are consumed by detailed and repetitive tasks. This inefficient work process can create a vicious cycle where spreadsheets become the norm for balance sheet reconciliations; this hampers business units in their ability to standardize their close processes – driving up costs, inefficiencies, and frustration.
Challenge #2: Lack of Transparency
The lack of transparency challenges finance teams, which try to maintain control and consistency with the balance sheet; this complicates team members’ efforts to gain greater visibility and assess the completeness/accuracy of their reconciliation efforts. All of this drives the following questions:
- Who is doing what task?
- Where are they in the process?
- How accurate is the reconciling?
Not sure if your finance team is suffering from lack of transparency? Can you answer these questions?
Challenge #3: Balance Sheet Risk
When your CFO signs of on the financial statements, there is a lot at stake. A lack of governance and transparency puts you more at risk, which can inevitably increase your costs – more time, more frustration, more errors.
Automation: Quantify your ROI
Within the finance function, financial automation can be the great equalizer; it can address and resolve the top three close process challenges and deliver more sustainable results over the short and long term.
Inefficient Work Process Resolved
Customers that have chosen to leverage automation have seen substantial improvements in their operational efficiencies: they realized up to a 60% reduction in reconciliation errors. A VP of finance from a materials distribution company noted, “All policies are attached to the reconciliations and reviewers can see all documentation in one place.” Moreover, automation provides better reporting capabilities – in addition to reducing manual processes.
Lack of Transparency Resolved
Customers that opted to leverage technology for their close process also realized improvements in their balance sheet visibility thereby deriving greater insights. Additionally, they realized a 20% to 30% improvement in controlling and managing task assignments. They had more visibility into who was assigned what task and the status of the task. Moreover, they had better analytics to understand where there were gaps and opportunities in the task management process.
Balance Sheet Risk Resolved
Finally, customers that leveraged automation were able to decrease balance sheet risks. Automation enabled them to increase financial governance and identify areas of risk before they caused a misstatement. This led to a 10% reduction in risks related to misstatements. A finance director noted: “Automation has helped to reconcile merchant server transactions. Previously, it was a time-intensive task that wastes man hours, now we have been able to speed up the close process and improve the efficiency, reduce risks, and create an audit trail.”
To learn more about how financial automation can help improve your close process results. Register for How to Transofrm the Office of Finance in 3 Steps on Sept 19 from 2-3pm (ET).