Our move to remote working has caused a crucial realisation for virtual accounting teams – traditional accounting practices are long overdue for change. Suddenly, we’re being forced to assess what works, and what doesn’t.
But so as to seem forward, let’s consider where we’ve started. the quality accounting processes most businesses use today aren’t too dissimilar to those developed many years ago, when the sole tools that existed for balancing accounts were a quill and paper ledger. Similarly, today’s accounting professionals still spend an outsized amount of your time on repetitive, manual tasks instead of trying to find ways to enhance their organisation’s performance.
But quite ever, businesses need faster access to financial data. we’d like to evolve from the strain of month-end close. As accountants and CFOs aim to deliver greater value to their clients and business, now’s the time to exchange the normal record-to-report process with continuous accounting.
Change isn’t near, it’s here
Closing the books has long been resource intensive. From reviewing transactions to tracking down errors and correcting journal entries to creating sure accounts balance, the time and energy required is vast.
But there’s a much bigger picture. ‘Traditional’ accounting practices aren’t only more vulnerable to human error, but by the time the method is finished – sometimes weeks after the month has ended – there’s little strategic value left. With alittle window to analyse results before focus turns to subsequent month, decision-makers can not act on information that isn’t real-time.
Enter COVID-19, which has already pushed many accounting teams to adopt parts of the continual close (either consciously or unconsciously). Suddenly thrust into working remotely and attempting to deliver real-time views of the business within the midst of crisis, accounting teams are pushed to adopt more automated processes.
Continuous close and month end
Our research shows that 81 percent of finance professionals rated operating income because the top KPI being regularly updated, demonstrating the critical got to have real-time access to the present information during a fast-moving landscape. Compiling large volumes of monetary and non-financial information efficiently is not any easy feat, and therefore the role of technology in supporting the continual close approach is important and can’t be overstated.
Often, accounting’s difficulty in collaborating with others within the organisation is getting information delivered in timely manner – a serious obstacle that has slowed the normal close process. Continuous close mitigates this by automating repetitive tasks like creating journal entries or reconciling account statements, also as eliminating the necessity to gather and normalise data from other departments – which may save dozens of hours monthly . This automation must be provided by a financial management or ERP system, which should also ensure compliance with accounting standards, government regulations, and tax laws by consistently applying the acceptable rules and schedules for items like revenue recognition, depreciation, lease management, and prepaid and deferred expenses.
By incorporating closing tasks into the daily routine, continuous accounting spreads the compute over the whole month and balances workloads so accounting team members do the work they’re best suited to. the mixture of automated processes, real-time access to information, and therefore the refore the replacement of spreadsheets for complex calculations boosts accuracy by eliminating duplicate data entry and the potential errors caused by massive spreadsheets, incorrect formulas, and manual processes.
Moving from an event-driven close process to continuous accounting provides firms with visibility and accuracy in but half the time and helps to determine the strategic role of finance. In essence, the role of the team becomes that of an indoor auditor, which reviews the automation setup for material errors and testing transactions to stay things in restraint .
Shift to business now, not ‘business as usual’
Accounting and finance teams must demonstrate the worth they will bring back the organisation, and sometimes this comes with a shift in culture. An accountant’s most crucial skill is distilling data during a way that matters most to decision-makers to assist them meet organisational priorities. It’s one thing to possess an excellent idea, but quite another to be ready to use continuous on the brink of deliver financial insights to the business to be ready to act swiftly.
It’s attribute to be immune to change. Yet, this year has shown that we will adapt as quickly as we’d like to. to assist shift the mindset of what accountants can usher in the month-end close process and beyond, they need to create a culture of collaboration both within finance teams and other departments to enhance processes and permit accounting staff to feature more value. As a result, managers should specialise in helping individual team members build and maintain strong relationships. a method to try to to this is often by ensuring everyone – and therefore the group as an entire – sees how their work contributes to the achievement of broader finance and accounting objectives.
The mindset around endless close shouldn’t solely specialise in doing it faster, but rather designing a process for monitoring critical business information and accessing the info in real-time to deliver both short and long-term business value.