Financial Close and Consolidation

Maximizing Cash Flow: How Technology Optimizes Accounts Receivable Operations

August 10, 2023 by Revelwood

Effective management of accounts receivable (AR) is critical for the financial health of any organization. Timely collection of outstanding payments can improve cash flow, reduce the risk of bad debts, and enhance overall financial stability. However, manual AR processes can be time-consuming, prone to errors, and lack actionable insights.

Automating Cash Application

Cash application is a fundamental part of the AR process, where incoming payments are matched with outstanding invoices. Traditionally, this has been a tedious and error-prone task. With AR technology, cash application becomes automated and efficient. The system should intelligently match payments with invoices, reduce manual efforts and ensure accuracy. This automation can save valuable time for finance teams, allowing them to focus on higher-value tasks.

Enhancing Payment Matching

One of the common challenges in AR management is dealing with diverse payment sources and remittance formats. AR automation technology addresses this issue by seamlessly scraping payment information from various sources, such as bank statements and remittance invoices. The technology should match this data with relevant invoices, streamlining the reconciliation process. As a result, organizations achieve better visibility into their cash flow and minimize the risk of unidentified or misapplied payments.

Customer Risk Assessment

Understanding the creditworthiness and payment behavior of customers is vital for managing risk in AR operations. Technology such as BlackLine’s solution’s customer attractiveness scoring system helps organizations identify customers with varying levels of risk. By analyzing factors such as payment history, outstanding debts, and payment trends, the system assigns grades to customers, enabling finance teams to prioritize collections efforts and manage credit exposure more effectively.

Cash Flow Forecasting

Cash flow forecasting is an essential practice for any organization to plan and manage financial resources efficiently. An AR Intelligence solution should empower finance professionals with data-driven insights to make informed cash flow predictions. By analyzing historical payment patterns, invoice due dates, and customer payment behaviors, the system provides accurate forecasts, helping organizations anticipate cash inflows and outflows with greater precision.

In today’s fast-paced business landscape, optimizing financial operations is essential for sustainable growth and success. AR solutions offer comprehensive and intelligent approaches to streamline accounts receivable processes. By automating cash application, enhancing payment matching, and providing valuable insights through analytics, organizations can reduce manual efforts, mitigate risk, and achieve better financial outcomes.

Learn more about optimizing AR – watch our on-demand webinar, BlackLine in Action: Optimizing Your Accounts Receivable Process.

The Role of CFOs in Building Financial Resilience

July 27, 2023 by Revelwood

In today’s dynamic and unpredictable business landscape, financial resilience has become a top priority for organizations. Among the key drivers behind this resilience are CFOs, who play a critical role in navigating uncertainties, forecasting cash positions, and ensuring long-term stability. This blog post explores the significance of CFOs in building financial resilience and highlights their strategic role in adapting to changing market conditions.

Understanding the Importance of Financial Resilience

Financial resilience refers to an organization’s ability to withstand and recover from financial disruptions, economic downturns, or unexpected events. It encompasses the capacity to adapt, respond, and thrive in the face of uncertainty. CFOs, as key members of the executive team, are responsible for forecasting cash positions, managing working capital, and ensuring the financial health of the company. They act as strategic partners to the CEO and board, translating financial data into actionable insights to support decision-making.

Proactive Cash Flow Management

One of the primary responsibilities of CFOs is to monitor and manage cash flow effectively. By implementing robust cash flow forecasting models, CFOs can identify potential risks, plan for contingencies, and allocate resources optimally. They work closely with other departments to align financial goals with operational strategies, ensuring a disciplined approach to working capital management. CFOs leverage financial data, market trends, and scenario planning to make informed decisions and adapt the organization’s cash blueprint to changing circumstances.

Embracing Technology and Automation

Digital transformation has revolutionized the finance function, offering CFOs unprecedented opportunities to enhance financial resilience. By leveraging advanced technologies, such as artificial intelligence and automation, CFOs can streamline financial processes, improve efficiency, and reduce manual errors. Automated systems provide real-time visibility into cash flows, accounts receivable, and financial performance, enabling CFOs to make data-driven decisions and take proactive measures to mitigate risks. Embracing technology not only optimizes financial operations but also frees up valuable resources, allowing finance teams to focus on strategic initiatives that drive long-term growth.

Strategic Partnerships and Stakeholder Communication

CFOs serve as a bridge between the finance function and other key stakeholders, including shareholders, investors, and the board of directors. Effective communication and collaboration with these stakeholders are essential for building financial resilience. CFOs provide transparent and timely financial reporting, highlighting the organization’s financial position, risks, and mitigation strategies. They play a pivotal role in developing and executing strategies that align financial objectives with broader business goals. By forging strong relationships with stakeholders, CFOs build trust, instill confidence, and secure support for initiatives aimed at strengthening financial resilience.

In an era of unprecedented disruptions and economic volatility, CFOs play a crucial role in building financial resilience. By proactively managing cash flow, leveraging technology and automation, and fostering strategic partnerships, CFOs can navigate uncertainties, adapt to changing market conditions, and position their organizations for long-term success. Their strategic agility and financial acumen are indispensable in driving financial resilience and ensuring sustainable growth.

Learn more about building financial resilience. Download the white paper, Financial Resilience 101: How CFOs are Shifting to a New Cash Blueprint.

A Day in the Life of an Accountant using BlackLine

July 20, 2023 by Revelwood

As an accountant, your day is filled with numbers, spreadsheets and deadlines. Every company relies on their accounting team to maintain financial stability and continuity by keeping track of transactions, expenses and profits. In today’s digital age, the role of an accountant has evolved from traditional bookkeeping and tax filings to taking a more strategic, predictive approach to financial planning. With the right tools and technology, accountants can now optimize their workflows and gain insights to make key business decisions.

One tool that stands out is BlackLine, the cloud-based finance and accounting software that automates mundane tasks and streamlines processes. A typical day in the life of an accountant that uses BlackLine starts with logging in to the software’s dashboard, which displays their team’s tasks for the day. The dashboard provides a real-time view of all the assigned work, outstanding tasks and allows for task reassignment and priority settings. With this comprehensive view of accountants’ workload, they can manage their time effectively and ensure timely completion of tasks.

The first task for an accountant may be balance sheet reconciliations, which involve comparing general ledger data to the reconciling items to verify their accuracy and completeness. In the past, reconciliations have been a manual and tedious task that requires significant time and effort. But with BlackLine, the software can enable faster, more accurate reconciliations. The system automates mapping, matching, and enrichment of data, and identifies exceptions, variances, and errors for corrective action. By using BlackLine, accountants can complete reconciliations in a fraction of the time it would take manually, giving them time to work on other critical activities.

Once the reconciliations are completed, accountants can move on to transaction matching. This task involves comparing two sets of transaction data to ensure that they correspond correctly. With BlackLine, the process of transaction matching is automated, enabling accountants to identify and resolve discrepancies with ease. The system compares a company’s transaction information with its counterparties’ transaction information, which reduces human error and increases accuracy in matching financial data. The time saved can then be used to perform more calculations, analyze trends, or conduct financial risk assessments.

After transaction matching, accountants can perform variance analysis, looking for discrepancies between actual and expected results and identifying factors that contributed to the variances. For instance, if a company’s revenue was lower than expected, accountants would investigate where the revenue loss occurred using BlackLine. The software provides interactive dashboard displays, trending charts, and data analytics tools, which enable accountants to identify anomalies or trends in real-time. This bird’s eye view of the financial data highlights areas that need improvement or attention, uncovering opportunities for growth, revenue optimization, or cost savings.

The final task for the day would be approval workflows. Approval workflows include reviewing and signing off on balance sheet accounts or journal entries, ensuring compliance with regulations, and ensuring internal control policies are followed. One of the most significant benefits of using BlackLine is its automation capabilities. The software enables visualization of approvals, routing for approval, and integration of approval with external tools. Accountants can simply “click to approve” or “click to reject” on the approvals that are generated from BlackLine, eliminating the risk of misplaced or incomplete approvals and facilitating compliance assurance.

In conclusion, a day in the life of an accountant is a complex and crucial cycle that keeps businesses financially stable. The use of BlackLine software can dramatically reduce the manual and tedious tasks traditionally associated with accounting, freeing up accountants to focus on analyzing data, making recommendations, and proactively solving issues. The software’s dashboard, balance sheet reconciliations, transaction matching, variance analysis, and approval workflows are all critical tools that ensure accounting processes are streamlined, error-free, and efficient. Ultimately, BlackLine empowers accountants to be more strategic in their approach to business and ensures financial stability.

The Evolving Role of the Modern CFO

July 13, 2023 by Revelwood

This is a guest post from Christine Peart, CFO at our partner, Fluence Technologies. Christine discusses the how the roles of CFO and the Finance team are changing.

Recently, there has been a realization that the finance team is in an ideal position to deliver real value to the organization beyond monthly close and reporting. The back-office financial stewardship role of controlling, compliance, and governance services alone no longer satisfies the needs of the organization. We have a unique position as keepers of financial data with a high level of analytical skills to use this information to drive the business.

As a result, the roles of the Chief Financial Officer (CFO) and the finance teams have shifted significantly. We are expected to leverage our end-to-end view of the organization to drive decision-making.

To meet these new expectations, we need to adopt a change mindset and develop a skill set to focus on what the organization is needing: more strategy, insight, and leadership.

This changing role of the CFO is clearly illustrated by the results of a recent survey by Gartner, Inc. (see figure 1) where 157 CFOs ranked their top ten priorities for 2023.

A picture containing text, screenshot, font, line

Description automatically generated — Caption: Figure 1: Top 10 CFO Priorities for 2023. Source: Gartner (January 2023)

Of these ten priorities, a significant proportion is highly strategic in nature, with four of the top five priorities related to redefining how finance supports the organization. The CFO is now seen as working alongside the CEO as a co-pilot, vastly different from the traditional role of the CFO, which is to primarily oversee the work of the finance team. To succeed, CFOs need to have a broader strategic skillset than ever before.

So, where do we start this evolution? It goes without saying that, to play the co-pilot role, the CFO must have a deep understanding of the organization beyond the finance function. We need to understand the objectives of the organization and how the goals impact internal and external stakeholders. We need to understand how the organization operates, and what makes it tick. We need to understand the market sector and the competitors. When we have this knowledge, we can support and influence major initiatives.

In the digital age, embracing and leveraging modern technology is crucial. A modern CFO is expected to use technology to effectively guide their business and to lead the ‘setting finance’s technology strategy and roadmap’ initiative. With respect to finance, this includes systems that support the entire finance team, including remote working and collaboration, process automation (RPA), disclosure management, and reconciliations. Then there are solutions to support the financial planning and analysis (FP&A) team, such as planning systems, data repositories, and business intelligence (BI) tools for advanced analytics. These will also help us lead on other strongly linked initiatives, such as ‘improved budget process efficiency’ and ‘developing a planning, budgeting, and forecasting strategy’, both of which are likely to be achieved by leveraging technology.

Of course, while technology is an enabler to improvements in efficiency and effectiveness, it is never the silver bullet. The importance of people to the success of any organization cannot be understated. And the success of CFOs is no different. As a CFO, we can only achieve success with the support of a strong and capable team. With high-quality finance staff currently a scarce resource in the market, we must lead the way in attracting, developing, and retaining talent and, thus, leading the initiative of ‘improving staff engagement’. Meeting this challenge will require the development of talent programs, in partnership with human resources, to source talent from diverse backgrounds, build employer branding, enhance digital skills, and improve employee satisfaction.

Finally, it is not surprising that ‘communicating and engaging with the board’ is a priority initiative for many CFOs in 2023. Developing effective communication and collaboration skills is now a requirement for the modern CFO. Not only must the CFO be a ‘financial storyteller’, understanding and explaining complex financial results and business performance to internal and external stakeholders, but we must also become expert collaborators across the organization.

Challenging as it may be modern CFOs need to develop a change mindset and skillset to meet the demands of the organization. As a result, the CFO’s evolution is very much a journey of self-development.

The Changing Role of the Finance Team

Along with the changes to the CFO role, the finance team is no longer simply responsible for recording financial transactions and ensuring compliance with regulatory requirements. They are expected to support us in all aspects of our evolving role and evolve as a team to deliver better insight to the organization.

While the finance team’s role is changing, the fundamentals of the traditional accounting back-office function remain. Transaction processing, general accounting, financial close, and reporting continue to be core activities in every organization. However, there is now added pressure on ‘doing more with less’, and to achieve this we need to improve the efficiency of core processes. The automation of the back-office processes, such as transaction processing, reconciliations, and financial consolidation, are repetitive tasks high on the list. It is only by improving the efficiency of these processes that we can ensure the close is timely and resources are concentrated on ‘value-added’ tasks that directly support the evolving role of the finance team.

FP&A teams have also grown in importance within organizations as budgeting, planning, forecasting, reporting, and analyzing take center stage. To maintain best-in-class status, the FP&A team must be seen as a trusted business partner, working closely with other departments to provide insights into financial performance while identifying areas for improvement. As with the role of the CFO, understanding the business beyond the numbers is a fundamental prerequisite.

We have already noted the importance of technology when discussing the CFOs changing role. Ultimately, the finance team members will make technology work for the organization and lead the success of any finance transformation projects while working closely with the CFO on these initiatives.

As we move increasingly towards automation and data analytics, we must recognize the need to align capabilities with changing skillset requirements. Where once the finance team was the domain of the trained accountant, we now see data analysts, scientists, and project managers on the team. We are in the perfect position to invest in the current team creating more job fulfillment by looking beyond traditional finance skills to include analytical, problem-solving, communication, and leadership development in the team.

As a CFO, I expect to see my role and the role of my team continue to change as we strive to meet the organization’s more strategic and analytical needs. To meet this challenge, we need to adopt a change mindset, develop skillsets to provide insights that inform business strategy and decision-making and achieve this while continuing to deliver efficient back-office services. This is a journey of self-development for the CFO and our finance team that will result in us meeting, and exceeding, the expectations of the organization.

This blog post was originally published on the Fluence Technologies blog.

The Power of Technology in Recruiting and Retaining Finance and Accounting Talent

July 6, 2023 by Revelwood

This blog post is based on a white paper from our partner BlackLine.

In today’s competitive business landscape, recruiting and retaining top finance and accounting talent is a priority for organizations striving for success. However, the labor and skills shortage, compounded by the recent phenomenon known as “The Great Resignation,” has made this task increasingly challenging. To overcome these obstacles, organizations must leverage technology to optimize their talent strategy and create an environment that attracts and retains the best professionals. In this blog post, we will delve into the power of technology, with a focus on automation and digital transformation, in recruiting and retaining finance and accounting talent.

Challenges in Talent Acquisition and Retention

The shortage of skilled finance and accounting professionals poses a significant challenge for organizations seeking to fill key positions. The Great Resignation, marked by a surge in employee turnover, further complicates the talent acquisition landscape. To address these challenges, organizations must understand the factors that contribute to employee satisfaction and work towards creating an environment that fosters engagement, growth, and work-life balance.

The Role of Technology in Talent Strategy

Technology, especially automation and digital transformation solutions, plays a pivotal role in strengthening talent strategy. By implementing advanced technologies, organizations can optimize their current talent pool and attract new talent by offering engaging and meaningful work experiences. Thomson Reuters highlights the importance of technology in attracting and retaining staff, including enabling remote work capabilities, driving automation, and improving workflow efficiencies.

Streamlining Processes and Reducing Manual Work

One of the key advantages of technology in finance and accounting is the ability to streamline processes and reduce manual work. Tasks such as reconciliations, journal entries, and financial close processes can be automated using software solutions like BlackLine. By eliminating mundane and repetitive tasks, finance and accounting professionals can focus on higher-value work that leverages their skills and expertise. This not only increases job satisfaction but also enhances productivity and efficiency within the team.

Optimizing Talent’s Capacity and Time

Automation and digital transformation allow finance and accounting professionals to optimize their capacity and time effectively. By reducing the burden of manual work, these technologies enable professionals to engage in more value-added activities and support strategic objectives. By leveraging their expertise in areas such as data analysis, financial forecasting, and strategic decision-making, finance and accounting talent can contribute significantly to organizational growth and success.

Enabling Remote and Hybrid Work

Modernizing accounting processes with cloud-based solutions offers the opportunity for remote or hybrid work arrangements, a top motivator for many job seekers. Technology facilitates collaboration and communication across geographically dispersed teams, allowing organizations to tap into a broader talent pool. Remote work options also promote work-life balance, which is increasingly valued by finance and accounting professionals. Embracing remote and hybrid work models enhances the organization’s appeal, making it more attractive to top talent.

The Benefits of Technology in Recruiting and Retaining Talent

Implementing technology in Finance and Accounting not only enhances employee satisfaction but also delivers several benefits to organizations. By empowering employees with automation tools, organizations can increase productivity, improve accuracy, and reduce errors. This, in turn, leads to enhanced operational efficiency, cost savings, and improved customer experience. Moreover, the reputation of organizations that invest in technology and create an environment focused on professional growth and development is strengthened, attracting top talent and retaining existing high-performers.

Recruiting and retaining top finance and accounting talent is a pressing challenge for organizations, especially amidst a labor and skills shortage. However, by harnessing the power of technology, particularly automation and digital transformation, organizations can optimize their talent strategy and create an environment that attracts and retains the best professionals. Streamlining processes, reducing manual work, optimizing talent’s capacity and time, and enabling remote or hybrid work arrangements are among the many benefits that technology brings to the finance and accounting domain.

Download your copy of F&A Priorities: Recruiting and Retaining Talent

Are your Accountants Quitting?

June 22, 2023 by Revelwood

This is a guest post from our partner BlackLine, examining the drivers behind the mass exodus in accounting roles.

Like everything else in accounting, the numbers tell the story.

The profession is experiencing a steep decline in qualified personnel, as many trained accounting professionals are choosing to leave their careers for another line of work. According to the Wall Street Journal, more than 300,000 U.S. accountants and auditors have left their jobs in the past two years, representing a 17% decline.

While the timing of these numbers makes them easily dismissible as yet another fallout from the 2-years long battle against COVID-19, the trend actually began before the global pandemic prompted so many people to re-evaluate their lives and their work. Data from the Bureau of Labor Statistics reveals a trend of departure that started in 2019, well before the pandemic began.

In a related pattern, recent grads with accounting degrees are having second thoughts about the profession, and many of these would-be accountants are choosing to go into a different line of work before they even get started. Furthermore, fewer college students are enrolling in accounting programs to begin with.

The number of U.S. students who completed a bachelor’s degree in accounting declined nearly 9% to about 52,500 in 2020, down from almost 57,500 in 2012, according to the Association of International Certified Professional Accountants (AICPA).

Both trends lead to fewer qualified candidates entering the field. AICPA data confirm these trends, showing notable declines in recent years both in the number of students completing a bachelor’s degree in accounting and of candidates taking the CPA exam.

Why Are Accountants Quitting?

The reasons for this decline are many and varied. Long, grueling hours, especially during month- and year-end close top the list. While standard 40-hour weeks are the norm for most accountants, that figure can go as high as 70 to 80 hours per week during certain periods.

Repetitive work can also wear on those who have spent time in the profession. Many accountants feel bored, tired, unchallenged, and lacking growth opportunities in their positions. It can take up to 15 years to become a partner in larger accounting firms—that’s a long time to endure the demands of the job. Many feel that they have learned all they can from their jobs and are looking for a new challenge.

Another factor is contributing to the decline in the number of accountants in the U.S. As it has for so many other industries and professions, technology has drastically altered day-to-day jobs, and many accountants cite technology as a reason for leaving the profession.

Accounting professionals’ relationship with technology is complex. Some don’t want to learn new technology while others feel that technology has made them irrelevant. Finally, some feel that their employer has not embraced technology enough, or has not provided them with adequate training, leaving them to toil in the manual dark ages or fumble with a software platform they don’t know how to use properly.

Enter Accounting Process Automation

Good news! Technology doesn’t have to be the bane of accounting or of those who have made it their profession. In fact, it can be a resource to make the profession more productive, efficient, and fulfilling.

Accounting has traditionally been a process of manual data entry, review, and revisions, which can be tedious and time-consuming activities.

With the advent of software as a solution, much of this process can now be done with the aid of computers, which can receive and store data, perform financial calculations, and produce balance sheets and other closing reports. A more recent development, artificial intelligence (AI) further simplifies data capture, reduces error, and minimizes repetitive manual tasks.

With the right approach to automation, businesses can reduce and even eliminate activities in the closing process that traditionally rely on manual steps. They can reduce risk, error, and fraud by strengthening controls and improving accuracy. Businesses can become more strategic, holistic, and forward-thinking.

All of this leads to improved productivity. Instead of overburdening employees, it frees them up to perform more high-level and high-valued tasks. It allows them to participate in more strategic and analytic thinking. This makes them more engaged and fulfilled in the job.

Employees who are involved in the process of change and improvement that technology has to offer feel more vested in their work and the results.

Far from alienating or overburdening employees, these improvements can help increase retention by making the closing process more efficient and enhancing the value of the employees involved. Employees feel like they have gained a new set of skills, elevated their level of work, increased their importance to the organization, and improved the process which they administer.

A Smart Approach to Accounting Software

Adopting accounting automation software is not a simple task, but it doesn’t have to be overwhelming either. True, if done improperly or in haste, it won’t be effective, and employees can feel alienated. The process requires its own unique approach that involves thinking, strategy, and evaluation. Each business is distinct, and the successful adoption of software will reflect this truth.

As an industry leader in financial close automation, BlackLine has taken steps to help businesses transition to automation by developing a Modern Accounting Playbook (MAP) for steering finance through the Great Resignation. This expertly curated strategic framework helps organizations modernize their accounting and finance functions by establishing a deliberate and stepwise process for the adoption of software solutions.

Businesses start with core functionality to help automation address some of the basic elements of their close process. Improvements include a central workspace with automated trial balance import, standardizing reconciliations with automation, rule-based transaction matching for bank files, and other changes.

Building on these improvements, they can expand adoption in alignment with other elements of their business strategy with such enhancements as direct ERP journal posting, automated flux analysis with proactive alerting, and complex matching scenarios.

The MAP allows businesses to adopt technology in a strategic, forward-thinking approach by helping them identify their most pressing accounting challenges. Software is applied in a way that suits their needs specifically.

This sets the stage for future growth and integration of the technology into the close process. This thoughtful approach enables businesses to close faster, increase efficiency, reduce risk, and continuously improve their closing process.

Get your copy of this playbook to learn how to win the new war on retaining and attracting talent. You will learn five strategies to reimagine F&A for the future of work, including how to:

Design a digital hybrid workplace that Accounting will love
Equip your organization to fight digital burnout
Automate away the soul-sapping work that makes accountants leave

This blog post was originally published on the BlackLine blog.

Intercompany Financial Management Benchmarks

June 15, 2023 by Revelwood

This is a guest post from our partner BlackLine, highlighting some results from their recent survey, Intercompany Financial Management: Benchmarks, Challenges and Expectations

For companies that transact intercompany business, intercompany operations have a big impact on the financial results. However, there are few surveys that focus on intercompany financial management.

The Intercompany Financial Management: Benchmarks, Challenges, Expectations survey was conducted in September 2022 to benchmark the challenges companies face in the arena of intercompany financial management, assess how companies are leveraging technology in managing intercompany operations, and offer a preview of how intercompany will look in 2023 relative to 2022 when the survey was conducted.

Our analysis of the survey data revealed that intercompany transactions and related reporting have meaningful impacts on business outcomes, finance and accounting operations, and finance and accounting team members.

Our analysis of intercompany (IC) begins with examining the magnitude of intercompany transactions relative to revenue. The results depicted in Figure 1 in and of themselves speak to the fact that intercompany matters and deserves the attention of CFOs at any company that has IC operations. Almost ninety percent (88%) of companies surveyed have IC interactions valued at least 1X more than revenue while sixty percent have transactions valued at least 3X more than revenue.

Our analysis of the magnitude of intercompany across the enterprise looked at the impacts of intercompany challenges on business outcomes, finance and accounting operations, and finance and accounting staff. Intercompany challenges have several impacts on business outcomes.

A few of these impacts are depicted in Figure 2 along with their relative prevalence among survey responses. Almost forty percent (39%) of companies face uncertainty relative to overdue or unsettled IC outcomes, increased probability of SEC investigations, and missed tax deduction opportunities that impact the bottom line.

Intercompany challenges also have meaningful impacts on finance and accounting operations and finance and accounting teams.

At least 50% of survey respondents face compliance and formal disputes about allocated costs and additional time needs for reconciliations that slow down the financial close process and create friction among those closing the books.

Sixty-five percent of companies report increased employee churn that results in the loss of institutional knowledge.

And over 30% face stress levels that can lead to potential mental health issues and demotivation. The impacts of intercompany operations on finance and accounting teams are more important than ever given the current market conditions for acquiring finance and accounting talent and the increased appetite for workers in today’s world to change jobs relative to years past.

Intercompany operations can have meaningful impacts on the productivity of accounting and finance professionals and the value of a company’s brand—these are just a few ways that intercompany gone wrong can impact a company’s bottom line. Intercompany financial management matters.

This blog post was originally published on the BlackLine blog.

Financial Consolidation Software Reduces Risk and Accelerates the Close

June 8, 2023 by Revelwood

This is a guest post from Ventana Research, published by Fluence Technologies. It details how financial close and consolidation software can reduce risk and speed up the close process.

The Importance of Time to Close

An important measure of the effectiveness of a finance and accounting department is the time it takes to close the books. Finance department executives should take a fresh look at this decades-old topic to assess the benefits of a faster close to the entire organization, from turning early actionable insights into performance to providing a working environment for the accounting staff that can attract and retain the best talent. This reassessment is warranted due to the relatively recent availability of full-featured cloud-based software that is affordable to midsize companies and readily managed by their finance department.

Our recent Smart Close Dynamic Insights Research finds that organizations using the right technology complete their accounting close sooner than those that do not. Software that manages the consolidation process is essential: 67% of participants that say their software manages the process very well can close within six business days compared to 36% that do not. Dedicated consolidation software can enable an organization—not just very large corporations—to streamline and accelerate its close while reducing the risk of financial statement errors. Ventana Research asserts that by 2025, one-half of midsize and larger organizations will use close management software to speed their close and achieve greater control of the process.

Since the 1990s there has been a consensus that organizations should complete the process within one business week. Our research consistently finds that the main reasons why organizations want to shorten their close are to provide more time for analysis that identifies issues and opportunities and to provide accurate data to their organization sooner. These can include issues such as the root cause of a significant cost variance and opportunities like unexpected strength in a region or product line. Shortening time-to-close shortens the time-to-know. Modern consolidation software can enable the department to spend less time on unproductive work, so it has more time to focus on providing executives and managers broader and deeper analysis and insight into improving their performance. Reducing unproductive effort also helps create a working environment that can attract and retain the best accounting staff. Closing faster means the finance department can complete the financial and management accounting sooner, which gives the entire organization the necessary information to react to opportunities and challenges earlier and in so doing, become more agile and promote a bias for action.

Limited Progress Over Time

Ventana Research has been doing research quantifying the accounting close for the past two decades and we have found that there has been limited change over this period: our research found that 56% of participants close their month within six business days and just 40% complete the usually more rigorous quarterly process in that amount of time. Using the right information technology can be the key to closing faster without requiring additional staff and without sacrificing quality.

Our research repeatedly finds that there usually are multiple reasons why organizations take longer than one business week to close their books—if there was a single snap-your-fingers fix the issue would have disappeared. Typically, we find that there is a set of interwoven and often self-reinforcing issues related to people (including training and attitudes), process design and execution, the quality and availability of data as well as the software that is used in the process. One often overlooked opportunity to a faster close is using a dedicated consolidation application.

How Dedicated Consolidation Software Helps

Modern consolidation software is designed to accelerate the creation of consolidated financial statements by automating computations, streamlining processes, and reducing the need for checks and reconciliations, while increasing control and auditability. Using consolidation software to manage workflows ensures that best practices are baked in and hand-offs between staff and others are smooth. Our research found that 69% of organizations that used workflows for all or some of their processes were able to close their quarter within six business days, compared to 29% of those with limited or no process automation. Consolidation software ensures that detailed accounting work such as currency conversions and amortizations and allocations are handled accurately and consistently.

Corporations that have been or are expecting to make acquisitions will find that consolidation software can eliminate financial frictions that arise when maintaining multiple ERP systems is the best pragmatic option. It can make assessing different financing and capital structure options easier and accelerate their ability to see the impact on cash flows and the balance sheet, especially when evaluating the impact of different interest rate and currency exchange rate scenarios.

This type of application has been available since the 1980s but until recently was mainly adopted by larger enterprises because of cost considerations, and the need for IT department involvement to maintain on-premises software. However, within the past decade, cloud-based software with the same functionality and capabilities have made this type of software much more practical and accessible for a wider set of organizations. There are three simple diagnostics that any CFO or controller can apply to determine if consolidation software would improve their organization’s performance.

Three Simple Diagnostics

1. The time it takes to close the books

If it takes more than a business week, consolidation software should be a consideration as a part of a process to shorten the process.

2. Complexity

Are there two or more general ledgers? Are more than a handful of legal entities? Are there operations with multiple countries with multiple currencies? Does the ownership structure feature any complicated elements (including partnerships, joint ventures and crossholdings)?

If any of these factors are present, dedicated consolidation software could be helpful in shortening the time it takes to close while ensuring calculations and journal entries are accurate easily audited.

3. The number of spreadsheets staff accountants use to get around the limitations of their existing software

The consolidation capabilities of general ledger applications may have worked initially, but rapidly growing companies, those that now have operations in multiple countries or that have made more than a couple of acquisitions are likely to discover that the series of incremental workarounds now require a growing amount of staff time and diligence in ensuring the accounting is correct.

Ventana Research recommends that organizations that take longer than one business week to complete their close, as well as those that “finish” within one week but routinely continue to make adjustments and journal entries for another week or more, should investigate whether dedicated, modern consolidation software would improve their process.

About Ventana Research

Ventana Research is the most authoritative and respected benchmark business technology research and advisory services firm. We provide insight and expert guidance on mainstream and disruptive technologies through a unique set of research-based offerings including benchmark research and technology evaluation assessments, education workshops and our research and advisory services, Ventana On-Demand. Our unparalleled understanding of the role of technology in optimizing business processes and performance and our best practices guidance are rooted in our rigorous research-based benchmarking of people, processes, information, and technology across business and IT functions in every industry. This benchmark research plus our market coverage and in-depth knowledge of hundreds of technology providers mean we can deliver education and expertise to our clients to increase the value they derive from technology investments while reducing time, cost and risk.

Ventana Research provides the most comprehensive analyst and research coverage in the industry; business and IT professionals worldwide are members of our community and benefit from Ventana Research’s insights, as do highly regarded media and association partners around the globe. Our views and analyses are distributed daily through blogs and social media channels including Twitter, Facebook, and LinkedIn.

To learn how Ventana Research advances the maturity of organizations’ use of information and technology through benchmark research, education and advisory services, visit www.ventanaresearch.com.

This blog post was originally published on the Fluence Technologies blog.

Making Work Meaningful for Finance & Accounting

May 18, 2023 by Revelwood

This is a guest post from Christine Peart, CFO of Fluence Technologies, a partner of Revelwood, defining a future-ready finance workforce.

A few months ago, an article in the Wall Street Journal documented a troubling trend for finance; accountants are beating a path to the exit with more than 300,000 U.S. accountants and auditors leaving their roles from 2020-2022.

After almost a year of hearing about “quiet quitting,” accountants seem to be just . . . outright quitting.

That would be bad enough in itself, but the article suggested retention was only one part of the challenge finance departments are facing:

“The huge gap between companies that need accountants and trained professionals has led to salary bumps and more temporary workers joining the sector. Still, neither development will fix the fundamental talent pipeline problem: Many college students don’t want to work in accounting. Even those who majored in it.”

The WSJ interviewed one college student who bemoaned the idea of being “bogged down in the repetitive tasks of accounting, such as balancing cash sheets.” Instead, he found greater fulfillment in his data analytics class.

If this sounds familiar or reminds you of a similar refrain within your accounting and finance team, you might want to consider what will most deeply engage the talent you employ today, and what they’ll need to continue thriving tomorrow. I’m calling this a future-ready finance workforce, and if it’s not already, it should be at the top of every CFO’s agenda.

The search for meaning in finance and accounting

The evidence that working conditions within finance and accounting departments need to change isn’t limited to a few interviews and anecdotes. Last year consulting firm Deloitte conducted a survey in which careers.

You probably already guessed the number one answer, which was compensation. Number two, however, was “meaningful work” at 28% of those surveyed. This was far more important than other factors you might have expected to rank high, such as recognition (cited by only 6%) or even upward mobility, which came in at less than ten percent.

If those in accounting and finance find work meaningful, in other words, they may not be looking for their next big promotion. They might just be looking to build upon their skills and deliver greater value for the organization.

“People are most often engaged and productive when they do activities that energize them and leverage their skills. When organizations connect people to work that uses their skills, the result is likely to be high engagement and productivity,” the Deloitte report’s authors wrote. “Transitioning from a role-based to a skill-based finance organization can empower the workforce to own their development and establish a culture of internal mobility.”

Your future-ready finance workforce to-do list

It might seem difficult to develop finance and accounting roles in such a way that they compete in terms of prestige or glamor. And yet being able to make sense of financial information and guide corporate strategy can transform the ability of an organization to grow and succeed. It can help leaders in every other department outside finance be in a better position to achieve their goals. It’s hard. And it matters.

With that in mind, the call to action for finance leaders couldn’t be clearer:

1. Listen and act upon employee experience indicators

A future-ready finance workforce is one in which leaders have taken the time to develop a culture among their team where this value is clearly understood and to clearly reinforce it based on the employee experience they deliver.

By “employee experience,” I don’t simply mean what happens when an employee is welcomed on their first day, or the exit interview that’s conducted as a sort of post-mortem once they’ve tendered their resignation. The employee experience spans the entire journey someone takes with your organization, including what they see, think and feel on a day-to-day basis.

Whether through a formal survey or just seeking feedback through team meetings and one-on-one check-ins, ask your team about where they’re spending their time. Not to suggest they’re spending in the wrong areas necessarily, but whether it’s making the best use of their skills. Explore where they feel they could be making a greater contribution. Think about what kind of tools can best support them.

2. Conduct a skills audit to inform career development and hiring strategies

For some organizations, turnover in finance and accounting may be the one place where they’re not trying to trim back personnel. Challenging economic headwinds are forcing leaders in every industry to consider the people and skills they have in place, and whether it’s sufficient to meet business needs.

As a recent article in Fortune pointed out, the mass layoffs we’re reading about in the news could be the beginning of a transformation in who gets hired in accounting and finance roles.

“While most finance organizations were built with folks that have backgrounds similar to mine—accounting, risk, controls—what CFOs are now looking for are people with a much greater degree of tech fluency, data analytics skills,” said one of the CFOs interviewed for the piece, which predicted a rise in the use of cloud computing, artificial intelligence and more automation in general.

While you’re keeping an eye out for those future stars, begin building up those you already employ. That may require looking at automation too, so you can free them up from the manual and error-prone tasks that may make it impossible for them to reskill and upskill as they should.

3. Align your workforce around functional and organizational goals

Regardless of industry or size of company, finance leaders are pretty consistent in where they want to modernize operations: the close.

Just look at the results of a 2022 CFO survey from market research firm Gartner, which showed the most common goals included a faster, real-time close (86%), a cheaper close (68%), and an error-free close (64%). The future, in this case, isn’t very far away: these were all goals finance leaders expected to reach by 2025.

Even Gartner admitted that a fully autonomous close is unlikely to happen anytime soon. However, the purpose-built, finance-owned solution finance and accounting teams need to achieve those other targets is here today. The challenge with technology, though, is that most organizations are still leveraging legacy solutions or worse yet, still relying on Excel. These outdated tools tend to perpetuate the need for repetitive, mundane tasks and inhibit their ability to do ‘meaningful work’. Arming your workforce with modern tools that are easy to use and maintain is the first step in preparing them for what’s ahead and enabling your team to do ‘meaningful work’.

Conclusion: The value of working definitions

What is a future-ready finance workforce? A team whose leaders make the work feel meaningful. A group where everyone is motivated to continually develop their skills in response to business changes. A department equipped with the modern tools to tackle the biggest organizational ambitions.

That’s how I’d define it today. If we’ve learned anything over the past few years, though, it’s that the future evolves in highly unexpected ways. And it’s going to be critical for CFOs to modernize their office of finance with a future-ready workforce to be prepared for whatever comes next.

This blog post was originally published on the Fluence Technologies blog.

Financial Close and Consolidation

Automating Cash Application

Enhancing Payment Matching

Customer Risk Assessment

Cash Flow Forecasting

Understanding the Importance of Financial Resilience

Proactive Cash Flow Management

Embracing Technology and Automation

Strategic Partnerships and Stakeholder Communication

Read more about Financial Close & Consolidation:

The Changing Role of the Finance Team

Read more about Financial Close & Consolidation:

Challenges in Talent Acquisition and Retention

The Role of Technology in Talent Strategy

Streamlining Processes and Reducing Manual Work

Optimizing Talent’s Capacity and Time

Enabling Remote and Hybrid Work

The Benefits of Technology in Recruiting and Retaining Talent

Read more about Financial Close & Consolidation:

Why Are Accountants Quitting?

Enter Accounting Process Automation

A Smart Approach to Accounting Software

Read more about Financial Close & Consolidation:

Read more about Financial Close & Consolidation:

The Importance of Time to Close

Limited Progress Over Time

How Dedicated Consolidation Software Helps

Three Simple Diagnostics

About Ventana Research

Read more about Financial Close and Consolidation:

The search for meaning in finance and accounting

Your future-ready finance workforce to-do list

1. Listen and act upon employee experience indicators

2. Conduct a skills audit to inform career development and hiring strategies

3. Align your workforce around functional and organizational goals

Conclusion: The value of working definitions

Read more about Financial Close and Consolidation:

Footer

Revelwood Overview

EXPERTISE

ABOUT

CONNECT