Part 2 of our Accounting in Challenging Times blog series. Read Part 1 here.
From staff accountants to controllers and CFOs, the traditional way of Accounting costs everyone—and these costs have multiplied as F&A teams around the world are now working remotely.
Today, we’re exploring the five key pains accountants are experiencing while trying to operate effectively with a distributed workforce and close virtually with manual processes.
Difficulty Accessing Data
Difficulty accessing data is the first challenge, because without the ability to access the information sources you need to perform the close, nothing else can really happen.
Accountants have traditionally been office dwellers, and many teams that have suddenly shifted from an in-person approach to working from home are now struggling to access information.
For example, some companies relied on binders or network access that could only be available in the office. Others relied on shared services centers or BPOs that only had desktop computers, and accessing information and technology remotely was not an option.
Many accounting teams have had to get creative with how they access information or close the books with a more limited approach. This can introduce risk and disrupt controls.
On the positive side, disruption has helped some teams re-evaluate what is truly required to close successfully, and many F&A leaders are reevaluating materiality thresholds, frequencies and levels of review, and prioritizing a cloud approach.
Limited Process Documentation
In talking with accounting leaders and accountants during the past couple of months, I’ve noticed that most said they had some sort of business continuity plan for F&A.
But what’s also become clear is that in many cases, the plan was either not complete, not accessible, or not necessarily the right level of detail to navigate through a crisis like the current one.
Having access to the steps and requirements to perform key close activities is an important part of business continuity. Employees might need to unexpectedly be away from work, roles and responsibilities may need to shift, and a lack of sufficient process documentation or an inability to access it is causing a lot of bottlenecks and issues for accounting teams.
In my previous blog, we talked about risk and how the current environment is introducing new risk to organizations. I think detailed spreadsheets are a perfect example of unnecessary risk.
When companies are relying on manual, complex spreadsheets to finalize results, identify errors, or manage the status of the close, it introduces unnecessary opportunities for human error and prevents companies from finding those errors in a timely manner.
If preparers are forced to copy or roll forward complex formulas and apply them to thousands of lines of data, errors can easily occur. With the current disruption presenting new challenges and distractions, the risk is even higher, as reviewers have even less capacity to perform detailed reviews.
Detailed spreadsheets and related errors can also lead to unexpected control deficiencies and cause unnecessary work for companies and their auditors.
Manual effort has always been a challenge for accounting and finance teams, but the current environment is highlighting the amount of heavy lifting that goes into the close.
Many accounting teams are finding that if it took them five days to close normally, it’s taking at least six or seven days, if not longer, now. This is primarily because of the many individual steps, the sequencing, and the starting and stopping that is embedded in traditional closing processes.
Finding opportunities to automate is a major opportunity to relieve some of this pain. Accounting has often struggled to free up resources to focus on what’s most important or to support strategic initiatives. In an environment like this, a lack of available resources and a full workload could prevent Accounting from providing insights that could inform critical business decisions.
Due to all the disruption, there’s an even greater need for more real-time information. Unifying and automating data and processes makes all the difference for teams working in a distributed environment.
Fully Remote Work
Before this pandemic, working remotely was often seen as a benefit or a perk, as many organizations were not equipped to allow this—especially during close. But disruption forced change upon all of us.
Many accounting teams didn’t realize how dependent their processes were on in-person touchpoints and on-premise solutions until now. At the start of this pandemic, companies with modern, agile solutions and processes found themselves adapting with confidence, while those relying on traditional manual processes found that they just weren’t sustainable.
For those companies that weren’t prepared, it’s important to identify low hanging fruit, prioritize transformation, and find incremental wins each close. And finding the right technology partner to enable change is a huge part of getting started.
Read our virtual close playbook to learn more about how you can alleviate the pains of manual processes, undocumented institutional knowledge, disrupted business continuity, limited access to real-time data, and a fully remote workforce.