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Modern Accounting: Driving Sustainability

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As part of our series on ESG reporting, we are featuring guest blog posts from our partners. This post from BlackLine explains how the finance team can take the driver’s seat when it comes to sustainability. 

Consumers are increasingly looking to do business with sustainable organizations, elevating sustainability to a boardroom level. Organizations looking to compete effectively in a challenging and crowded marketplace must be able to demonstrate their environmental bona fides. However, creating sustainable practices is usually the domain of operational lines of business. Many larger enterprises may have a dedicated role for a sustainability officer, or even a team that works across environmental and social corporate responsibility.

Rarely does the finance team get involved in the early stages of sustainability discussions. If anything, the finance team is usually left to manage the implications of business decisions around changing suppliers, operating procedures, and so on.

However, there is an opportunity for the finance team to take the driver’s seat when it comes to sustainability.

The rise of environmental, social, and governance (ESG) reporting has led to an increased focus on these issues from a risk management perspective. Getting these elements right can also lead to increased turnover and an improved ability to attract and retain staff. For example, 90% of consumers prefer to buy sustainable products and 86% of employees prefer to work for companies that care about the same issues they do.

ESG reporting translates these otherwise potentially hard-to-measure areas into financial results, language, and metrics. This is where the finance team shines. Finance also has access to all of the data across the organization that can be affected by ESG practices, such as sales, supply chain, and cost of goods sold.

Where to Start

Developing environmentally sustainable practices and policies can seem overwhelming, especially given the already large workload that falls on the finance team’s shoulders. Managing existing financial management and reporting requirements while adding ESG strategy, measurement, and reporting may not seem feasible for some teams. However, the finance team’s background in risk assessment and mitigation, data analysis and reporting, and strategic direction makes it perfect for this task.

There are four key questions the finance team should start with on the journey towards driving sustainability:

  • What ESG components will affect the business, including stakeholders and customers?
  • What metrics and targets should be managed, monitored, and reported on?
  • How can financial and non-financial data be integrated into reporting?
  • Are specific reporting models required for ESG and, if so, what are they?

While it may seem overwhelming for finance teams to dive straight into ESG and driving sustainability, there are immediate steps that can be taken to improve sustainability. For example, finance teams can make their own practices more sustainable and lead by example.

It may also be worth investigating ways to streamline and automate existing processes to pave the way for increased responsibilities around ESG management and reporting. By automating processes that previously took days or weeks of manual work, finance teams can free up talented professionals to focus on innovation and sustainability. This will also improve the team’s access to real-time data, which can be used to drive sustainable decision-making and, eventually, accurate reporting around ESG activities.

Read more in our series on ESG Reporting:

FP&A Done Right: ESG Reporting Tools

FP&A Done Right: Finance’s Role in ESG Reporting

More from BlackLine:

How Finance & Accounting Can Champion Sustainability in Business

This blog post was originally published on the BlackLine blog.

https://www.blackline.com/blog/driving-sustainability-from-the-finance-seat/

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Modern Accounting: Why Does Intercompany Accounting Crash Your Close?

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

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

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

The Challenges of Intercompany

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

Poorly executed intercompany agreements

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

Incorrectly booked invoices

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

Lack of communication

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

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

Inquiries and disputes

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

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

Is a Shared Services Team the Answer?

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

Pressure On the Accounting Team

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

How to Address These Intercompany Challenges

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

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

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

How BlackLine Can Help

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

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

Read more Modern Accounting blogs:

Modern Accounting: Four Key Ways AR Automations Propel Financial Operations

Modern Accounting: 6 Essential Qualities for Surviving the Robot Uprising in Accounting

Modern Accounting: How to Approach Intercompany Recharging

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Modern Accounting: Four Key Ways AR Automations Propel Financial Operations

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This is a guest blog post from our partner BlackLine, explaining four ways AR automation moves financial operations forward.

Due to challenges in recent years, there’s been a shift in the way companies approach people retention—with varying outcomes.

Many organizations now offer hybrid working policies, with employees enjoying more flexibility throughout their weeks, even if it’s just the ability to do laundry at lunchtime.  

On the flip side, the uncertainty and disruption has caused others to become fed up, leading them to move on to new pastures. We’re all aware of The Great Resignation—but what does this mean for AR and finance teams?

Time-consuming manual processes are a significant factor in this fight. With employees struggling to hit targets and respond to customers on time, plus battling siloed systems that don’t provide full visibility into business procedures, it’s easy to see why they’re cutting loose.

It’s clear that to retain staff and streamline operational processes, digital transformation is no longer a nice-to-have—it’s a must-have.

Banish Back-Office Blues with AR Automation

AR automation raises the bar in business performance.

By moving AR to a different beat, businesses can make small changes to their every day that triggers a big change their operational success. Not only that but automating AR can inform more strategic decision-making and drive better financial outcomes—a win-win for both people and business.   

It’s time to MOVE on from manual:

M—making better decisions

O—operational success

V—visibility into the future

E—employee satisfaction

And AR is for automating.

1. Making Better Decisions

Let’s be honest: most manual AR practices don’t lead to effective data utilization. And few companies have the necessary tools to make best use of their available data, or action the insights it gives them.

AR automation can fill this gap. By surfacing critical information that is typically difficult to obtain, finance leaders can improve strategic decision making across all areas of business.

This leads to better business outcomes all around, as well as helping you to identify potential growth areas within your existing customer base.

2. Operational Success

Unnecessary process errors. Duplicated effort. Customer disputes. These are just some of the AR challenges your staff are tasked with that can have a serious company-wide impact.

Automating repetitive tasks results in less complications to deal with. Teams can more promptly resolve customer disputes, building better relationships and elevating business reliability and reputation.

On top of this, teams are not only better placed to hit their targets but are also able to dedicate more of their time and energy into work that really makes a difference.

3. Visibility Into the Future

Senior board members are tasked with, among other things, keeping external shareholders happy. They’re (understandably) mostly concerned about revenue, and that is directly informed by a healthy cash flow.

AR automation gives you full insight into your cash position, providing you with everything you need to deliver detailed reporting to shareholders.

Not only could this help secure future investment, but it also contributes towards financial resilience. The more you know about your cash position, the more informed decisions you can make to protect your business.  

4. Employee Satisfaction

While WFH has generally gone down a storm, hybrid working can throw up just as many pitfalls as perks. With staff split between home and office, siloed teams may not have full visibility over entire processes, damaging collaboration and significantly hampering productivity.

By implementing AR automation that takes care of admin under one unified platform, staff can take care of adding value elsewhere, putting their expertise to best use: achieving financial goals.

Plus, with staff feeling happier and more supported, they’re less likely to become another ‘Great Resignation’ statistic—and you won’t lose out on all the best talent.

By moving to a different beat with BlackLine, you’re realizing the true potential of AR: as an integral back-office function that contributes significantly to business success.

This blog post was originally published on the BlackLine blog.

Read more Modern Accounting blogs:

Matching Records from Multiple Files in BlackLine

Modern Accounting: Improving Collaboration in Virtual Accounting

Managing your Month-End Checklist in BlackLine

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Modern Accounting: 6 Essential Qualities for Surviving the Robot Uprising in Accounting

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This is a guest blog post from our partner BlackLine, explaining how you could be more productive with fewer resources, less overtime, and also easily improve the quality of your work.

As accounting and finance professionals, you do so much more than just handle money matters—you’re also critical for creating strategy and driving process improvements across the entire organization.

But if the majority of your days are spent manually reconciling accounts and matching transactions, little time is left for these bigger picture activities.

What if you could be more productive with fewer resources, less overtime, and also easily improve the quality of your work? Not only would you be pleased with this improvement, but it would set you apart in the industry.

Optimizing Your F&A People

Your accounting and finance professionals are at the heart of your organization’s innovation, and crucial to driving strategy and future business growth. But according to a recent BlackLine survey conducted by Censuswide, many mid-sized and large company decision-makers are not fully leveraging this talent.

Manual processes and tedious tasks take up too much time and result in this invaluable skillset being widely underutilized. To unlock the value of your people, begin by automating the manual accounting work that consumes so much of accountants’ time and effort.

When manual processes are automated, accounting and finance teams spend fewer hours on transactional activities. The focus shifts to analyzing the data and reports, and addressing only the exceptions.

This enables everyday accountants to become exceptional accountants, providing high-value services in areas like fraud detection, compliance, data analytics, technology, and business advice.

What Is an Exceptional Accountant?

When you are only researching the anomalies, you can finally refocus on providing strategic guidance to the business, such as improving internal processes or finding cost-saving opportunities. In other words, the added time allows you to apply not just your knowledge and expertise, but your nuanced creativity and intelligence as well.

According to Helen Brand, chief executive of the Association of Chartered Certified Accountants (ACCA), “To succeed as a professional accountant…a vastly different set of skills is required than was necessary just 10 short years ago. And in the next decade, things are likely to change even faster and more dramatically as the global economy continues to evolve at an ever-quickening pace.”

So, what does the exceptional accountant of tomorrow need to cultivate today? Think mastering communication, not macros. Strategic aptitude, instead of being spreadsheet savvy.

In short, capabilities that enable you to deliver predictive insights to leadership, drive data-based decisions and provide expert counsel. 

6 Skills You Need to Become an Exceptional Accountant

These six skills needed for accounting work in unison to serve as building blocks to exceptional accountant status.

1. Analytical Skills

For the finance function, providing leadership with historical data used to be quite sufficient. Yet today, companies also expect to have access to predictive data.

For today’s accountants, this requires knowing how to turn Big Data into concise, decision-driving insights. Vanguard businesses are already hiring accountant/data scientists. Accountants looking toward the future must have both a theoretical and practical understanding of data and analytics.

2. Communication Skills

It’s said ad nauseam: it’s the Age of Information. Yet all this information is just noise if it’s not shared effectively. The exceptional accountant of tomorrow won’t just know why data looks like it does (analytical skills); she’ll also be able to skillfully convey those insights to others.

Accountants must begin to cultivate strong written communication skills: the ability to think critically and translate those thoughts into compelling documents. They will also need strong oral communication skills: the ability to convey pertinent financial information to executive teams and stakeholders.

3. Relationship Skills

During the “good ole days,” an accountant could hide in the back office, subsisting on a few basic greetings at the legendary water cooler.

Yet thriving in tomorrow’s business is going to take more than water cooler-level conversational skills. As automation streamlines transactional tasks, accountants won’t have the “millions of transactions to match” excuse to sidestep human interaction.

The exceptional accountant of the future will know how to manage numbers and people. That requires cultivating a broader range of relationship skills today, such as how to work in a team, how to motivate and engage employees, and how to deliver bad news — without making somebody cry.

4. Creativity

It used to be that nobody wanted a “creative” accountant. But in an era when businesses must quickly identify opportunities while simultaneously mitigating risk, a finance professional who can think outside of the proverbial box is a strategic asset.

Accountants who can combine creativity with a deep understanding of the company’s financial capabilities will be able to solve complex financial—and non-financial—problems faster and more cost-effectively.

5. Business Acumen

Contributing to the business on a strategic level requires more than just an understanding of the numbers. Accountants also need to understand the business as a whole. The ability to provide counsel to the C-suite requires seeing the big picture, from how each functional area works to the best way to acquire and retain talent.

When accountants have the opportunity for stretch assignments, cross-training, and job-sharing, it’s easier to understand—and make decisions based upon—the holistic interplay between a company’s services, employees, customers, and stakeholders.

6. Tech Savvy

Technology isn’t just changing every job function; technology itselfchanges rapidly. Instead of expecting to use the same tool for the next decade, accountants today must be ready to use new technology every year. This requires not just a basic understanding of technology itself, but the ongoing cultivation of flexibility andadaptability.

Benefits of Developing Your F&A Professionals

Today more than ever, companies need finance and accounting professionals who can transcend traditional number crunching. Yet for accountants, making the transition from spreadsheet jockey to strategic expert requires new skills.

Your people are the ones who redesign your processes, and therefore it is essential to encourage, help develop, and hire for a different set of skills needed for accounting. This is the most difficult hurdle to clear because there is so much inertia, with the biggest battle being the comfortable, fixed mindset of “this is the way it’s always been done.”

The tactic to overcoming this is to create buy-in for the Continuous Accounting approach and get your people on board with your vision. For this to be successful, your Continuous Accounting strategy must clearly point to your end goal as an organization, along with a blueprint of achievable milestones.

Fundamentally, Continuous Accounting is a story about unleashing the accounting and finance professionals who have unparalleled vision to experiment, push the limits, try and fail. When you allow your people to drive change, they deliver things that scale in a very exciting way.

And it all begins with empowering your teams with the skills needed for Accounting to propel the entire organization into the future.

Accountants who cultivate business acumen can begin to provide guidance relevant to the entire company, not just the finance department.

Nurturing creativity leads to innovative solutions for some of the biggest challenges in business today, from the unexpected corner of accounting.

Developing analytical capabilities ensures the accounting function can deliver true insight, not just historical information, while building communication and relationship skills guarantee those insights aren’t lost in translation.

Finally, because technology will continue to change at light speed, accountants who not only have basic IT skills but also flexibility and adaptability will always be ready to integrate new, more efficient tools into existing processes.

Read more Modern Accounting blogs:

Modern Accounting: Changing the Culture in Accounts Receivable

Auto-Certification Rules for Balance Sheet Reconciliations in BlackLine

Workflow Capabilities for Balance Sheet Reconciliations in BlackLine

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Modern Accounting: Achieving Finance Transformation

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This is a guest blog post from our partner BlackLine, explaining four essential steps for transformation success.

Making the Move to F&A Digital Transformation

For controllers, CFOs, CTOs, and business leaders in general, planning a move to digital finance transformation can be daunting—and it can raise some serious concerns. What if, for example, the transformation causes more problems than it solves in the intermediate term? What if it adds interim state technical complexities to an already challenging ecosystem further challenging the partnership between finance and IT?

Mike Polaha, BlackLine senior vice president finance solutions and technology, has seen these and other issues arise in his time working with global organizations. Digital transformation has been proven to deliver significant benefits, he notes, but the keys to success are in the preparation and being smart with the ways you organize and sequence the strategy and work plans.

4 Steps to Finance Transformation While Avoiding Common Pitfalls

Base Your Strategy on Diagnostics

Your strategy and corresponding business case should have a clear goal, and that goal should be informed by benchmarks of similar companies in the affected finance processes.

“You don’t want your strategy to be informed by hunches,” says Polaha. Instead, it’s good to use an outside consulting group—the Hackett Group, for example, or some other company with a benchmarking service—to see where you currently stand, then focus your strategy to gain the greatest competitive advantage at maximum efficiency.

Benchmarking can also be critical in selling the transformation to executive management.

“It can help you show executive leaders how, by making certain investments, you can not only improve your cost to serve, but likewise how the service can be differentiated in what it can now provide,” he says. “You’re more finitely tethering the functional investment to the overall business strategies.”

Adopt a Leading-Practice Orientation

Polaha notes, “every company is unique, of course, but all companies share certain fundamental characteristics. Once a company realizes this, it’s able to benefit by looking at, and emulating, industry leading practices.”

 Here is where a relationship with a top-end system integrator like Deloitte or EY can pay dividends.

“These companies have lots of experience with finance transformation,” he says. “They can show you a well-documented way of adopting best-practice processes for your specific areas of concentration.

“Also, BlackLine can help implement leading practice solutions based on our own experiences with customer installations and our regular participation in customer advisory boards. In essence, our application is crowdsourced by enabling best practice inherent in the composition of our solution design.”

Admit You’re Not a Software Company & Embrace the Cloud

According to Polaha, “too many companies think that they can develop their own applications. The problem is they first have to build the applications, and then they have to maintain and upgrade them. Then typically at some point they start to fall behind and can’t catch up.”

An example is one company that tried to upgrade their intercompany reconciliations by customizing their ERP software. “It then became very difficult, and costly, for them to implement vendor upgrades without the fear of breaking everything they’d developed.”

Using the cloud can help speed application deployments and allow companies to digitize rapidly at scale. The company also avails itself to a future proof architecture by allowing the SaaS provider to continually embed the latest evolutions in process and solution capability.

Polaha notes, “there are times when companies have too many applications with significant overlap. It’s better to partner with fewer vendors that can use the cloud to cover multiple applications.

“If you’re using one finance vendor for account reconciliations and another to do cash application for accounts receivable, it’s much more efficient to give those jobs to a single, cloud-based vendor to simplify the overall technological and contractual footprint.”

Harmonize Finance Data with the Enterprise

Here’s where finance can be an evangelist and a valuable partner to IT.

Data analytics are growing in popularity as a tool for business planning, but Polaha notes that analytics are only effective when they’re based on data that’s harmonized—unified—so that all data uses common, standardized naming and formatting conventions.

As an example, today’s finance groups are making increasing use of analytics-driven rolling forecasts that produce continuous predictions based on the previous time period’s data. Rolling forecasts can be very effective planning tools, says Polaha, but only if they are based on harmonized data.

“The problem is that without harmonized data, some people will be basing their planning instances on their unique views of the data. So, you end up with 50 instances of planning and forecasting software, and you can’t put Humpy Dumpty back together again.”

Once finance has harmonized its own data, it can then become an evangelist for data harmonization across the enterprise.

“Finance can then present a common view of finance data to IT,” says Polaha. “IT can use that for further harmonizing their own data and applications,” he says.

“That’s the ultimate prize for transformation, isn’t it? To get finance, IT, and the entire enterprise moving smoothly into a digital future.”

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Modern Accounting: Easier Intercompany Transactions

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This is a guest blog post from our partner BlackLine, explaining five ways to make intercompany transactions easier and avoid the mess at month-end closing.

Table of contents

Intercompany transactions are common in the business world. In truth, over 80% of all global transactions are intercompany. The challenge for finance and accounting teams can be daunting, but it doesn’t have to be. It’s important to have a clear understanding of what these types of transactions entail, how they impact financial statements, and where to uncover value in places no one is looking.

Whether you’re looking for ways to simplify the process, make cash flow more predictable, or be more tax-efficient, the five tips in this blog are sure to come in handy.

What Are Intercompany Transactions?

Let’s start with the basics: a transaction is a completed agreement between a buyer and a seller to exchange goods, services, or financial assets in return for economic value. An intercompany transaction is one that occurs between different legal entities within the same parent company. Because these entities are related, companies can’t include a profit or loss from these transactions on consolidated financial statements.

Intercompany accounting involves recording these transactions in your financial systems — sounds simple enough, but in reality, it can be a chaotic and lengthy undertaking. Here are five ways to prevent the intercompany mess so transactions run smooth as silk.

1.    Identify the Type of Transaction and Set up a Standard Process to Record Them Properly

Not all transactions are created equally. There are two general categories of intercompany transactions. One is trade-based, directly related to the product you sell to the customer, such as materials and semi-finished products. The other is non-trade — in-direct or service transactions, including fee sharing, cost allocations, royalties, and financing activities.

Standard processes are important — they help you get things done in an organized way. For intercompany, the transaction type drives the activities required for each step of the process, so nothing slips through the cracks or needs any rework later.

Upstream work solutions achieve long-lasting results, giving you a way to detect problems before they arise by addressing early warning signs. So, intercompany should be a continuous operation to prevent reconciliation issues down the line — defining a standard process that acts as an invisible hero and stops the month-end firefights from occurring. With non-trade transactions, initiator-recipient rules will ensure transactions contain the necessary support, authorization, and validation at the point of need and before invoicing and recording.

2.     Create an Agreement, Enforce the Agreement

Make, and stick to, intercompany agreements. Transfer prices play a large role in determining the overall organization’s tax liabilities. Entity-specific rules must be centrally stored to ensure profit maximization and to take advantage of favorable tax setups for the group.

The optimal transaction price among transacting divisions then drives more profit and compels us to better plan tax. Tax and finance functions need to use integrated transaction-level pricing and analytics, thus allowing for price and tax optimization.

And any breakpoints in technologies, processes, and people create a manual overhead, often resulting in improper mark-ups. Duct tape works wonders, but not for stitching financial systems and data together. Spreadsheets don’t cut it, and like back-of-the-envelope calculations, you end up with errors and no way to trace or validate your entries later.

3.     Drive More Collaboration Across the Enterprise

Intercompany accounting can be a thorny topic because it touches so many parts of the company. The hybrid workplace is here to stay, and finance professionals are craving more flexibility and easier communication, particularly in the opaque world of multinational operations. Companies should look to remove organizational silos and use technology to act as the ember to spark collaboration.

Collaborators, i.e., the buyers and sellers, are still people transacting on either side. Automated workflows and collaboration tools let them interact and share their comments, empowering anyone involved in an intercompany transaction to communicate with their peers while keeping an audit trail for easy reference later on.

4.     Push for a Unified Intercompany Technology Environment

The ultimate vision is uniformity and transparency of intercompany processes. Instead of having information in disconnected silos, business users share one intercompany solution—streamlining and centralizing all intercompany transaction records, corresponding journal entries, statuses, supporting documents, currency rates, transfer pricing rules, policies, and invoices in one place.

5.     Add Automation to Minimize Transactional Accounting

According to APQC, finance and accounting can spend at least half their time in transactional accounting. Tedious work increases employee disengagement, decreasing productivity.

Financial and tax regulation is now a rapidly evolving area for intercompany accounting, so automating intercompany accounting will increase control, reduce compliance risk, and promote healthy operations. For example, by automating currencies, required tax calculations, and invoice requirements, you’ll minimize human input and open up new opportunities to improve working capital, cash flow, and profitability.

When you have more than one ERP, transactions can get “lost” if the other side of the entry is not added. Automated solutions can catch and prevent the fallout between AP and billing systems, accrue the amounts, and avoid plugging any differences.

For trade transactions, automation helps to shift our focus from rote data collection, processing, and emails to early intervention—analyzing exceptions and variances.

Above all, automating transactional tasks reengages your workforce to drive productivity where it counts.

Prevent the Mess at Month-End Closing

Monthly peaks are a pain. Companies can get ahead of intercompany issues with preconfigured leading practices to initiate, approve, and book intercompany transactions and invoices, while enforcing intercompany trading relationships, policies, and transfer pricing and tax calculations.

This blog post was originally published on the BlackLine blog.

Read more posts on intercompany transactions:

Modern Accounting: Intercompany Accounting

Modern Accounting: Automating the Intercompany Accounting Process

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Modern Accounting: What is Accounting Automation?

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This is a guest blog post from our partner BlackLine. The author, Jason Brisbane, defines accounting automation and details its top five benefits.

What is Accounting Automation?

The need for on-demand visibility and actionable insights to navigate today’s dynamic business environment has never been greater. Technology, specifically accounting automation, can be a foundation to providing fast and continuous information to key stakeholders, supporting the agile decision-making that is required to make critical decisions in a timely manner.

Traditional manual accounting processes introduce risk and consume so much capacity that it prevents effective decision-making. A recent study found that nearly 70% of global business leaders and finance professionals reported that their organization has made a significant business decision based on inaccurate financial data. And over 55% are not completely confident they can identify financial errors before reporting results.

Accounting automation reduces the manual effort required to perform tasks and access information. Configurable rules and workflows, global visibility from anywhere, streamlined reconciliations, and journal entries ensure more time can be spent on actionable analysis and strategy.

Here are the top five benefits of accounting automation.

Benefits of Accounting Automation

1.    Time Savings

The benefit of time-savings that automation delivers cannot be understated. With automation, you can eliminate repetitive tasks, significantly reduce error-prone spreadsheet work, and shift audits to a self-service model. Low-value activities like faxing, copying, and physical storing of documents are eliminated with automation.

With the time savings, accounting staff can be re-deployed to addresses more strategic tasks, and teams can scale to support growth without adding additional headcount.

2.    Higher Productivity

The before-mentioned time savings benefits from automation enables accounting staff with more time to do what they are hired and trained to do—partner with the key stakeholders of the organization to guide the business with meaningful data and input.

Automation also frees accountants to focus their efforts on higher-risk areas, like judgments and estimates, new business models, or complex transactions, and it provides opportunities for talent development which improves retention and helps Accounting avoid costly turnover.

3.    Insights & Analysis

Accounting automation allows you to unify data quickly and continuously. This enables more frequent exploration of trends, exceptions, and insights without having to wait for period-end close. More time for analysis and quality insights means you’re better positioned to support agile decision-making.

Accounting staff can easily build reports and dashboards that can be adjusted to when new revenue streams, cost centers, and other business changes are introduced. Without reliance on IT for maintenance, Accounting and their business partners can engage in new initiatives without the worry of unnecessary bottlenecks.  

4.    Data Security

Manual accounting activities require the use of spreadsheets that have minimal security, lack preventive controls, and increase the risk the for cyber-attacks and errors. Accounting automation reduces the use of spreadsheets that require sending and receiving in favor of a single version of the truth with embedded workflows and segregation of duties.

When needed, auditors can access information securely, in a self-service model, reducing the risk associated with providing audit requests in paper, flash drives, or other less secure means.

5.    Improved KPIs

It’s well-known that what gets measured often gets done. As accounting teams look to modernize their processes, scale forth growth, and provide better insights, accounting automation platforms not only address the underlying processes but also enable tracking.

With a single point of collaboration for accounting, leaders can monitor KPIs like unrecorded adjustments, open tasks, and late journal entries. These metrics not only enable better business decisions, but also can be used to drive accountability and change throughout the accounting organization.

Conclusion

Manual accounting processes are not sustainable to thrive in today’s accelerating pace of modern business. Accounting automation is required to continuously monitor for error and inefficiency before they become misstatements.

This blog post was originally published on the BlackLine blog.

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