financial close software

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.

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.

financial close software

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:

Survey Results of F&A Executives & Professionals

Trust (or Lack of) in the Numbers

How Financial Automation Helps Increase Confidence in the Numbers

Read more about Financial Close & Consolidation:

Supply chain issues for the finance and accounting function

The missing links in financial reporting today

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

Excel and ERPs: The more things change…

What’s driving today’s supply chain issues?

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

Read more about Financial Close and Consolidation:

Technology Powering Transformation

Major Leadership Challenges For 2023

Transformation & Technology Priorities

Other BlackLine Predictions for 2023

Read more about Financial Close and Consolidation:

A Brief History Of Best of Breed

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

1. Tie Clear Goals To Finance And Accounting Performance KPIs

2. Scope The Full Breadth Of Feature Capabilities That Matter

3. Assess Current And Future Finance Data Complexity

4. Determine The Degree Of Finance Ownership

Calculating Best-of-Breed ROI And Next Steps

Read more about Financial Close and Consolidation:

The Risk of Doing Nothing

Reducing the Resistance with Continuous Accounting

The End-Goal of Continuous Accounting

Driving Your Organization to the Next Level

Read more Financial Close & Consolidation

Cash is King

The Bottom Line

Read more about Financial Close and Consolidation:

Footer

Revelwood Overview

EXPERTISE

ABOUT

CONNECT