Part 1 of the Risk of Manual Processes blog series. You can access the full series here.
Accounting and finance departments have a vital responsibility to produce accurate and complete financial statements. The business depends on these results for effective decision-making, compliance, forecasting, and strategic planning.
Trust begins with a reliable output, but if those numbers are produced by manual processes—well, it’s no wonder accountants are feeling the pressure.
The close process is weighed down by manual, repetitive tasks (think mile-long checklists and complex formulas) that absorb accountants’ valuable time and introduce risk. Weaknesses and inefficiencies in the balance sheet substantiation process often lead to misstatements and control deficiencies, which can result in costly penalties and fines, stock price deterioration, damaged public image, litigation, and even bankruptcy.
Accuracy and integrity are the ultimate goals, but the intensely manual nature of this process puts those goals in jeopardy.
Here are three factors that introduce risk and kill confidence during the financial close.
Error-Prone Account Recs
An account reconciliation is only as good as its ending balance. If the process of agreeing a reconciliation to the general ledger is a manual one, it is inherently error-prone.
What happens when someone records a late entry or a job runs later than expected, pushing transactions through to the ledger but not your spreadsheet? If there is nothing in place to alert you to these adjustments, you’ll always be stuck with that looming feeling of: should I triple check one more time? Did I get everything? Are the numbers accurate?
We’re all familiar with that feeling of overwhelm that comes from opening a file with 30 tabs: “Every reserve model since 2013 can be in there. Where do I begin?? How do I know what I need to be looking at, and how on earth am I supposed to find it?”
A lot of accounting processes start with a roll forward, and when you’re locked into this habit, it can result in unnecessarily large and confusing files.
The reality is that your attention is only needed on a small portion of that spreadsheet, but when a document takes on a life of its own, it can quickly consume valuable time—wearing you out before you even begin.
If a formula in one of those 30 tabs is off by a column or row, you now have an error that is difficult to identify and correct. In massive spreadsheets, a small error could result in a significant oversight or misstatement. And when accountants are responsible for numerous files, it becomes unrealistic to assume that every formula can be thoroughly checked each month.
Drag something incorrectly, copy and paste it in the wrong spot, add an extra row, hit backspace one too many times, and an entire workbook is compromised. This is why teams who are accounting manually live with the fear that something slipped through the cracks.
It’s Time to Boost Your Confidence
The most effective way to automate error-prone, manual tasks that exhaust resources is a finance controls and automation platform.
Instead of working frantically at month-end to aggregate close data, you can automatically import data into a unified platform from almost any ERP. Instead of manually matching transactions over hours or even days, you can systematize this process and complete the same task in mere minutes.
And instead of dealing with doubt every time you need to hand over those financial statements, you can deliver them with confidence, knowing they’re complete and accurate.
Finance automation reduces human error, increases standardization, improves visibility, ensures stronger controls, and streamlines internal and external audits. Companies can save a significant amount of time while ensuring a more accurate financial close. Without compromising quality, accountants can close the books faster than ever before, leaving time for critical analysis and business partnership.
The right platform equips organizations to start making truly real-time—not behind-the-times—business and strategy decisions. And this is how accounting and finance can finally earn a seat at the table.
Read this brief to learn more about how you can close with confidence and be done with doubt.