accounting

Fixing Intercompany

November 9, 2023 by Revelwood

This guest post from our partner, BlackLine, explains how to get started fixing intercompany.

The signs are there. Quarter after quarter, your organization’s transactions aren’t balancing. Your close is taking too long, and write-offs and tax leakage are happening too often. In short, your intercompany operations are a mess.

As issues spring to the surface and create havoc, it’s easy to get pulled in different directions trying to fix each one. But it’s best not to get caught up in a Whac-A-Mole game of jumping from one issue to the next. Instead, step back and look at your intercompany operations holistically. Then, commit to improving them so all finance and accounting functions work efficiently.

That said, the idea of transforming intercompany is incredibly daunting. How does an organization even begin to develop a strategy to ensure that everyone is following best practices? Are the problems tied up in governance and policies, in processes, or both? Do new technologies need to be adopted to automate transactions?

To start: conduct a root-cause analysis of your intercompany finance and accounting processes. Once you do, you can pinpoint where things are breaking down and find solutions for making sustainable improvements that benefit the entire intercompany ecosystem.

Addressing All 3 Intercompany Processes

Intercompany is a network of functions and entities in which an organization is essentially trading with itself. To ensure that it conducts business fairly, it must operate according to an “arm’s length” model. Just as its different entities are segmented, a root-cause analysis must be broken down into distinct, manageable processes and address three key intercompany processes:

1. Balancing
2. Settling
3. Initiating transactions

When the Left Pocket Doesn’t Equal the Right Pocket

Many intercompany financial close delays are rooted in the fact that organizations are balancing transactions using manual processes that make it virtually impossible to identify and resolve errors, discrepancies in volume and price, currency translation, and timing differences.

Other negative impacts of transaction mismatching include:

Working with inaccurate customer data
Increased write-offs
Diminished ability for teams to focus on business goals

Analyzing balances to see where breakdowns occur requires a granular assessment of every trade. Examine how the seller recorded a transaction and compare that to how the buyer recorded it. Do the two match? If not, why not? Is the discrepancy an anomaly or a chronic failure that repeats throughout the system?

Ultimately, intercompany operations should work from a complete, virtual subledger of global intercompany transactions that streamline and manage reconciliation complexity and free up staff capacity and close periods quicker. This positively impacts transaction amounts, recorded taxes, and exception management.

Where Things Fall Apart Downstream

Errors accumulate when organizations fail to deliver settlement-ready balances to treasury teams and where reconciliations take too long to manage, thus delaying netting and settlement efforts. This increases FX impact and the volume of aging write-offs that can further reduce working capital and liquidity.

Other negative impacts of delayed netting and settlement include:

Impeded cash management
Adverse credit ratings and increased borrowing costs
Delayed mergers and acquisitions funding and lost M&A opportunities

Where intercompany balances are being settled, what do those settlements look like? Are they occurring as cash settlements where funds are being moved on the books of different entities? Where is short-term and long-term debt being created? When do equity infusions come into play? Is there good visibility into how transactions are being settled? Do you have creative control over foreign currencies, using the clearing or non-clearing of intercompany as a natural hedge against foreign currency movements?

An optimized netting and settlement function empowers the collaboration between Treasury, Accounting, Finance, and Tax with real-time visibility on the status of intercompany transactions. ERPs, banking, and treasury are integrated to facilitate and streamline netting, settlement, and clearing processes.

Where Bad Data First “Infects” the System

Very often, issues arise from the moment a transaction is begun. A common problem is that transactions and invoices are initiated in an opaque way to users. When stakeholders and accounting teams don’t have visibility and operate in silos, there’s an increased chance of errors entering the system.

Other negative impacts of initiating inaccurate transactions include:

Inaccurate transfer pricing mark-ups
Reduced tax defensibility
Increased preventable losses due to foreign currency fluctuation

Which transactions are taking too long? Are manual processes slowing things down? Are humans doing the heavy lifting where technology could automate processes and save teams time so they can focus on more meaningful tasks?

During this process, teams should have complete visibility when initiating, approving, and booking transactions and invoices, while enforcing correctly applied intercompany trading relationships, business logic, transfer pricing markups, and tax determinations. Intercompany service activities should follow preconfigured billing routes, automate journal entries, and produce tax-compliant invoices using automated processes.

Starting on a Path Toward Intercompany Excellence

Once an organization completes a root-cause analysis, it’s perfectly positioned to develop a strategy to optimize intercompany operations, improve governance, policies, and processes, and implement intercompany financial management best practices.

This blog post was originally published on the BlackLine blog.

Building a Successful Finance Transformation Team: Key Stakeholders and Change Champions

October 5, 2023 by Revelwood

This guest post from our partner BlackLine, which provides guidance on digital finance transformation journeys.

Embracing automation has become a strategic imperative for organizations seeking operational efficiency and improved reliability for their finance and accounting (F&A) processes. However, digital finance transformation journeys come with challenges that can fundamentally shape the ultimate outcome.

A successful implementation doesn’t just mean being smart with technology. It’s about managing change throughout your organization, ensuring everyone on the team is on board and making the most of software that tackles the real, everyday pain points for F&A.

You need all the pieces to fit, and to do this companies must take a considered and strategic approach.

Clear Objectives & Goals

Anchoring your automation initiative with clear, measurable objectives will be paramount to its success. Objectives that are too vague, challenging, or difficult to measure will hinder your project before it even begins.

Clear objectives and goals, on the other hand, will help you steer the ship, and right it when things go wrong. You should think of your objectives as your island. If your project scope starts to creep or become too complex, it can feel like you’re struggling to keep your head above water. When this happens, your objectives are where you want to return. You should be able to come back to them throughout the project, to make sure that what you are doing is aligned with and in support of these initial goals. This will help you to circumvent scope drift and focus on tackling the challenges that matter most to your business and its people.

Additionally, during this first step, you should already be thinking about the success story you want to tell at the end of the project. Think about the objectives you’ve set – do you know how you will show that you’ve met these? What benefits will these help to deliver, for people and the organization? If you can’t answer these questions, you may need to revisit your objectives to make them clearer and more specific.

Establish Metrics That Align with Automation Goals

This brings us to metrics and measurement. Whatever your goals for implementing new technology, demonstrating a good ROI, and building a business case for any future improvements, your definition of success must be etched in metrics. This is an area that sometimes (mistakenly) gets left to the end of a project. However, I would encourage you to view this as something that goes hand-in-hand with objective setting.

If you don’t think about measurement until the end, you’ll only measure what you can – not what would have been best for showcasing success. Establishing the right metrics at the beginning of the project gives you the opportunity to look at these at every stage, adjust your approach accordingly, and continue on your transformation journey.

Key Stakeholder Engagement

Planning is a priority at the beginning of any project – but change is a team effort. Get the right people involved and do it right away.

Rather than viewing your automation initiative solely through a technology or organizational lens, think about transformation as a people-centric process. Who will be impacted by this project and at what stage? Who needs to be informed? Who is a decision maker? Who can help you shape this? Who, ultimately, will its success depend on?

Involving key stakeholders from the beginning is important for setting expectations and avoiding challenges further down the line. If you introduce a stakeholder group too late, you might end up with objectives that move or change over time, or with technology that is not widely accepted by those who need to use it. Those brought into the project in the early stages are considerably less likely to challenge things down the line. Particularly if they have played a part in setting objectives or goals.

Depending on the size of your organization, the number of people who need to be informed and involved will vary. But there are three groups you should not forget:

A senior leader: someone who will help champion the project for you.

Your IT department: This team is crucial for any digital F&A initiative. The worst thing you can do is spring a project on them at the end of the line once a solution has been purchased, with an outcome and delivery date that does not work for their time and resources.

End users: Never forget the people who will be using the software you’re introducing and remember that people can sometimes feel threatened by change. Communicating how this will benefit them and hearing their concerns are both fundamental to managing change.

Change Champions

Every team needs its heroes. As part of your ongoing stakeholder engagement, try to identify and support “change champions” within your company.

Your most engaged and passionate colleagues often make the best champions. They’re the ones who know the current processes and pain points and see the benefits of what you’re trying to do. They may see that the next step in their own career is getting confident using the latest technology. These people can help you communicate how responsibilities and procedures are changing and why. They can help others adapt to the changes and make the integration process smoother.

Testing Before Showtime, Not After

Before your transformation project goes live, remember: test, test, and test again. Do not wait for issues to reveal themselves after launch. Instead, ensure rigorous testing has been carried out well in advance of the go-live date.

This is a crucial part of the process to ensure that the technology performs as expected and that any potential roadblocks are dealt with proactively and head on. What’s more, it will build confidence in the system’s readiness and sets the stage for communicating success back to the business.

User Acceptance Testing (UAT) – testing of the technology with real-life users and scenarios – is invaluable at this stage. It will identify any unforeseen issues before the official launch, giving the team a chance to address them.

Balancing Perfection & Progress

While it’s critical to test and make sure you’re set up for a successful launch, it’s also important to understand that there is room to refine and improve things at a later stage.

A common mistake during an integration project is to expect perfection right away and become stuck in a holding pattern when it doesn’t materialize. If 95% of your project and processes are working as expected, that may be enough. Prioritizing measurable and impactful progress over a ‘perfect scenario’ will help you to reap benefits sooner. In turn, these benefits will likely help you to make a case for any additional investment that might be needed to achieve that last 5%.

Often, it’s better to take a step-by-step approach to transformation, gradually scaling and bringing people on the journey with you. Trying to do everything at once only heightens the risk of overpromising and underdelivering.

Once everything is up and running, it’s time to share the good news. If earlier steps were followed, accurate metrics in line with initial objectives will demonstrate the automation’s positive impact. What’s more, you should have a range of stakeholders and change champions who are ready and willing to talk about the benefits they’ve seen along the way.

Ultimately, a successful automation journey opens exciting possibilities for F&A teams. While the technicalities are important, the real key to success is understanding that people are at the heart of it all. Ensuring successful implementation of technology and ushering in positive change requires F&A leaders to bring together employees, processes, and technology. By following these steps, you should be set up for success and in a position to demonstrate ROI for the next steps in your transformation journey.

This blog post was originally published on the BlackLine blog.

From Credit Managers to Strategic Partners: The Rise of Revenue Cycle Managers

September 28, 2023 by Revelwood

This guest post from our partner BlackLine discusses the emerging role of accounts receivable (AR) revenue cycle managers.

The role of credit managers is changing… dramatically. As organizations more aggressively seek to improve operational efficiencies, lower costs, and maintain growth, credit managers are being called upon to view their roles in a whole new way.

To be clear, this shift won’t only impact AR processes. The financial operations of the entire business enterprise depend on it.

Historically, it has been common for credit managers to be focused solely on isolated issues, such as late payments and non-payments, DSO, and lagging indicators. But what if they instead adopted a holistic view and examined how AR fits into the business enterprise? What if they were to embrace the idea that AR can actually play an instrumental role in impacting other outcomes—even enterprise profitability?

With this enlightened, expansive view comes a new title for credit managers: Revenue Cycle Manager (RCM). RCMs are responsible for overseeing billing accounts and helping departments resolve their revenue cycle problems, so the role goes beyond simply being a process watchdog. Instead, the RCM is a strategic partner to leadership and various corporate functions.

Accurately Assessing Customer Behaviors

At the heart of this transformation is credit managers’ untapped superpower, one they’ve actually possessed for a very long time: visibility into customer behaviors and the insights they leverage to manage debt and risk appetite, as well as collections and cash flow.

AR teams typically have extensive access to customer data that can paint a stunningly accurate picture of customers’ credit patterns and behaviors, including sales. This offers them the ability to share insights and showcase the essential, multifaceted nature of AR with other functions.

This visibility has remarkable value, because such insights can benefit the enterprise in big, strategic ways, enabling functions to get away from operating in siloed fashion and instead work together to make better decisions that improve processes and the enterprise’s ability to grow.

There are three important steps toward expanding the perspective of an AR manager to that of an RCM.

Identify Functional Disconnects

The RCM must be able to identify operational breakdowns and disconnects between functions. For instance, where are finance teams not working together and sharing information that could make both more successful? If one team is managing risk but not impacting collections, and vice versa, that’s a disconnect.

These disconnects can also creep into leadership circles where conflicting KPIs and targets can be a challenge. For example, perhaps the CFO is pushing to collect more cash and reduce bad debt at all costs, but the CEO is looking to grow the business. They’re unlikely to achieve growth without adding an element of risk that newer customers may not be strong payers, and so both targets require an element of give and take if they are to be successful.

That’s one challenge. But, if both of those KPIs are being set by individuals who are also working with inaccurate, or limited, data relating to customer behaviors, risk appetite and collections processes within the business, then those leaders, too, are working in silos which will serve only to exacerbate contradictory or competing KPIs.

While the wider organization doesn’t always perceive AR teams as customer-facing, interacting with customers and tracking customer behaviors is actually a big part of what they do. As such, their insights can positively impact customer-facing functions, such as sales and marketing. To be successful and operate efficiently, sales and marketing need to target customers that are most likely to convert. That could take the form of purchasing a product, increasing recurring purchases, or buying additional product lines. It’s a waste of time for them to be fostering customers who aren’t “keepers” or, worse, indicate they will be risky payers.

Making savvy decisions about building the desired customer base is dependent on how aligned a credit and finance approach is with an organization’s sales strategy and revenue targets. AR intelligence can help sales verify good customer profiles. Knowing that risk is lessened, those teams can focus on doing business with those customers and extend to them bigger lines of credit.

Adopt New Technological Solutions

RCMs can’t do their jobs and achieve operational excellence if teams are relying on manual processes. This results in delayed, poor-quality data and performance.

The most accurate way of determining risk is by analyzing which customers are paying on time, and this can only be learned through analytics and intelligence. That’s why it’s essential for businesses to adopt solutions that automate processes, streamline and unify data, and give teams access to real-time intelligence so they can make quick, informed decisions — all of which drives improved performance, not only for AR and finance, but across the business.

Once an automated solution is in place, the RCM can quickly assess customer behaviors, identify payment patterns, direct business strategy, and help company functions utilize data, talk intelligently with each other, and improve processes.

Communicate the Importance of the RCM Role

Many people don’t like change, especially if it means adjusting the way they’ve been operating for a long time. So, while this evolution might require some feather smoothing, it can be done.

High-level stakeholders and customers aren’t impressed by nips and tucks to processes. What they care about is compelling results. To get started on this journey, RCMs need to communicate to those inside and outside AR the importance of being able to access customer data quickly and leverage automation solutions that ensure that all data that enters the system is both timely and accurate.

Making the case for these sorts of holistic changes has the best chance of improving the health and viability of the enterprise and bringing about positive business outcomes.

The RCM’s Time Is Now

As enterprises realize the gains of improving AR processes, they’ll be in a stronger place to manage the many challenges that impact profitability. But this evolution can only begin when finance leaders embrace the emergence of the role of the Revenue Cycle Manager and the impact that AR decision-making has on key functions across the enterprise, including sales and strategies to improve customer relationships and expand the customer base.

This blog post was originally published on the BlackLine blog.

Redefining Accounting: Embracing Technology to Transform the Profession

September 21, 2023 by Revelwood

This guest post from our partner BlackLine, highlighting the challenges the accounting profession is facing.

Since the onset of the pandemic, the list of challenges faced by business leaders has only gotten longer with each passing quarter: geo-economic confrontations, rising interest rates, supply chain disruptions, rising cyber-crime, energy crises, failing banks, extreme weather events…and unfortunately, there is more bad news to share. Accounting—the backbone of business operations—is in decline.

The Wall Street Journal reported that over “300,000 U.S. accountants and auditors have left their jobs in the past two years, a 17% decline,” and that the diminishing number of accounting bachelor’s graduates won’t be able to fill the vacancies. Some of this decline across the profession can be attributed to retirements, however, several studies point to a much larger problem.

Accounting’s Dependence & Decline

A recent survey of over 1,400 college students (accounting and non-accounting majors alike) on their perceptions of the accounting profession revealed three predominantly negative perceptions of accounting:

1) Accounting careers require longer hours per week than other careers.

2) Day-to-day responsibilities are less interesting than other business careers.

3) Accounting degrees are more difficult to earn than other business majors.

Another survey conducted with the University of Georgia’s Consumer Analytics Program revealed even more alarming data: of the 204 professional accountants surveyed, 99% reported experiencing some level of burnout and 24% of those reported experiencing medium-high to high levels of burnout.

This burnout is predominantly associated with the financial close:

81% of participants reported having at least one month in the past year where the financial close disrupted their personal lives
85% of participants reported having to re-open the books to fix errors at least once a year
49% reported having to re-open the books to fix errors 3-4 months a year

This prevalence of errors within the financial close and subsequent burnout originates in the lack of controls, repetitive work, long hours, and weak data governance that is inherent to dependence on Excel-based accounting processes. Consequently, burnout across the profession only results in more time spent in these processes for the accountants that do remain.

Despite the well-known drawbacks of this dependence, Excel has remained the go-to for period-end accounting and finance processes since its entry into the software market in 1995. This reign as accounting and finance’s primary tool is a success by all accounts. However, the mutual relationship between the recent decline of the accounting profession and the consequences of reliance on manual processes demands a change. This demand for change is stressed even further when we consider the circumstances of our macro-environment and the challenges they pose to the priorities of business leaders.

Conflict with Leadership Priorities

In its Leadership Vision for 2023, Gartner research presents the leading 2023 priorities of Corporate Controllers and their leadership. To no surprise, the CEO’s number one priority is growth, followed by workforce management, and then technological transformation. For the Corporate Controller, the number one priority is to digitize and streamline the financial close process, followed by improving accounting staff engagement and retention, and then reevaluating the controllership’s scope and structure. Does accounting’s dependence on manual, Excel-based processes contribute to either set of priorities? The short answer is no.

With respect to the CEO’s priorities, spreadsheet-based processes:

1) Inherently conflict with technological transformation.

2) Are the root source of the accounting profession’s challenges with workforce growth and retention.

3) Lend themselves to the persistence of risk, inconsistency, lack of visibility, and inefficiency that ultimately disables the CEO from making well-informed, real-time decisions that can optimize profitability.

This is especially true during a tumultuous macroeconomic environment.

A Better Way to Achieving Controllers’ Goals

Fortunately for Corporate Controllers, they can simultaneously address the conflicts that Excel-based processes pose to the priorities of the CEO and achieve their secondary and tertiary priorities through commitment to their first priority—digitizing and streamlining the financial close process.

Of course, there are steps that need to be taken to make the close process resilient to a rapidly changing and increasingly complex business environment prior to digitizing it.

Corporate Controllers can improve accounting staff engagement and retention and reevaluate the controllership’s scope and structure by redefining accounting’s role to support the decision-making and growth priorities of the CEO by:

1) Ditching the risks and inefficiencies associated with spreadsheet-driven processes.

2) Leveraging technology that enables real-time visibility into the balance-sheet.

3) Removing repetitive, mundane tasks from the accountant’s day-to-day responsibilities.

Despite the reality of the accounting profession’s decline, the shift from bookkeeping to decision-support that’s offered by the digitization and streamlining of core accounting processes can deliver a sea change to the profession.

It can address the root causes of burnout, such as the prevalence of errors and rework and the long hours required of repetitive, spreadsheet-driven processes. It can align accounting graduates more closely to the education in analytics and strategy that they received in college, which can in turn make the most of the controllership’s valuable talent. It can dispel perceptions of accounting work as boring and repetitive. And most importantly, it can increase the accountant’s value by making them a stakeholder in the strategy and growth of the business.

If delaying this change to the accounting profession is to delay the growth trajectory of the controllership and its alignment to the priorities of the CEO, then this is a change that business leaders cannot afford to delay.

This blog post was originally published on the BlackLine blog.

The Future of Accounting: Breaking Free from Manual Tasks with Technology

September 14, 2023 by Revelwood

This guest post from our partner BlackLine, discussing how technology can help with the shortage of accountants.

Over the years, the accountancy profession has been known for its stability and rewarding nature. Recently, the number of students specializing in accountancy has dropped while the number of accounting professionals leaving the sector has risen. Yet the demand for qualified accountants shows no signs of abating, resulting in a pressing talent shortage in the finance and accounting industry.

Tammy Coley, BlackLine’s Chief Transformation Officer, chatted about the topic with radio station CNA938 in Singapore.

Technology in the Accounting Profession

Tammy and the show host discussed the rise of technology in the sector and its impact on the profession. Tammy noted that the pandemic caused a lot of corporations to think differently about accounting which led to an embrace of technology and its ability to reduce the reliance on manual, spreadsheet-driven processes. But, in truth, she believes the industry should have been thinking differently about it for a long time before the pandemic.

“We in the accounting profession have a significant opportunity to stop allowing these manual routine processes to continue to be the focus of the accounting function. Accounting is critical, yet many accounting professionals spend so much time simply going through the motions, doing those same processes over and over every period,” she explained.

It’s time to automate those processes so accountants can spend their time on higher value-added activities.

“I am so passionate about helping the accounting profession get away from the manual routine processes and really add value by analyzing the numbers and making sure the numbers are accurate.”

The Accounting Talent Crunch

The Association of Chartered Certified Accountants (ACCA) notes the talent crunch in the finance and accounting industry in Singapore (and elsewhere) is expected to worsen. The perception that accounting is still manual, routine, and not exciting may be part of this.

“Accounting is an awesome profession. I love, love, love accounting!” exclaims Tammy. But she goes on to say that accounting has done itself a disservice over the years by continuing to allow the processes to stay manual and routine.

However, this has exposed a huge opportunity to embrace technology and let it do the hard work on the manual, routine processes. This gives accountants an opportunity to better understand the drivers of the business and help the company make good decisions.

Let’s look at an example. In the past, you’d come to work and know that you’re going to pull this data from this subsystem, you’re going to put it into a spreadsheet, then you’re going to calculate the journal entry, and you’re going to post it.

What if, in place of you doing that process over and over, the software does it? Now, instead of posting that journal entry, you get an opportunity to step back and say, “Okay, the system posted it, but does it make sense in comparison to last period or last year? Does it make sense in comparison to forecast?” Now, you can focus on understanding whether the numbers make sense, analyzing the numbers, and helping turn the numbers into information—not just data.

Changing the Perception of Accounting

Tammy feels strongly that the industry needs to change the perception of accounting to get more people interested. The current view is that accounting is a lot of manual work—and that’s not wrong in many organizations.

Students go to school for years to become an accountant, and the job is so critical, but then some people just feel stuck in this manual process cycle. “Those manual routines? They don’t have to be manual anymore. We’ve got to take our game to the next level and not just stay back where we were before the technology could do so much for us,” Tammy explains.

With solutions like BlackLine, accounting departments can automate the manual processes, the routine tasks, and the activities that take up so much time. With that time freed up, F&A professionals can provide an elevated level of service to their organizations and stakeholders, while the organizations benefit from increased job satisfaction and employee retention.

This blog post was originally published on the BlackLine blog.

Accounting Automation Transforms Finance

September 7, 2023 by Revelwood

In today’s fast-paced business landscape, finance and accounting teams face increasing pressure to close the books faster, ensure data accuracy, and comply with ever-changing regulations. Manual accounting processes not only consume valuable time and resources but also pose significant risks of errors and inconsistencies. However, there’s a solution — accounting automation software.

Simplifying Account Reconciliation

One of the core features of accounting automation software is for account reconciliations. Traditional reconciliations involve manual data entry, cross-checking, and time-consuming reviews. Accounting automation software transforms this process by offering auto-certifications, matching technology, and real-time visibility into the status of reconciliations. Intelligent algorithms handle high volumes of accounts effortlessly, minimizing the risk of errors and ensuring compliance with accounting standards.

Empowering Transaction Matching

Another game-changing aspect of accounting automation software is transaction matching. Matching records from multiple data sources, such as bank statements and general ledger transactions, can be a tedious and error-prone task when done manually. Advanced matching logic can handle various types of matches, enabling efficient one-to-many and many-to-many reconciliations. This capability saves valuable time and ensures accurate results for even the most complex datasets.

The Benefits of Accounting Automation

Implementing accounting automation in your finance department offers a plethora of advantages. First, it significantly reduces the time and effort required for financial reconciliations, enabling teams to focus on value-added tasks. By automating workflows and standardizing processes, the software ensures consistency across different accounting practices, reducing the likelihood of errors and discrepancies.

Ensuring Data Security and Compliance

The best accounting automation solutions prioritize data security, confidentiality, and compliance. It should have robust encryption measures, access controls, and secure cloud storage so that sensitive financial information remains protected from unauthorized access.

As finance and accounting professionals seek to streamline their processes and achieve greater efficiency, accounting automation software emerges as a transformative solution in the Office of Finance. By centralizing financial tasks, automating reconciliations, and providing real-time insights, the software can revolutionize the way financial operations are managed. Embrace the future of accounting automation and empower your finance team to drive business success like never before.

Unplugging with Confidence: How Accountants Can Enjoy Vacations Stress-Free

August 31, 2023 by Revelwood

This guest post from our partner BlackLine will help you understand how automating your financial close, implementing accounts receivable automation, and structuring and automating intercompany transactions can reduce stress and allow you to fully relax on your summer holiday.

Believe it or not, there are just a few more weeks to get in your summer vacation.

You’ve been needing a vacation, and perhaps you’ve found the perfect destination for you and your family. Whether you’re going away for a few nights or spending a few weeks, some time off is just what you deserve after a busy Q1 and Q2 this year.

Here at BlackLine, we know the pace of work in the financial sector can be all-consuming, especially for you, an accountant. We also know that PTO is essential to avoid burnout.

So while you’re excited for your holiday, there may be a nagging thought in the back of your mind … “I’m too busy to go on vacation” or “I can’t miss the month-end.” Sound familiar? We thought so.

Accountants, like professionals in many other fields, often face challenges in maintaining a work-life balance due to the nature of their work and the demands placed upon them. Here are some common challenges that accountants may encounter:

Long working hours: Accountants often work long hours, especially during peak periods such as month-end close or the end of the financial year. These extended hours can make it difficult to allocate time for personal activities and maintain a healthy work-life balance.
Deadlines and time pressure: Accountants typically work with strict deadlines which can create significant time pressure. Meeting these deadlines often requires additional hours of work, resulting in reduced personal time and increased stress.
Seasonal workload fluctuations: Accountants may experience significant fluctuations in workload throughout the year. During busy periods, they may be required to work more intensively, leading to the long working hours mentioned above.
Expectations and responsiveness: Accountants need to maintain strong relationships with their stakeholders and business leaders. This often involves being readily available and responsive to inquiries and requests, which can encroach upon personal time and limit work-life balance.
Technological demands: The accounting profession has become increasingly reliant on technology. While technology has streamlined many processes, it has also increased the pace of work and the expectation of immediate responses. Accountants may feel pressured to be constantly connected, which can blur the boundaries between work and personal life.
Continuous learning and professional development: Accountants must stay up to date with the latest developments in accounting regulations, tax laws, and industry trends. Pursuing ongoing professional development while juggling work commitments can be time-consuming and challenging to balance with personal life responsibilities.
Work-related stress: The accounting profession can be inherently stressful due to the complexity and high stakes involved in financial reporting, audits, and tax compliance. Managing work-related stress and its impact on personal life is essential for maintaining a healthy work-life balance.

Thankfully, you can manage and mitigate the struggles mentioned above and unplug on vacation without feeling guilty.

Set clear boundaries: Clearly communicate your vacation dates to colleagues and stakeholders and establish limits on work-related communications during your time off.

Plan for deadlines: Prioritize and complete critical tasks before your vacation to minimize the last-minute rush and avoid the need for extra work during your time off.

Coordinate workload and coverage: Collaborate with your team to ensure that the workload is appropriately distributed and that someone is available to handle urgent matters in your absence.

Disconnect from technology: Take a break from work-related technology and avoid checking emails or work messages while on vacation. Enjoy your time off without feeling pressured to stay constantly connected.

Delegate responsibilities: Delegate non-urgent tasks or responsibilities to trusted colleagues to ensure smooth workflow and prevent a backlog of work upon your return.

Make self-care a priority: Use your vacation as an opportunity to recharge and focus on personal well-being. Engage in activities that help you relax and rejuvenate, such as spending time with family and friends, pursuing hobbies, or engaging in physical exercise.

Set realistic expectations: Be realistic about what you can accomplish before and after your vacation, and communicate any potential delays or limitations to stakeholders, including clients and colleagues.

Practice stress management techniques: Use your vacation as a chance to unwind and reduce work-related stress. Engage in activities that promote relaxation and well-being, such as meditation, mindfulness, or engaging in hobbies you enjoy.

Reflect on work-life balance: Take this time away from work to reflect on your work-life balance and identify any adjustments or improvements you can make upon your return to maintain a healthier equilibrium.

Remember, time off is essential for your well-being, and by effectively managing your workload and communicating your availability, you can enjoy a well-deserved break while maintaining a healthier work-life balance.

This blog post was originally published on the BlackLine blog.

Modern Accounting: The Impact of Investing in Accounts Receivable

September 29, 2022 by Revelwood

This is a guest blog post from our partner BlackLine, explaining how to gain confidence cash flow.

Historically, accounts receivable (AR) has been the victim of a lack of investment from a technological perspective. Primarily, this lack of investment in AR is the result of something simple: a misunderstanding.

AR is largely regarded as a necessary but transactional back-office function and not something that creates a “value-add” for the business. Unlike the core accounting of bookkeeping, AR’s reputation is that of a kind of conveyor belt. Necessary, but low impact in the grand scheme of things. As a result, AR is the victim of fundamental misunderstandings regarding how it can be optimized—and the business impact that the right optimization can have.

When finance professionals think about how to streamline or optimize AR, typically it has been viewed as something that may be better offshored or that the ERP already handles. This is due to it being largely manual, time-consuming, and often transactional. But this simply moves the problem elsewhere, rather than solving the underlying issue.

Investing in technology that automates the accounts receivable function grants you complete visibility over the flow of cash into your business, in real-time. The data, intelligence, and real-time oversight of working capital that optimized AR offers to businesses are invaluable, for several key reasons.

Unlocking Working Capital

Applying customer payments to customer accounts quickly and accurately is the cornerstone of successful AR. However, manual processes lead to significant delays in unlocking crucial cash flow.

Money owed by customers is one of the largest assets on any balance sheet. A recent report by PwC estimated that the amount of working capital held hostage in this way is an enormous €1.2 trillion globally. According to PwC, releasing this cash would be enough for global companies to boost their capital investment by 55%, without the need to look externally for funding or put their cash flow under unnecessary pressure. With interest rates as they are right now, never mind what might be on the horizon, looking internally to find opportunities to streamline cash flow and payment processes is a no-brainer.

Let me give you an example: on average, organizations are paid on day 50-55. For a business with $500m revenue, each day is worth $2m. By automating and optimizing payment processes, businesses can potentially release a significant amount of cash into the bottom line that can then be put to work in the business.

Releasing cash from receivables is the quickest and cheapest way to more working capital, yet organizations continue to rely on manual processes which don’t provide proper visibility and tie up cash for far longer than necessary. Investing in AR frees up more working capital, which means stronger business resilience and enables more effective decision-making. Put simply, it puts much more power in your hands and leaves much less up to guesswork.

Maintaining Lasting Customer Relationships

Credit controllers used to be a lot more persistent. This was clear in the terminology they used. They looked at customers as “debtors.” This sounds more akin to something you’d read in a Dickens novel than the way a business refers to its trusted partners.

The way you treat your customers not only reflects your efficiency internally but crucially shapes perceptions, both for potential new customers and those who might be on the fence about jumping ship. Chasing a customer for a payment that was made days before, simply because you’re reliant on manual processes that don’t give you proper visibility, could reflect poorly on your organization. Aside from the wasted time and effort, receiving an erroneous demand for payment on a bad day could be the difference between a continued relationship and a swift parting of ways.

Customers provide the value for our organizations. It’s our customers that are going to support us through the tough times. A mindset shift is required here at all levels of business, including the C-suite. Customers should be treated with the same respect when they owe money as when they don’t. Investing in AR creates the visibility over customer payment behaviors that is essential to this.

The right solution can unlock decision intelligence by removing time-consuming and error-prone processes involved in preparing, transforming, and visualizing data. This lets your teams make more informed decisions around credit risk policies, collection strategies, or credit limit increases to create greater value for the business. It can help you gain visibility into customer behavior changes. This could unlock opportunities for you to work with customers to solve payment challenges before they become a major problem, or increase their line of credit and in turn, your revenue. This can improve profitability by reducing the financial risks posed by write-offs and late payments.

Creating greater visibility over real-time payments allows you to leave the war of attrition over unpaid invoices behind. This leads to a more customer-centric approach to credit, collections, and complaints that can help you to maintain good customer relationships.

Retaining Talent for a Competitive Advantage

In an increasingly competitive business environment, the ability to attract and retain top talent is crucial to business success. A recent survey commissioned by BlackLine suggests that one of the first steps finance and accounting needs to take to retain their best workers is to eliminate transactional, mundane work. More than a quarter (28%) of FP&A professionals surveyed said there weren’t opportunities to learn new skills because transactional work takes up so much time, while a similar number (26%) claimed that they had become bored of the mundane, repetitive nature of their jobs. What’s more, a quarter (26%) also claimed not to have time to focus on future career development.

It’s clear that your talent wants to spend their time adding value, regardless of function. Completing a long list of manual tasks, which could be automated, is not adding value. If 80% of your time is spent on routine tasks that can be automated, that’s 80% of your value gone before any major or strategic tasks arise. This wasted energy wastes your employees, which passes on up the chain.

Automation frees up F&A team members to focus on strategic, more career-focused goals, ensuring their motivation and energy is spent bringing value to your business (and not someone else’s).

Don’t Let Manual Processes Decide Your Fate

Many organizations have now automated processes such as accounts payable, but the prevalence of manual processes in accounts receivable continues to pose serious health issues for businesses. The problem is that automating some processes and not others could ultimately cost you more than you bargained for. If the budget only stretches so far, it’s essential to upgrade the process that will have the biggest impact. Let me explain by way of an analogy.

Imagine you need to dig a hole somewhere in your back garden. You could do it with a shovel, but it needs to be a very large hole, so doing it that way would take a huge amount of time and exhausting effort. So, you hire a contractor with the right equipment. This gets the job done much faster and with much less effort. The problem is, you didn’t know where exactly to dig the hole to begin with and you’ve dug it in the wrong place. Now, not only do you still need to dig the hole, but you need to repair the large area of back garden that is now a building site.

Automating some FP&A processes but leaving AR up to manual processes creates a similarly traumatic scenario. Choosing to invest in accounts receivable opens up a treasure trove of intelligence and profitability that could make the difference between success or failure. When it comes to accounts receivable, investment is no longer a nice-to-have, it is now a must-have for survival.

Modern Accounting: Why Does Intercompany Accounting Crash Your Close?

August 11, 2022 by Revelwood

This is a guest blog post from our partner BlackLine, explaining why intercompany accounting is killing your close.

It’s a fact of life that if you can’t reconcile your intercompany accounts, you can’t close your books. The goal of intercompany accounting is netting to zero across the entire company. However, as multinational companies know, that is easier said than done—especially when it comes to billing services.

Deficient processes anywhere in the intercompany chain cause delays in controllership and impact a company’s monthly, quarterly, or annual close.

The Challenges of Intercompany

Without standardized intercompany processes, the risk of problems and delays that “kill your close” is high.

Poorly executed intercompany agreements

Intercompany accounting starts with an agreement between parties acting as either a seller and/or buyer to other entities in the multinational corporation. An intercompany agreement specifies what type of products will be delivered or services will be billed. It will also include details such as who is to be invoiced, what indirect taxes apply, and may even note restrictions around getting money out of the country where the buyer entity operates. If no actual agreement is in place, or if the agreement is poorly executed, mistakes must be undone and disagreements resolved. This takes extra time.

Incorrectly booked invoices

Problems progress from there as some invoices are simply not booked correctly. Perhaps a lower-level employee new to their position inadvertently books an invoice incorrectly or in a way that is inconsistent with the intercompany agreement. When it comes time to roll up the accounting, there is a disconnect between how the entities involved in the transaction accounted for that invoice. Ultimately, late in the game, the accounting team discovers these inconsistencies and must investigate where the disconnect occurred and effect a correction. This problem is further compounded as a multitude of inconsistencies roll up through the organization increasing by both number and associated value. If these issues cannot be rectified by the end of the month or quarter, they will become costly to plug.

Lack of communication

A lack of communication and standardized processes creates problems on both sides of intercompany transactions. For example, if a seller sends an invoice to the wrong distribution list or responsible person, the invoice never gets booked. Without proof of a counterparty confirmation, of a person saying, “I agree to book this,” the risk of a delay is high.

Problems on the buyer’s side arise when invoices are not processed properly. The buyer needs to book whatever service or product they receive to the right function, to the right department. This must be done in a timely manner to minimize disruptions.

Inquiries and disputes

The expedient management of inquiries and disputes presents a final challenge. Even when intercompany invoice trafficking is efficient, the person receiving the invoice may disagree with the charges. In some cases, buyers don’t communicate that they have a dispute until an invoice is overdue, putting additional time pressure on the resolution process.

Considering how many invoice disputes happen throughout the year, it’s easy to see how a poorly executed inquiry and dispute management process can critically slow a company’s close. This is further frustrated when buyers or sellers are organized in silos managing their own entity’s books while working to keep their costs down. With this perspective, if they don’t agree to pay an invoice, it doesn’t affect their margins, targets, or KPIs. They are not concerned with how an outstanding intercompany invoice impacts the larger organization.

Is a Shared Services Team the Answer?

These intercompany challenges often drive the creation of shared service centers or centers of excellence which are tapped to manage intercompany invoicing across the enterprise. When well-formulated, these organizations can streamline intercompany invoice management and, seeing the larger picture, should increase accuracy and timeliness. However, these teams must be more than dedicated personnel assigned to intercompany tasks. Without thoughtful process design and automation and separated from the sourcing decisions by continents and time zones, a shared services team may actually increase errors. A poorly run, poorly trained shared services team also suffers from staff turnover—exacerbating mistakes.

Pressure On the Accounting Team

For the accounting team, trying to tie up the intercompany accounts at the corporate level can be extra challenging. They must track down knowledgeable parties at the entity level that may be operating in different time zones and with different work rules and holiday schedules. They face additional stress when the accounting close deadline looms, often having to spend days and nights trying to source information and resolve issues. Often, they are forced to make unfortunate write downs when time is up. The pressure becomes worse at the end of the year when issues cannot be carried over to be resolved in the next quarter.

How to Address These Intercompany Challenges

It is important to get your intercompany process right from the start. Make it well-defined and executed so that you’re not wasting time, money, and resources. Intercompany should be a net-zero game so a good policy ensures that information is right on both sides of the transaction at every stage of the process.

To prevent intercompany from killing your close, you need to establish a global intercompany standard. It should:

Eliminate the silos and outline how to get things done
Make sure invoices are booked into the right accounts and in a timely manner
Specify timing—for example, dictate the last day in the month/quarter that intercompany charges must be billed
Improve training for the shared service center team, especially new members
Make entity-level staff or shared services teams tie up outstanding intercompany transactions early enough so that the business unit and corporation are completed in a timely manner
Give you time to reconcile

How BlackLine Can Help

BlackLine helps companies centralize the management of intercompany processes, technology, and master data to create improved tax and resource efficiency while reducing operating costs. Our solution automates intercompany accounting by translating relevant data into compliant invoices and documentation to support intercompany transactions, real-time audits, and improved transaction transparency while reducing operational costs.

The art of establishing company-wide process uniformity requires experienced intercompany pros. BlackLine has guided consistency across customer organizations improving compliance and reducing risk at some of the world’s largest corporations. Uniformity and consistency are important defense lines in any transfer pricing audit as they communicate a sense of control and defend against disorder.

accounting

Addressing All 3 Intercompany Processes

When the Left Pocket Doesn’t Equal the Right Pocket

Where Things Fall Apart Downstream

Where Bad Data First “Infects” the System

Starting on a Path Toward Intercompany Excellence

Read more about Accounting & Accounts Receivable:

Clear Objectives & Goals

Establish Metrics That Align with Automation Goals

Key Stakeholder Engagement

Change Champions

Testing Before Showtime, Not After

Balancing Perfection & Progress

Sharing the Success

Read more about Accounting & Accounts Receivable:

Accurately Assessing Customer Behaviors

Identify Functional Disconnects

Adopt New Technological Solutions

Communicate the Importance of the RCM Role

The RCM’s Time Is Now

Read more about Accounting & Accounts Receivable:

Accounting’s Dependence & Decline

Conflict with Leadership Priorities

A Better Way to Achieving Controllers’ Goals

Read more about Accounting & Accounts Receivable:

Technology in the Accounting Profession

The Accounting Talent Crunch

Changing the Perception of Accounting

Read more about Accounting & Accounts Receivable:

Simplifying Account Reconciliation

Empowering Transaction Matching

The Benefits of Accounting Automation

Ensuring Data Security and Compliance

Read more about Accounting & Accounts Receivable:

Read more about Accounting & Accounts Receivable:

Unlocking Working Capital

Maintaining Lasting Customer Relationships

Retaining Talent for a Competitive Advantage

Don’t Let Manual Processes Decide Your Fate

Read more about Modern Accounting:

The Challenges of Intercompany

Poorly executed intercompany agreements

Incorrectly booked invoices

Lack of communication

Inquiries and disputes

Is a Shared Services Team the Answer?

Pressure On the Accounting Team

How to Address These Intercompany Challenges

How BlackLine Can Help

Read more Modern Accounting blogs:

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