Neil Kinson, vice president, EMEA, Redwood Software, explains why CFOs should take another look at traditional end-of-the-year activities and consider what’s next.
During the holiday season, many of us are sure to receive a few handwritten cards and, perhaps, even write a few. All of this manual effort got me thinking. It’s a fact that there are some handcrafted year-end traditions that still have their rightful place with us, but, there are others that would certainly benefit from the help of 21st century technology.
While sending out handwritten cards to our close friends and family is always a warm, personal gesture, there comes a time when the sheer scope of even the most accepted manual tasks becomes too risky and time-consuming. For example, if you have a high volume of holiday cards to send out, it might be time to enlist some technology to lend a hand and use your desktop computer to manage that list. If not, you’d better be ready to spend many hours doing repetitive, manual work and prepared to make some mistakes.
Another project that often coincides with the year end is the financial close. This tradition also has, at its heart, a long list of manual tasks that could benefit from a bit of computerized muscle. But, unlike the holiday cards, in the financial close, errors have much more severe consequences.
If a name is spelt wrong in a Christmas card it’s not the end of the world. Your cousin, co-worker or old friend will almost surely forgive you. But if the same kind of manual error occurs somewhere in the financial close and ends up in public reports, it can resonate throughout your entire organization—tainting both your brand and your executive’s reputation. The recent onslaught of news around Tesco’s overstated half-year profits because of irregular movements in “commercial income” should be considered a clear warning against such results.
Close Consistency
In complex processes such as the financial close, the CFO must have complete confidence in the numbers. As a result, most finance groups do, indeed, harness some IT tools to help. But often, many activities at the very core of the close—in the entity close process—remain perilously manual.
A typical end-to-end entity close process can take as much as two-thirds of the time and effort of the entire close. Most of these activities are distributed across the entire corporate finance team, which makes it very difficult for finance leaders to see exactly how much manual effort is required overall.
In fact, it takes a tremendous amount of manual work to bring all separate legal entities and subsidiaries to the point where the books can be closed and the results can be transferred to group reporting applications such as Hyperion or SAP® BPC.
To guarantee consistency and accuracy throughout a process as complex and multi-tiered as the financial close, the finance group must:
- 1. Eliminate risky and time-consuming manual activities within the entity close process
- 2.Provide end-to-end monitoring of record to report
- 3.Enforce compliant and standardized close process execution across all entities
- 4.Deliver a complete and accurate audit trail
Accomplishing all of these requirements manually exposes companies to compounding risk of error together with slow reporting times and high costs.
These activities demand the use of technological muscle in the form of Financial Close Automation (FCA). Not only does FCA provide greater speed, process standardization and reliability throughout the close, it also takes less manual effort. So, instead of dedicating trained finance and accounting professionals to countless repetitive, manual tasks, they’re free to focus on analysis. Plus, FCA creates its own documentation as it completes steps, building a clear and complete audit trail for everything that happens during the entire close process.
Happy Closing
As the whirlwind of holiday excitement begins, it’s the perfect time for businesses to consider their past, present and future. While handwritten cards still have a warm and wonderful place this season, it’s time to re-evaluate the all-too-many manual activities hidden within the heart of the financial close. Make your financial close a lot less tedious and a little more festive in 2015.
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