Part 1 of our Accounting in Challenging Times blog series.
The way Accounting has always been done is not sustainable—especially in our current environment. Manual processes tend to be chaotic and time-consuming, and with so many F&A organizations still working remotely, the challenges are even greater.
There are new regulations, new assumptions about the business impacts, and other new considerations for Accounting. Many close processes were always resource-intensive, involving a myriad of people, technology, processes, and controls.
Now, things are taking even longer to complete.
Here are four ways the cost of manual processes is being multiplied in your organization, and resources for you to start addressing them.
The Complex Challenge of Remote Communication
Unifying and reconciling data usually requires extensive use of spreadsheets and a huge amount of manual, repetitive work.
Before the pandemic, communication happened through multiple in-person meetings, hallway conversations, phone calls, email, and other ad hoc touchpoints—all while raising the chances of something getting missed.
As a distributed workforce, those drive-by conversations and in-person reviews of key deliverables are a lot more difficult, if not entirely impossible.
There are no longer clear ways of communicating across or within departments to offer status updates and next steps. With everyone working remotely, there are often new controls considerations and key assumptions that need to be evaluated by the accounting team, among other requirements, to close the books virtually.
So, processes that already took a long time are taking even longer now. And the communication that needs to happen to get the work done has to be revisited, resulting in additional inefficiency.
Increased Risk During the Close
A fully remote workforce is creating an even greater visibility problem. Additional or different steps are needed to understand the status of the close and results. This increases the risk of errors, issues, and bottlenecks, and makes them even more difficult to identify.
Many controls that can be performed easily under normal working circumstances have been disrupted, and companies are being forced to reevaluate their processes or identify mitigating controls, which could also have an impact on risk.
So, all this change and lack of visibility are adding risk to the entire close process.
The Cost of Inefficiency
As a non-revenue generating area of the business, Accounting and Finance have always been expected to manage costs. And inefficient F&A organizations cost even more than those who are automating and using technology.
In the current environment, these costs are only multiplied. For example, when closing takes longer and audit processes or control testing is less efficient, that adds time which also adds cost.
Additionally, third parties like BPOs and other advisors are likely to experience their own inefficiencies, which may get passed along to the business—increasing costs and potentially causing unexpected and excessive fees as a result.
New Impacts on Morale
Before the COVID-19 pandemic began, talent management, changing the way we work, engagement, and retention were all hot topics for Finance.
Many leaders agree that traditional manual accounting processes could impact morale by leading to employee disengagement or a lack of job satisfaction. This is still true in a distributed environment, but there are new impacts on morale, as professional and personal lives have changed in unprecedented ways.
We’re all figuring out how to work from home while balancing a variety of other responsibilities, including children and other family needs. And in many cases, employees may also be worrying about job security, adding a new dynamic to the morale conversation.
These factors make it critically important for leaders and organizations to be thinking about talent management and how they can provide transparency and engage their employees, who are their most valuable resources.
Making the Move to Modern Accounting
BlackLine is helping F&A teams adapt to this new environment by unifying their data and processes, automating repetitive work, and driving accountability through visibility. This approach enables a virtual close—a process that is collaborative, achievable, and continuous—from wherever you’re working.
Visit our Virtual Close Hub for the resources you need to close with confidence and reduce the cost of manual processes at your organization.