BlackLine Blog

February 17, 2021

How to Automate Accounting Processes for Manufacturers

Modern Accounting
3 Minute Read

Katie Morris

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In a time of constant economic disruption, manufacturing companies must learn to work in a whole new way. From evolving regulations to uncertainty and fluctuations in material and transportation costs, manufacturers are facing daily challenges to improve transparency and agility around finance and accounting processes.

For manufacturers, closing the books is a unique and complex process. Unlike other industries, where the majority of close-related processes are performed at the corporate level, manufacturers must rely on local plants or sites to complete critical closing steps.

On top of an already decentralized structure, locations can have fragmented systems and spreadsheet-driven processes that lead to a lack of standardization across the close. These manual accounting processes are not sustainable and introduce unnecessary risk.

5 Reasons Manual Accounting Hurts Performance
  1. Time. When resources are spent wrangling financial data from across different plants, entities, and systems, more time is allocated to transactional activities rather than analysis.

  2. Cost. The cost of accounting operations is up to 3X more for manufacturers that rely heavily on manual spreadsheet-driven processes.

  3. Risk. Inconsistent processes, limited corporate visibility and oversight, and disparate systems all add additional risk to an already complex close process.

  4. Compliance. Manual, inconsistent, and (now) remote processes negatively impact the strength of internal controls and drive up internal and external audit challenges.

  5. Talent. About a third of employee productivity can be lost through employee disengagement due to repetitive work spent in spreadsheets.

How to Identify Processes Ripe for Automation

For the most part, organizations agree on why manual accounting hurts financial and operational performance. But understanding the reasons for modernizing accounting is only the beginning. How to identify processes ripe for automation and where to start can be more difficult than it may seem.

Manufacturing accounting teams are already strapped for resources, so allocating any amount of time to identifying which accounting processes should be automated is nearly impossible.

Start by thinking about repetitive transactional activities like VLOOKUPs, rainbow spreadsheets, copying and pasting data, and multiple Excel tabs and files. Processes that contain these types of common daily activities should be automated.

4 Manufacturing Processes Ripe for Automation

With years of experience working with manufacturers to upgrade their accounting processes and technology, UHY and BlackLine help accounting teams get started today by highlighting these four processes that are ripe for automation.

Reconciling In-Transit Inventory

Reconciling reports from external sources against internal systems, capturing and comparing logistics events against shipping terms, and costing and classifying (e.g. raw materials, work-in-process, or finished goods) inventory often requires massive, error-prone processes.

Accruing for Supply Chain Costs

A dependency on third-party logistics providers for data, and estimation strategies no longer reliable as supply chain costs fluctuate more than ever both cause substantial variances between estimates and actuals, and in return a lot of manual effort.

Clearing Open Items

It’s common for manufacturers to have open item managed accounts where transactions can build up like cash, accruals, T&E, and prepaids. The volume of transactions and complexity of data can make it impossible for manufacturers to keep up with manual clearing.

Reconciling Procure-to-Pay Transactions

Procurement processes that involve data from supplier invoices, POs, and payments often involve various data reconciliation exercises that rely heavily on spreadsheets, resulting in significant time and effort spent.

These are just some of the many accounting processes consumed by cumbersome, spreadsheet-driven activities that manufacturers face on a monthly, weekly, and sometimes daily basis.

A Closer Look at How 3 Manufacturers Modernized Accounting

In the Accounting Automation Guide for Manufacturers, BlackLine and UHY walk us through how three manufacturing companies modernized their processes with the technology and experts’ leading practices to make them successful.

A multi-billion-dollar industrial manufacturer, a leading chemical manufacturer, and a 7-billion-dollar automotive company experienced challenges across common accounting processes. This included manually reconciling intercompany inventory in-transit variances, a monthly freight accrual process with manual data extracts, inaccuracies, and significant true-ups, and a revenue recognition nightmare with a multi-subledger inventory reconciliation process.

With BlackLine’s modern accounting automation and UHY’s implementation expertise to deploy, these organizations realized significant results across multiple processes. Here’s a snapshot of the results across the three manufacturers:

  • Increased accuracy by identifying and accounting for unreconciled inventory

  • 6 weeks saved every year, freeing Accounting to focus on other strategic initiatives

  • Unified, consistent data allowed for accounting process transformation while moving to a new subledger

You can dive into more of the challenges, the solution, and additional results experienced by the manufacturing companies in UHY and BlackLine’s Accounting Automation Guide for Manufacturers.

BlackLine & UHY Transform Accounting at Manufacturing Companies

There’s never been a better time for manufacturers to automate manual accounting processes. With a rapidly changing and uncertain global business environment, automating transactional accounting processes is a clear opportunity to drive significant efficiencies, boost productivity, and enable the reallocation of talent toward more strategic activities.

BlackLine and UHY have the experience in the manufacturing industry and the leading practices to prove it. A leading implementation partner of BlackLine since 2009, UHY transforms accounting processes at manufacturing and others across Fortune 500 and dynamic middle-market companies.

Read BlackLine and UHY’s Accounting Automation Guide for Manufacturers to learn more.

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About the Author


Katie Morris