financial close software

What’s F&A’s Role in Responding to Instability & Volatility?

May 4, 2023 by Revelwood

This is a guest post from our partner BlackLine, detailing the results of its annual survey of global F&A leaders.

War in Eastern Europe. Global inflation. Ongoing supply chain issues. Just one of these is enough to cause serious impacts on business—and currently, the world is enduring all three, along with countless other local and regional economic disruptions.

While Finance and Accounting (F&A) has a reputation for remaining calm and pragmatic in a crisis, it can be overwhelming for these departments to help steer their organizations through difficult times while keeping up with their day-to-day work. BlackLine wanted to hear directly from F&A professionals on how they’re feeling about these issues and more.

Survey Results of F&A Executives & Professionals

In a survey of 1,483 C-suite executives and F&A professionals in medium and large companies around the world, BlackLine discovered not-so-rosy outlooks and insights including:

Nearly two thirds (63%) of all respondents said they expected a worldwide recession within a year
Almost all (95%) expect rising interest rates to have an impact on the way their business operates
More than six in ten (62%) C-suite and F&A professionals predict that their companies’ financial reporting will come under increased scrutiny over the next year

Whether or not these results surprise you, they beg for real solutions and actionable ways to address them.

Trust (or Lack of) in the Numbers

Since 2018, our surveys have shown C-Suite trust in the accuracy of the financial data at their companies has fluctuated from a high of 71% in 2018, dropping to 58% in 2022. In addition, in our 2022 results, nearly half (48%) of overall respondents indicated they do not have complete confidence that their company’s financial data is accurate.

The top three reasons given for this mistrust were:

1. Some or all of my team are working from home—making it difficult to know if the right processes are being followed

2. Data from too many sources—making it difficult to know if all data is being accounted for correctly

3. A continued reliance on clunky spreadsheets and other outdated processes that leave finance teams in the dark until month-end

As previously noted, most of the C-suite and F&A professionals we surveyed this year are braced for recession. They are also concerned that rising interest rates will push up the cost of company borrowing and mean that their customers will have less to spend.

As a result of relative mistrust in numbers along with these other external factors, the accuracy of companies’ financial data is expected to come under more scrutiny. And, outside of this survey, there have been other developments, such as the SEC’s new clawback rules, which bring even more importance to certainty in financial numbers.

How Financial Automation Helps Increase Confidence in the Numbers

The various factors discussed in the survey expose a weak link in many F&A departments: manual, error-prone, and outdated processes.

And consider this—nearly two-thirds (62%) of our respondents agreed that the ability to view their companies’ financial data in real time will be a “must-have” for business survival over the next 12 months.

How can F&A departments solve for archaic processes and gain real-time visibility? By employing the intelligent use of automation.

Leveraging a solution like BlackLine to automate end-to-end accounting processes—including the financial close, accounts receivable, and intercompany—helps reduce manual errors and increases the quality of your numbers.

In addition, automating manual, transactional work frees up capacity for F&A teams, so more time can be spent on proactively identifying anomalies in the data and ensuring the integrity of the financial reporting. And it allows for earlier views of the financial reports to proactively tackle issues—this directly addresses the concern of 62% of our respondents!

Of course, technology and automation are only part of the solution—they cannot reduce economic uncertainty. However, employing solutions like BlackLine can help companies become more efficient, reduce errors in financial data, and provide visibility so F&A departments can make faster, smarter, and more informed decisions.

Get your copy of the full report Eye of the Storm: F&A’s Role in Responding to Instability & Volatility to understand:

Who is responsible for steering a business through a recession?
F&A’s role in responding to global instability and volatility
The top challenges and pain points, such as intercompany transactions
The importance of cash flow in turbulent economic period

This blog post was originally published on the BlackLine blog.

Challenges Facing Finance Leaders in the Mid-Market

April 20, 2023 by Revelwood

This is a guest post from Michael Morrison, CEO of Fluence Technologies, a partner of Revelwood.

From financial consolidation to reporting, finance has to sort out some supply chain issues of its own.

Fluence recently conducted an independent survey of mid-market finance leaders on the needs and challenges they face stemming from their financial consolidation, close and reporting processes, as well as their aspirations for these processes looking forward.

Everything from attracting and retaining top talent to playing a more influential role in shaping the future of their businesses.

In certain cases, we learned some new lessons. In others, we heard that the more things change, the more they stay the same.

Here’s my take on the results and implications of the study, but if you want to jump straight to the report, download The Roadmap to Modern, Mid-Market Finance today.

Supply chain issues for the finance and accounting function

There are all kinds of reasons an accounting team might have for being late with the financial close. Maybe some of the numbers just didn’t make sense. Perhaps a substantial amount of data had to be double-checked. The team might simply have run out of hours in the day.

There’s one more reason you could add to the list, though.

Supply chain issues.

It sounds like a joke, but it’s not.

People outside of finance might assume it’s a joke because, lately, it’s been hard to ship and receive almost anything.

Pre-pandemic, most people outside of the logistics sector might have struggled to even define the term supply chain. Now we’ve all come to realize how dependent we are on the myriad processes that get products from A to B.

This has made “supply chain issues” a sort of sarcastic shorthand for “stuff happens” in some circles. In finance, however, supply chain problems have been there for some time.

The difference is that you’re not shipping products but critical data – whether for financial reporting purposes or to drive business decisions. And the supply chain issues come in forms you’ll likely find familiar – and typically manually intensive – including:

collecting data from different sources in different formats
reconciling accounts, consolidating financials and closing your books
providing trusted reporting for management, auditors, regulators and more

Supply chain issues in the financial close — Image courtesy of Fluence Technologies

The missing links in financial reporting today

When the finance supply chain breaks down, companies wind up getting financial data long after they truly need it.

Much like making do without a product you ordered online when it gets delayed, though, companies move on. They make the best decisions they can with older information, or simply gut instinct. Which, of course, is never the best move.

Some areas of your business might complain to the accounting team as though they were demanding answers from customer service. It can be difficult for the accountants to provide a good explanation of where the supply chain cracks are, however. There’s no time to investigate because you have to move on to prepare for the next close.

This is one of the reasons Fluence recently published The Roadmap to Modern, Mid-Market Finance, an in-depth study of financial close, consolidation and reporting challenges – and why mid-market finance leaders need to overcome them.

The results may leave you feeling in great company.

A big number you usually don’t see in the average executive survey

What we found was something almost unheard of in a lot of market research: complete unanimity. Among the finance leaders we surveyed, 100% said they want software that ensures an automated close.

100% of finance execs want software to automate the close process — Image courtesy of Fluence Technologies

True, it’s hard to imagine someone putting up their hand to say, “Let’s keep it all manual!” But the stat is significant, because it speaks to how hard the journey to an automated close has been. In fact, only 20% have actually done it.

It’s difficult to make a significant change of any kind across a business, even mid-market firms. But automating the close involves not only technology. It also means recognizing differences in process and a greater attention to how the data will be reported and acted upon.

This — along with governance, controls and audits — is what makes up the financial reporting supply chain.

Financial close, consolidation and reporting are critical links here, because they are where data capture and controls affect everything else.

More than a dozen years ago, the accounting profession may not have realized how badly automation would be needed. In 2008, for example, the International Federation of Accountants (IFA) released a study of its own.

Financial Reporting Supply Chain: Current Perspectives and Directions had a lot to say about auditing standards and regulation. Software applications, not so much. “Lack of forward-looking information” was one of the areas of concern, though. So was the need to “include business-driven information in financial reports.”

Excel and ERPs: The more things change…

Today, a group like the IFA would probably discover the same challenges we did about legacy software – that the vast majority prefer more flexible, modern tools.

But this doesn’t just include large, complex enterprise resource planning (ERP) systems, but also the one software tool that every finance professional knows (and many love) – Excel spreadsheets.

As popular as they’ve become over time, 66% of finance leaders admitted that standalone Excel spreadsheets hinder informed business decisions.

66% of finance leaders say standalone spreadsheets hinder business decisions — Image courtesy of Fluence Technologies

Of course, that doesn’t mean getting rid of them is all that easy – or that you should. With the right controls, governance and data connectivity, Excel can still be the powerhouse it has been for four decades (watch some of our demo videos to see how).

While “Excel Hell” and the usability, accuracy and flexibility challenges of today’s ERP systems are well recognized, our research highlighted another, arguably more important cost of the status quo – your employees.

After the time they’ve invested in a college degree, CPA accreditation and professional development, how much do you think accountants enjoy spending a week or more every month copying and pasting numbers from spreadsheet to spreadsheet? Or having to put a ticket into IT to add a single field to a financial report?

More to the point, what’s the human capital cost of using legacy systems and spreadsheets in your financial close and reporting processes?

88% of finance execs say modern software is critical to attracting and retaining employees — Image courtesy of Fluence Technologies

From our research, the answer is clearly a lot. A full 88% of finance executives told us modern software and tools are critical to attracting, retaining and rewarding employees.

What’s driving today’s supply chain issues?

Finance leaders know that maintaining the status quo is no longer an option.

In fact, 95% said an increasingly volatile business environment and the speed of technological change calls for something better. Instead of being held back by legacy solutions, they want something lightweight and agile.

95% of finance exes say volatility calls for something better than legacy software — Image courtesy of Fluence Technologies

The pandemic is increasing the sense of urgency here, too. Like many other business functions, finance teams are increasingly working remotely at least part of the time.

70% of finance execs are reevaluating their processes and tech post-COVID — Image courtesy of Fluence Technologies

That’s good from an employee experience standpoint, but poses potential risks around the accuracy and security of financial data. That’s why 70% said they are reevaluating what their consolidation, close and reporting processes should look like in a post-COVID era.

Using research to find common ground — and a common path forward

Our hope is that this research will serve as a way of helping other finance leaders to feel less alone. Wrestling with these challenges is common across the profession.

There are consistencies in the difficulties today’s accounting teams face in consolidation and reporting – with the process, the people and the technologies involved.

There’s also a lot of hope that a shift to more advanced ways of working is under way.

Beyond what I’ve touched on in this article, here’s a rundown of what you can expect to find when you download the full report:

A self-assessment among finance leaders about the state of their close and consolidation processes today
The top 3 challenges they encounter when they turn to technology for help
The functions that are most often poorly handled in today’s consolidation and reporting solutions
The value finance leaders put on agile and lightweight solutions
How actively firms are improving the quality of data for analysis

We have numbers for all of these areas, plus plenty of analysis on what the numbers mean. We also offer some recommendations on how to use this data to move your own financial close, consolidation and reporting forward.

Without giving away too many spoilers, what you’ll find is that the opportunities to improve aren’t limited to large enterprises.

There are more mid-market offerings available than ever. And they offer far more than efficiency gains or faster close times.

Indeed, how you modernize your consolidation and reporting today can lead to a better performing business tomorrow.

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

The Future of Finance & Accounting

April 6, 2023 by Revelwood

This is a guest post from our partner BlackLine, explaining 2023 predictions for Finance & Accounting.

Look for organizations to focus on process optimization, talent upskilling, and finance agility as major drivers for business leadership in the coming year, according to BlackLine experts Dominick Fatibene and James Tilk.

Technology Powering Transformation

In the webinar “New Year, New Trends: 2023 Predictions for Finance & Accounting,” they predict how technology advances will power transformations to address the top priorities of business leaders in 2023. They also show that transformation is an area of significant concern among CFOs. The webinar points out that 82% of CFOs report that investments in transformation are accelerating, and 70% of CFOs feel that they would be at a disadvantage without financial transformation.

How are organizations doing that?

Hyper-automation which streamlines and automates key parts of processes with leading-edge technologies. “I think this is an area where we’ll be seeing some of the largest investments for enterprise-wide, organization-wide process improvement,” says Fatibene.
Advanced analytics and reporting which involve increasing speed to insight and reporting visibility “To gain more opportunities to analyze information before making critical decisions,” he says.
Self-service tools that leverage technology to put power back in the hands of users, Fatibene notes.
Master data management is a critical resource, says Fatibene, because “When it comes to transformation, everything we do starts with data: how we organize it, how we prepare it and how we use it. That’s why a lot of financial transformation initiatives are revolving around master data management.”

Major Leadership Challenges For 2023

These include concerns about economic conditions, cost controls and access to capital, talent retention, and other workforce issues.

“Economies are going to continue to fluctuate, so prudent spending is a must,” notes Tilk.

Prudent spending is closely related to another challenge: workforce issues. Retaining top talent is always vital, but a new post-Covid challenge has to do with the uncertainties, for many organizations, around office real estate.

“Many corporate leaders are having to rethink real estate,” Tilk says. “For the last few years we’ve been working remote. Now companies are bringing workers back into the office on a part- or full-time basis and they’re also reevaluating what they’re going to do. Do they shrink their footprint or do they redefine their office spaces?”

Transformation & Technology Priorities

Throughout the webinar, Fatibene and Tilk examine other trends—in transformation and technology—that organizations will focus on in 2023.

According to Fatibene, keys to transformation success will be process optimization, talent upskilling, and finance agility. “Process optimization should focus on improving the ways we interact with people, processes, and data, and how to drive value through improved, organization-wide processes,” he says.

Talent upskilling is essential for all businesses today, and finance agility comes about when finance can free up capacity in order to better partner with business-unit peers.

Other BlackLine Predictions for 2023

These are several other findings by BlackLine as we look ahead to the rest of 2023. In addition to predicting increasing emphasis on hyper-automation, the webinar hosts point to a growing need for cyber security and autonomous technologies.

Cybersecurity will be forefront. “This is more critical than ever because of today’s often-distributed workforces and the high costs of security breaches,” Fatibene notes. “I saw a recent statistic that said the average cost of a data breach is $4 million.”
Autonomous technology—organizations will adopt newer technologies that can help provide personal insights to employees who might otherwise not have the time or ability to discover them through manual research.

Ultimately, the webinar points out that the top-level key to success will, as always, be finding ways to make the most out of that most precious resource—time.

“Time is limited—you can’t make more time,” says Fatibene. Because of this, notes Tilk, it’s important that people constantly examine the work they’re doing and look for ways to do it more efficiently.”

Throughout the next year, it will be vital to find the best technologies that can help workers and organizations do just that, by putting their time to the best possible use.

Watch the on-demand webinar to:

Identify 2023 critical trends impacting finance and accounting
Explain how technology improves accuracy, saves time, and benefits everyone, especially during uncertain times
Identify leading practices for optimizing and automating despite disruption

This blog post was originally published on the BlackLine blog.

Ventana Research on Intercompany Financial Management

March 16, 2023 by Revelwood

Ventana Research, an authoritative and respected market research and advisory services firm, defines intercompany financial management (IFM) as a “discipline for structuring and handling transactions within a corporation and between its legal entities.” It maximizes staff efficiency and accounting accuracy. It also optimizes tax exposure, minimizes tax leakage and “ensures consistent tax and regulatory compliance.”

According to Ventana, “by 2026, one-half of organizations with 10,000 or more employees will have implemented IFM to achieve tax, risk management and accelerated financial close benefits.” The research firm states, “Typically each instance of an IFM issue is relatively small, but in larger, multinational corporations, the money involved adds up to a meaningful annual cost.”

Large, multinational corporations have very complex systems and processes – often exacerbated by having several different ERP systems. Ventana’s Next Generation ERP Benchmark Research finds:

Two-thirds of organizations with more than 1,000 employees have more than one ERP system
27% of percent of these organizations have more than four ERP systems

IFM provides these companies with a way to capture the “required attributes of intercompany agreements and streamlines intercompany dispute resolution and handles taxes with an integrated tax engine to maximize tax deductability.”

Ventana states, “Being strategic in accounting is all about flawlessly managing the details, especially in areas of hair-curling complexity.”

Revelwood’s partner, BlackLine, provides software for intercompany financial management and other accounting activities.

Modernizing Financial Close and Consolidation with Best-of-Breed Corporate Performance Management Solutions

March 9, 2023 by Revelwood

This is a guest post from Michael Morrison, CEO of Fluence Technologies, a partner of Revelwood.

Ask an artist to show you what a tree looks like and they might create a beautiful painting that shows a maple tree’s leaves changing from green to orange and yellow at the height of autumn.

If you ask a scientist the same question, they’re more likely to walk through a detailed breakdown about the genus and species to which they belong, how tall they’ll grow and where they tend to thrive.

Now imagine you have to make a strategic business decision about trees: though both of them are valuable, it’s pretty easy to see why the scientist would become your preferred source of expertise. Some disciplines may be a mix of art and science, but others are more clear-cut. The differences between financial planning and analysis (FP&A) and financial consolidation are a perfect case in point.

The strategic roadmaps FP&A teams develop for their organizations could be considered an art in the sense that they involve studying data in the context of organizational objectives and finding insights that will chart a successful path forward. While the results need to be firmly grounded in fact, there’s some creativity involved.

“Creative” financial consolidation, on the other hand, is of no help to anyone in an organization, especially its leadership team. When companies consolidate and close the books using manual, ad-hoc processes, they risk introducing errors, inconsistencies and wind up taking accounting teams more time than they should. Instead of a clear representation of where the business stands, the result is more like an abstract painting that’s difficult to interpret.

Financial consolidation needs the rigor of science because it provides the foundation on which all the creative thinking is built. This includes budgeting and planning, but also identifying growth opportunities and operational efficiencies.

Perhaps even more importantly, financial consolidation is key to meeting reporting requirements, where the accuracy of balances, journal entries and intercompany matching is essential to a successful audit.

With these kinds of requirements in mind, it’s no wonder growing companies often struggle to choose the right technology solutions. This is where a best-of-breed approach provides functionality with flexibility to address the needs of those involved in both financial consolidation and FP&A.

A Brief History Of Best of Breed

Anyone who has ever gone camping with a Swiss Army knife can appreciate the versatility of an all-in-one platform.

When you’re spending time in the woods, for instance, a Swiss Army knife has the advantages of being small to pack, light to carry and containing all the tools you might need during your trip. This not only includes a blade for cutting but a tiny magnifying glass, a corkscrew and even a fork.

Once you’re back at home, though, using the fork in a Swiss Army knife for eating at your dining room table feels almost ridiculous. Instead, we turn to what might be called a best-of-breed fork – a utensil that was built specifically with a single purpose in mind.

Something similar has been going on within organizations that originally standardized many of their business functions on an enterprise resource planning (ERP) platform. This is the Swiss Army knife of software, handling not only accounting but procurement, project management, supply chain operations, payroll and more.

An ERP might be fine if the company using it never bought another firm, or if it decided never to expand into other markets or add more customers. The reality is that M&As often lead to a single company owning multiple ERPs, complicating financial consolidation by requiring deep integration and fine-tuning.

“Best-of-breed” can be defined in many ways, but think of it as technology that is purpose-built to do one job really well. You’ll recognize these solutions because they tend to be:

Cloud-based: Traditional, on-premise solutions tend to lock companies into features that become difficult to update or change. Software-as-a-Service (SaaS) financial consolidation solutions make data more accessible while providing a streamlined upgrade path.
Out-of-the-Box: Instead of bringing on an army of consultants to set up and deploy them, best-of-breed solutions can be set up in far less time, with key functionality ready to be used immediately.
User-centric: An ERP might be designed with almost every business function in mind. A best-of-breed solution hones in on the specific needs and challenges of a particular team or set or role. In this case, it means finance and accounting professionals will see features that align with their ideal workflow.

Sometimes the prospect of researching and selecting best-of-breed software might seem so daunting that companies are tempted to put it off indefinitely. There’s a risk in doing nothing, however.

Sticking with an all-in-one platform like an ERP (or several of them) means finance and accounting teams might run into consolidation challenges that require them to figure out workarounds – another form of “creativity” with all the risks we walked through earlier in this post.

Maintaining the status quo could also make consolidating, closing the books and reporting on the data more of a chore for already-overworked teams. Companies that want to hold onto these valuable employees (or avoid the threat of “quiet quitting”) should think about what a best-of-breed solution could mean for the employee experience.

Finally, failing to make best-of-breed solutions a priority means you may become less agile, productive and strategic as competitors who opt for more modern technologies to navigate uncertain economic times.

Fortunately, making the shift to best-of-breed finance software isn’t as difficult as you might imagine.

Best Practices For Choosing And Deploying Best-of-Breed Software

Your search for the right best-of-breed financial consolidation and close solution will depend in part on the catalysts that started you on this journey in the first place.

For fast-growing companies, it often stems from a combination of outgrowing tools such as static spreadsheets or facing enough complexity (M&A, international growth, intercompany transactions, etc.) that ERPs no longer make sense.

As you evaluate the options, consider the following principles:

1. Tie Clear Goals To Finance And Accounting Performance KPIs

FP&A and accounting groups already track plenty of metrics, from working capital to net profit margin, compound annual growth rate and beyond. In this case, though, you want to think more about the key performance indicators that demonstrate success among your team members.

These could include time spent completing the financial close, time spent reporting, error rates and more. Make sure you’re not constrained by a platform where the number of scenarios or versions you can work with are limited – you may only close the books once a quarter, but modern FP&A needs to support continuous planning processes.

Settling on a few of these KPIs – and setting goals to move the needle on them – will ensure you select the right best-of-breed solution for your business.

2. Scope The Full Breadth Of Feature Capabilities That Matter

It’s easy to get used to the way things have always been done in FP&A and close and consolidation. This is an opportunity to dream a little, looking at the functionality that will meet your current needs and those that may come up as your firm continues to grow.

For instance, some of the most burning issues could be integrating data from multiple locations and subsidiaries, or consolidating and reporting financial results across multiple hierarchies.

Over time, though, you may also want to think about how your potential solution can streamline the dissemination of financial data into board books, dashboards and other forms of reporting to help key stakeholders. The right product should also assist with what-if analysis for those doing the “creative” work in FP&A.

3. Assess Current And Future Finance Data Complexity

Regulatory compliance is an ever-evolving beast, as is the nature of what guides strategic direction in a company. Best-of-breed technologies should therefore offer a seamless way to bring together both financial and non-financial data to create a more comprehensive picture of business performance.

Why non-financial data? Because a true best-of-breed solution supports company-wide planning, where line-of-business leaders and their teams can adapt models to reflect their specific goals and allow them to easily collaborate with other functional groups.

Factor in variables such as having to contend with multiple languages, multiple currencies and any planned M&As or growth tactics will affect the chart of accounts you’ll need to manage.

And of course, all this should come with strong security and a complete audit trail. Data integrity is not a nice-to-have. It’s essential.

4. Determine The Degree Of Finance Ownership

Given the technical nature of ERP and similar enterprise-grade software, it has traditionally been up to IT departments to procure and make changes to the technologies used by finance departments. Cloud-based platforms today should require less oversight and intervention by the CIO’s team, however. Instead, accounting and FP&A groups should steer the overall roadmap for which new features should be turned on (and when), as well as any changes to business processes like the monthly close.

A good example is reporting: best-of-breed platforms should mean an end to the days when IT had to help finance teams develop reports. Instead, self-service reporting capabilities should support the development of ad hoc reporting so the company can respond to changes with intelligence and speed.

Calculating Best-of-Breed ROI And Next Steps

Automation should always accomplish a few key objectives. It should bring speed and simplicity to otherwise difficult or complex processes. It should position employees to focus more on the tasks that make the best use of their time, experience and expertise. And it should create greater standardization and consistency as it offers more trustworthy data for the business’s strategic use.

Best-of-breed financial consolidation and close software can tick all of these boxes, and many more. The return on investment should be based in part on factors such as:

The ability of the solution to scale with the business
The ongoing development of more sophisticated features tied to user needs
The ease with which the platform can work with related solutions and technologies
The ability to answer increasingly complex questions

The shift to best-of-breed finance software is also not one fast-growing companies have to make on their own. Watch this on-demand webinar by Fluence and Revelwood, where we go into more detail about actionable steps that will help you reduce the time to value and reap the biggest benefits.

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

Continuous Accounting vs The Risk of Doing Nothing

March 2, 2023 by Revelwood

This is a guest post from our partner BlackLine, explaining the value of Continuous Accounting.

Change is uncomfortable. We all tend to resist change when we see it coming—and even more when we don’t. Many go to great lengths to avoid what is different, especially at work.

We have our routines down pat, we can practically perform accounting processes in our sleep (and often do, especially during the close), and we like that familiarity.

But what if making a carefully calculated pivot to the right technology could actually be safer?

The reality is that although change is uncomfortable, it can be more dangerous to live with outdated manual processes and the inherent risks of human behavior.

The Risk of Doing Nothing

New possibilities to create competitive advantage present themselves all the time. This may seem overwhelming, but technology can lead to opportunities for accountants to evolve and add an even higher level of value to their organization.

Automation streamlines the most routine, manual work, and opens the door to Continuous Accounting: an approach that ultimately results in better-utilized resources.

Continuous Accounting transforms the way accounting and finance teams work by embedding automation, control, and period-end tasks within daily activities. It frees up accountants to partner with the broader business, helping to drive more informed decisions for the organization.

Process automation provides one of the greatest opportunities for competitive advantage and waiting to adopt the right technology heightens the risk of being left behind—in your industry and in your profession.

If you decide to do nothing “for now,” but your competitors and peers choose to innovate, adopting automation and a Continuous Accounting model, they will quickly set themselves apart, becoming more efficient and controlled.

They will have access to the financial information needed to inform better decision-making and gain insight into bottlenecks.

Reducing the Resistance with Continuous Accounting

When you are performing most of your month-end close processes during a defined close window, it’s difficult to provide any meaningful financial data until after “pencils are down” – which is typically several days into the new month when the data is no longer relevant.

If you continue accounting the way it’s always been done, you’ll stay trapped in the never-ending cycle of feeling behind, always reporting on last month while the business has moved on to the next.

Leveraging technology allows accounting organizations to perform certain activities more real-time, increasing visibility to prevent surprises. By analyzing smaller subsets of data on a regular basis, you can identify irregularities in a timely manner, allowing the business to react appropriately and forecasts to be updated when needed.

“A big win with Continuous Accounting is automating certain areas. This means that rather than spending valuable time in the weeds of transactional data, you’re analyzing and reviewing exceptions,” says Molly Boyle, Director of Solutions Marketing at BlackLine.

Accounting in real-time isn’t possible without the technology that can drive automation and visibility. When the manual processes are automated, your accounting team is freed to focus their time on reporting and analyzing data to identify trends or adjustments.

When you begin providing meaningful data to decision-makers, and when you can do so in a timely fashion, your value to the organization increases substantially.

The End-Goal of Continuous Accounting

The goal of Continuous Accounting is to create a more synergistic organization where accounting and finance have a seat at the table. The most effective decisions are made when different departments make them together, with the real-time reporting data that tells the full story.

But a series of steps are required to take you from doing nothing to a fully Continuous Accounting approach. And it’s essential to start by defining the end state so you know exactly what you want to work toward. You can then work backwards to break down and delegate the steps that will get you there.

These five steps provide a framework to get you started:

Evaluate your existing processes first, to avoid automating bad processes.
Thoroughly research the best finance automation solution to ensure that you implement the right technology.
Focus on the benefits – instead of your fear of change.
Start small with a stepwise approach that will prove the risk mitigating benefits of Continuous Accounting
Begin to view industry advancements as improvements, so you can recognize the most beneficial opportunities.

Continuing to repeat these steps will shift your mindset and create a ripple effect in your organization. You’ll begin to see a reduction of risk, more timely data for business decisions, and a better utilized, more engaged accounting team.

And eventually, you will realize that the uncertainty and discomfort of change have become worth it – if not a little more manageable.

Driving Your Organization to the Next Level

It may seem like less effort to stay where you are. But waiting to implement a Continuous Accounting approach could come at a much greater cost, putting you at a disadvantage that may ultimately leave you reeling.

Change is inevitable for any company striving to create competitive advantage and staying stagnant is far riskier than implementing new technology to improve old processes. For this reason, getting comfortable with being uncomfortable can drive your organization to the next level.

This blog post was originally published on the BlackLine blog.

Revenue Cycle Management

February 23, 2023 by Revelwood

This is a guest post from our partner BlackLine, explaining how revenue cycle management helps businesses be more responsive to changing market conditions.

Today’s business environment is more dynamic than ever. Business leaders are focused on strategic initiatives to position their companies for long-term growth, to gain competitive advantage, and to drive shareholder value.

Top of mind for many business leaders are topics like recruiting and retaining top talent, remote work enablement, mergers and acquisitions (M&A), and digital transformation, to name a few.

As business leaders focus on making strategic decisions around these areas, accounting teams are being increasingly relied upon to provide data and insights and to serve as strategic advisors to the business.

This post is part of a series that discusses areas of focus that require active accounting input, why it matters to accounting leaders, and the risk of doing nothing.

Cash is King

The revenue cycle, or order to cash cycle, refers to the entirety of a company’s ordering system and can involve many departments — from sales and accounting to inventory and logistics. It starts the moment a customer places an order and continues through when an invoice is settled, and all activity in between is recorded and reconciled.

All eyes are on the revenue cycle. Not just because it’s an essential function in finance and usually carries the most risk, but because it is a critical part of how an organization functions. The efficiency and effectiveness of the revenue cycle has an impact beyond sales and finance, including customer experience and retention, investor decision-making, and future organizational strategy.

From an investor, net income, and EBITDA perspective, the most important part of the revenue cycle is not what is invoiced, shipped, or billed, but rather what is collected. According to a PwC report, improved working capital management could unlock $1.4 trillion globally, increasing the return on invested capital by 8.8%. Maximizing profit is the end goal, and therefore limiting write downs, closing the gap between gross and net revenue and limiting the reasons companies fail to collect are of paramount importance. Further, cash flow fuels critical business strategies from maintaining customer service to investing in new areas, and so as they say: cash is king.

The Bottom Line

There are several reasons why a company fails to collect on what they invoice, but manual processes are the biggest driver. Within the revenue cycle, Finance and Accounting is dealing with a tremendous volume of individual transactions. When there is not an automated process for handling that data at scale, the result is preventable, but unavoidable, write-offs.

MGI Research estimates that 42% of companies experience some form of revenue leakage and according to a study published by EY, on average companies can expect 1-5% of realized EBITA to leakage, causing a direct hit to the bottom line. As such, this is not just a reconciliation problem—or even just an accounting and finance problem—it’s a bottom-line issue that company leaders and investors will notice.

Given the attention on cash in the current market conditions, it is of utmost importance to take action over areas that we can control and, in doing so, position our organizations and our companies for success.

This blog post was originally published on the BlackLine blog.

Nucleus Research Finds 50 – 150% ROI on Financial Consolidation and Close Solutions

January 26, 2023 by Revelwood

Nucleus Research has determined that SMBs can expect a “payback period of 12 months and an average annual ROI of 50 to 150 percent within the first three years of deployment” for financial consolidation and close solutions.

The analyst firm is a global provider of ROI-focused technology research and advisory services. According to Nucleus, “Midsized companies contend with the same accounting complexities of large enterprises with multiple business units spreads across various geographies and industries, but often lack the budget and bandwidth for a drawn-out implementation.” These companies turn to midmarket financial consolidation and close solutions to “migrate off disjointed Excel processes while lowering the technical and cost barriers of traditional enterprise technology.”

Nucleus defines financial consolidation and close (FCC) solutions as “covering the consolidation and reporting of financial information for the monthly, quarterly, and annual close … [they] help organizations streamline daily tasks for accountants, controllers, and the CFO.”

Furthermore, Nucleus explains that “midmarket companies deploy an FCC system when they have difficulty meeting compliance requirements, reporting actuals on a timely basis, evaluating the progress of accounting processes, and visibility to financials across their various functional departments, sales channels, and subsidiaries.”

Download the report today to learn about the benefits of FCC solutions, including:

Productivity
Cost reductions
Revenue drivers
Organization visibility
Culture and morale

The report also covers the total cost of ownership (TCO) of FCC solutions.

This report is courtesy of Revelwood’s partner, Fluence Technologies.

Modern Accounting: How to Approach Intercompany Recharging

June 30, 2022 by Revelwood Leave a Comment

This is a guest blog post from our partner BlackLine, explaining best practice recommendations for managing expenses across various business centers within your company.

What Is Intercompany Recharging?

What exactly is a recharge in the world of accounting? It essentially involves providing a good or service to an entity and recovering the cost from the entity served on a fee basis. Intercompany recharging happens when one entity incurs a cost and then bills, invoices, or moves that cost to another entity in the larger organization. The goal is to accurately charge the entity that received the value of the good or service provided.

Notable examples of intercompany recharging occur when shared services, IT and telecom, or any costs that are centralized must be billed to their ultimate beneficiaries across the corporation. For example, charges for phone, computer, and networking usually come from vendors in one comprehensive invoice. That invoice might be paid by corporate, but corporate would have to split the invoice and “recharge” portions of the bill to the entities in the organization that used the service.

Two Different Approaches to Intercompany Recharging

Broadly speaking, intercompany recharging can be handled in one of two ways:

The very detailed allocation model involves getting down to a per head cost with each line in an invoice allocated to the specific person or project it served. That cost, such as a mobile phone expense, is charged to whatever entity that person rolls-up to in the organization.

Challenges with this model occur when an individual doesn’t align easily to a single entity or when personnel changes happen within the organization. For example, people change roles, the billing or accounting information changes, or the organizational structure itself adjusts.

The more generic allocation model involves setting a cost per person and allocating that figure to intercompany entities based on the number of people allocated to that entity. For example, a percentage of costs would be allocated based on headcount regardless of whether the people used the billed product or service.

The challenge with this method is that it results in many disputes. Arguments arise because people disagree with how costs were allocated to their group. For example, a French entity might argue that their telecom costs are cheaper than the US or that only a portion of their team were given access. Then charges must be debated.

How to Decide Which Approach to Intercompany Recharging Is Best

When deciding which approach to intercompany recharging is best for your organization, consider three things.

1. Understand the organization’s risk tolerance.

This will help determine how precise to be. Risk averse companies will want their intercompany recharging to be more detailed to give them more support on how they allocate. Everything would be easy to trace back and serve as proof in the event of an inquiry or audit. Less risk averse companies, on the other hand, would take a more simplistic approach and might not be as concerned about how the costs are moved around.

2. Consider the organization’s cost tolerance.

How much it is willing to spend on being precise? This typically depends on where the business is in its evolutionary cycle. If it’s prospering and doesn’t believe it needs to worry about every detail on every line, then it won’t. But if the belief is that the organization needs to watch every cost, then the intercompany recharging will be broken down to the finest details.

3. Determine what the organization can operationalize and maintain.

Find the sweet spot that provides enough detail that a consistent process can be maintained month over month or quarter over quarter. Intercompany involves many functions which might limit what is possible. It all depends on those who are actually touching the data and reconciling it. There may be technology constraints where the systems can’t handle all the data coming in. The account reconciliation team may not be able to handle the volume of transactions, and the people inputting the information can also become overwhelmed.

The Trend Toward More Detailed Allocation & Greater Transparency

Intercompany recharging practices are moving toward more detailed allocation and greater transparency. This contrasts with how the recharging process has been addressed historically, when companies simply threw people at the problem or employed front end technology overlaid with workflows.

Backend technology, such as spreadsheets or reports, have also been used to reconcile accounts. However, this is more reactive than proactive, and usually happens after the fact when the accounting team is trying to reconcile everything together.

Do It Once, Do It Right

The benefits of doing it right include fewer intercompany disconnects, which result in a more accurate and timelier close. Ensuring transaction allocations are correct before they are booked also eliminates last-minute conversations with people trying to work out where disconnects happened and why. There is less chaos and churn. And if issues do arise, they can be resolved faster because teams can quickly see where disconnects exist.

The intercompany recharging methodology that BlackLine specializes in eliminates disconnects, booking both sides of the transaction at the same time. It also gives visibility to that data to deliver an understanding of what is billed, and what is being billed for. This process also enables good reporting. This is how BlackLine provides full transparency into the intercompany recharging process.

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Cash is King

The Bottom Line

Read more about Financial Close and Consolidation:

Read more about Financial Close & Consolidation:

What Is Intercompany Recharging?

Two Different Approaches to Intercompany Recharging

How to Decide Which Approach to Intercompany Recharging Is Best

1. Understand the organization’s risk tolerance.

2. Consider the organization’s cost tolerance.

3. Determine what the organization can operationalize and maintain.

The Trend Toward More Detailed Allocation & Greater Transparency

Do It Once, Do It Right

Read more Modern Accounting blogs:

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