Part 11 of the Continuous Accounting blog series. You can access the full series here.
Technology is changing the way business is done all around us, but it’s only part of the solution.
True organizational transformation requires adopting a fundamental shift in philosophy: one that combines technology with a focus on reimagining processes, empowering top talent, and embracing a culture of continuous improvement.
Continuous Accounting in Action
The goal of Continuous Accounting is to align the accounting function with the pace and cadence of the broader organization.
The conventional record-to-report model condenses a huge amount of work into a short span of time, typically following the end of the month, and delays certain transactions and key reports until weeks after period end. This is a reactive approach, and the costs of operating this way are high.
It’s also challenging to put together a team that is optimized to handle this extreme spike in workload each period.
With Continuous Accounting, more work is accomplished daily, as business occurs, reducing the spike that currently happens during the close. The demands of period-end won’t disappear entirely, but the overall workload is smoothed to better align with the business, reduce risk and surprises, and lessen the strain on resources.
This allows time for reporting and analysis to happen throughout the month, and eventually, on-demand. And this is when accountants can shine, because they’re finally able to rely on preventive controls, optimize processes to de-risk the organization, and pull a cohesive story from the numbers.
When Continuous Accounting is done well, you get real-time processing, increased time for analysis, and more exceptional accountants. It changes both the talent profile and the output of the entire accounting organization. And it moves toward a point-in-time close that doesn’t massively disrupt the departmental rhythm.
5 Steps to Begin Continuous Accounting
Notice that this is not just an automation story. It’s about when the work gets done, and more evenly distributing it throughout the month to increase efficiency and visibility.
Here are five foundational steps that you can apply in your organization.
- Split High-Volume Processes into Smaller Tasks
Evaluate your monthly or quarterly processes and consider whether they could be handled on a more on-going basis —daily, weekly, etc. For example, credit card transactions could be reconciled weekly, or every few days, to identify issues or reconcile items as they occur.
- Schedule Tasks as Early as Possible
Historically, close tasks are scheduled at the end of the period, creating the spike of work that takes away your evenings and weekends. Instead, identify tasks that can be completed in the pre-close window or as business transactions are occurring, and shift the close schedule so they’re required to be completed sooner.
- Embed Routine Tasks within an Everyday Workflow
When you’re working with a routine task instead of, say, a complex model or judgmental reserve, make it a part of the daily routine.
- Automate where Possible; Standardize Elsewhere
When you’ve successfully accomplished the first three steps, automate as much as technology will allow. Automation frees up your time and reduces the risk of human error.
This also gives you the flexibility to start scheduling these tasks earlier in the period, and standardize routine process where an accountant’s nuanced approach is ideal.
- Monitor Metrics to Adapt & Intervene in Real Time
Finally, report on everything and provide real-time metrics. The best thing you can do with your expertise is weigh in when it’s most important, and the Continuous Accounting approach gives you the real-time intelligence you need to do that.
It also delivers the data, results, and benchmarks necessary for addressing process gaps, anomalies, and discrepancies as they happen – reducing surprises and late entries.
Continuous Accounting is an ongoing, stepwise journey with achievable milestones. And it is a blueprint for the modern, strategic accounting organization.
Read the Blueprint for Continuous Accounting ebook to learn more about how to build your Continuous Accounting machine.