Part 12 of the Continuous Accounting blog series. You can access the full series here.
Change is the biggest catalyst for Continuous Accounting because business never stops. When the accounting for these business activities is only “on” for a subset of days each month, it creates a disconnect.
The expectation of processing, posting, and validating millions of records in real time, at scale around the globe, is difficult to meet. Finding the time to do it all and still have the capacity to analyze and act on the data is even more daunting.
Many record-to-report processes still rely on old technology—spreadsheets, emails, and PDFs galore. These tools are an improvement over the even more outdated green bar paper stored in binders.
But they still require the close process to be condensed into a frenzied, end-of-month period, where all documentation and data are aggregated and reviewed through “brute force”.
The Impact of Innovative Technology
Continuous Accounting doesn’t wait on outdated tools, and therefore it also doesn’t produce an end-of-month task deluge. Instead, this approach leverages innovative solutions to automate manual tasks, reduce accountant effort, and increase efficiency, accuracy, and visibility.
It enables forward-thinking companies to enhance and re-think legacy processes and develop talent, propelling finance and accounting resources from executors of rote tasks to strategic business partners.
According to Accenture’s Digital Disruption Impacts by 2021 study, automation will yield a 40% reduction in finance costs and a two to three times improvement in productivity. This will free finance and accounting teams to spend 75% more time on analysis and provide the visibility that finance executives need to inform decisions.
The Sweet Taste of Success
The Hershey Company is moving toward a Continuous Accounting approach.
“As a global organization, having visibility to the entire balance sheet is a need,” says John Zimmerman, Director of Financial Data Systems at Hershey for the last seven years. “The more global we became, the more oversight we needed into the chart of accounts. We were looking for process efficiency around balance sheet control, preparation, and reconciliation.”
Early in 2017, Hershey decided to implement five BlackLine products, in tandem with an SAP S/4HANA deployment, using a staged approach: Account Reconciliations, Task Management, Consolidation Integrity Manager, Journal Entry, and Transaction Matching. They began a training program for employees to facilitate quick user adoption.
At the same time, Hershey worked with BlackLine to establish the connectors between the SAP and BlackLine systems and to define the necessary information to begin to pilot and use Account Reconciliations.
As a result, Hershey's accounting and finance teams have gained enhanced efficiency and visibility during each account reconciliation and created greater consistency across accounts. They alleviated potential risks from lack of oversight and automated journal entry processes for quicker analysis.
Elevating the Role of F&A
This advanced level of end-to-end process automation is critical for keeping pace with change and elevating the strategic role of accounting and finance. The results of upgrading business performance through automation are substantial, and impact the business on every level.
According to PwC, best-in-class F&A organizations run at a 40% lower cost than their peers, yet spend 20% more time on analysis versus data gathering. Companies are also seeing faster financial close cycles, doubled accounting efficiency, and a more satisfied and engaged accounting and finance organization.
It’s Time to Make This a Reality
Continuous Accounting is a unique journey for every organization. Each accounting and finance team begins from a different place, approaches process improvement in its own way, has a different mix of technology, and defines success differently.
But the goal is the same: to gradually increase efficiency and fluidity in processes and adopt a culture of embracing change.
Read the Blueprint for Continuous Accounting ebook to learn more about how to achieve this transformative approach at your organization.