November 30, 2021

7 Steps for Creating a Modern Accounting Approach

3-minute read

Modernizing accounting is a journey that starts with taking the first step. Whether you are just getting started with modernization or are already moving forward, follow these seven steps to continuously improve and maximize the benefits.

Step 1: Build your business case to modernize accounting. Benchmark your team’s performance around time-to-close and their time spent in transactional accounting.

A typical modernization goal is around five to ten days to close the books and assumes 30% to 50% time savings on highly repetitive processes. And don’t forget to communicate intangible benefits around balance sheet integrity and staff engagement!

Step 2: Start with a quick automation win—and then scale it up and out. Break the modernization inertia with a quick win on a highly time-consuming yet measurable accounting process such as automating bank reconciliations or performing manual journey entries.

Avoid roadblocks by ensuring Accounting can roll out multiple subsequent modernization initiatives (e.g., cash application or detailed credit card matching) on the same toolset without adding more technology or relying on IT.

Step 3: Begin moving to Continuous Accounting. Identify typical period-end processes that can be performed within the month. Split them into smaller tasks, schedule them as early as possible, automate, and use analytics to monitor and improve performance continuously.

Consider adding structure and discipline to continuous improvement using techniques like Lean Six Sigma.

Step 4: Streamline accounting collaboration. Use online task management tools to orchestrate work, reviews, and approval processes from anywhere (and support your growing remote worker contingent), rather than adding more time-consuming meetings and spreadsheet checklists.

Move tasks, documents, paper binders, and checklists to a centralized digital repository. Shift your audit to a more self-service process for finding supporting detail and reduce ad-hoc accounting requests.

Step 5: Form a Center of Excellence around intercompany accounting. Modernizing intercompany accounting is a team sport, so establish a CoE across Accounting, Tax, Legal, and Treasury. On the agenda: strategy around streamlining intercompany settlements, standardizing agreements, managing transfer pricing policies, and centralizing intercompany transactions.

Consider a clearinghouse devoted to intercompany accounting for more centralization and standardization across the organization.

Step 6: Iterate your Shared Services Center. Enable the SSC to deal more effectively with multiple ERPs and subledgers by integrating data flows between business units and the SSC, centralizing documentation and transactions, and systematizing controls.

Look to improve visibility and trust within and outside the SSC by using dashboards and workflow automation to orchestrate and show progress on accounting tasks moving through the SSC.

Step 7: Build a team to sequence and drive ongoing change. Keep the momentum rolling by assigning responsibilities for modernization to a sponsor, champions, communicators, enablers, and scorekeepers.

Motivate staff engagement at every level by establishing rewards and recognition for successful process improvement. Don’t forget to cut the risk and free up accounting time before big projects like ERP upgrades by systematizing the financial close first (your CFO will thank you).

We've created a checklist to help you follow these 7 steps of your modern accounting journey. Get your copy today.

Tammy Coley

Modern Accounting