This article originally appeared in FEI Canada. It’s a 6-minute read.
The ramifications of the current crisis will long outlast it: how Accounting conducts period-end, where accounting staff is located, and the way work gets done. Companies that emerge from the crisis having learned critical lessons will be better positioned than others who have simply limped through, preserving the status quo.
Accounting must now provide financial information faster—to the CFO, the executive team, and business leaders—to drive forecasts and decisions, as business conditions change almost daily. Waiting weeks to close the books or being heads down on manual transactional accounting was always problematic. Now it is untenable.
All of these challenges are coming to the forefront as finance and accounting teams are working from home, often struggling with manual accounting, spreadsheets, desktop tools, and paper-based processes that were hard enough to manage in the office.
Manual accounting can be a profound drag on remote staff productivity and engagement, and even create a security risk for those who have not modernized their processes and technology.
“Managing uncertainty starts with eliminating the use of manual tools like spreadsheets, Word docs, and binders, to manage much of the close. These tools prohibit access to real-time data,” says BlackLine CFO Mark Partin.
“CFOs must integrate more automation into every process. Reducing repetitive, tedious, manual tasks not only increases efficiency and accuracy but enables accountants to become less reactive and more visionary.”
The shift to remote work had been gradual before the current crisis. No longer. The current crisis has highlighted the need to enable workforce flexibility and business continuity.
The effects will undoubtedly affect how we work in the future. For example, a March 2020 Gartner survey found that three of four CFOs plan to move some employees who previously worked onsite to work from home (WFH) permanently.
For finance and accounting leaders, the goal is twofold:
In the near term, examine existing processes and technology and remove barriers that may stand in the way of predictably, efficiently, and securely closing the books from anywhere
Next, scrutinize period-end processes to identify ways that Accounting can deliver better quality financial information throughout the period, and shorten the traditionally lengthy financial close blackout that hurts Accounting’s ability to support the business
Here are three practical ways you can build a resilient, collaborative, virtual accounting organization.
Encourage Business Partnering by Accounting Continously
Unprecedented economic uncertainty is placing incredible pressure on understanding its impact on financial statements—as early as possible. The effect on financial statements is far-reaching, and in some cases hard to predict, including on receivables, cash flow, asset valuations, inventories, debt, tax, foreign exchange, payroll, and revenue recognition.
FP&A teams require rapid access to data to adjust their rolling forecasts and models. CEOs, business unit heads, and department leaders are looking to Finance and Accounting to understand P&L impact so they can adapt operations as soon as possible to minimize the damage.
The goal of Continuous Accounting is to perform as much accounting work as possible throughout the accounting period, so a more accurate view of financial statements can be generated at any point in time, and ultimately close the books faster.
“We had a lot of silos to organize, and started talking about technology solutions that could bring us the visibility we needed, number one, and then ultimately get us to automation,” says Mayra Herrera, VP of Core Accounting at World Fuels.
Automation can enable a substantial amount of work to be performed throughout the accounting cycle—continuously, robotically, and systematically—with variances and exceptions flagged in real-time for human intervention.
It can dramatically reduce the amount of period-end accounting work in areas like reconciliations by up to 90%. This means not only shortening the close but having a more accurate picture of the financials throughout the period.
Transform the Virtual Audit with Technology
Audits are painful at the best of times. They can be even more challenging when everyone is remote, managing PBC requests and status using spreadsheets, chasing down supporting documentation, and trying to provide requested documents or evidence.
Moving this process to the cloud can provide secure access to centralized, real-time information from anywhere that enables secure, consistent, role-based auditor self-service, reducing both audit costs and effort. Control owners and Internal Audit can start to operate together.
At the same time, external auditors can remain independent of the function. Everyone can work from a common, unified, and up-to-date environment that is accessible from anywhere.
“Audits are a non-event for us now,” says Jeannette Nimmo, GL Global Process Owner at Hyatt. “Auditors can pull the information. It’s a huge time saving for us, and they really appreciate not waiting on us. Internal auditors have access any time they want. External auditors are given access for a limited period.”
RemoteSec: Mitigate WFH Security Risks
Ready for a new term? RemoteSec has now come to the fore, because while working from home is not new, for most accountants working from home full-time creates unforeseen risks.
While the current crisis will pass, increased time working remote is here to stay. Upwork Global predicts that by 2028, nearly three-quarters of all departments will rely on remote workers, OpenVPN found that 73% of VP and C-Suite IT leaders believe that remote employees pose a higher security risk than those onsite.
With spreadsheets, Word documents, and transactional details managed on home laptops and desktops, accounting staff can be more vulnerable to misplacing files or risking exposing data in the case of device theft. Email-heavy period-end processes can also be susceptible to Business Email Compromise (BEC) attacks.
All IT departments typically have policies and infrastructure in place around WFH. However, Accounting must go the extra mile:
Identify spreadsheet-loaded processes where accounting teams are frequently managing data on to their laptops or emailing files to co-workers
Reduce spreadsheet sprawl by moving the data to a single secure online location where accounting can review, approve, and report on it
Set up secure integrations to your ERP and other subledger systems into a financial close management system, rather than relying on ad hoc spreadsheet extracts run by accounting staff
Reduce email communication around period-end, and cut the risks created by files being sent over email by instead using a solution to centrally handle all collaboration, communication, and store all supporting documentation
Charting Your Path to Modern Accounting
The amount of change hitting enterprises and accounting departments at once is dizzying—from fluid business conditions that demand near real-time data to disruptions to how everyone traditionally works. For Accounting, the biggest obstacle to adapt remains manual accounting, which crushes efficiency and collaboration, and creates roadblocks to workforce flexibility.
Accounting organizations that successfully transform how they work will be more productive, resilient, and better positioned to engage, retain, and attract talent in the future. And there has never been a better time for Accounting to step up, be more strategic, and lead with data.
Every organization must determine where they are on the path to modernizing their accounting processes by implementing the right automation and enabling remote workers, so that they can succeed throughout and beyond this period of uncertainty.
Visit our Virtual Close Hub for more resources to help you adapt to working with a distributed workforce in these unprecedented times.