Times are changing for all businesses, and retail is no exception.
Many retailers are discovering that to stay in business, they need to rely on online sales and supporting applications more than ever before.
For instance, smartphones let retailers “push” advertisements before customers’ eyes, electronic wallet apps expedite contactless checkout processes, and ubiquitous delivery services make online purchasing accessible to just about every consumer.
These advantages aren’t free, however. They carry new costs and challenges, especially for finance and accounting teams.
More sales channels can add exponentially to order and tender complexities. Subscriptions, which have become increasingly popular, require new billing systems. Growing numbers of payment types, from PayPal to Google Checkout, mean more data streams and mappings.
And regulatory pressures seemingly never let up, with the IFRS 16 and ASC 842 lease accounting standards, in effect since last January, now requiring retailers to account for the costs of what can be hundreds of property leases.
Transactions Are Key
Studies show that nearly 50% of accounting time is spent on transactional activities, which include revenue transactions. For retail companies, speed is critical to processing transactions so that errors and other issues can be reconciled quickly, without waiting for month-end.
Compounding the need for speed is the growing complexity of payment types and data mappings.
“With COVID-19, many retailers are now facing a difficult choice,” says Katie Morris, product marketing manager at BlackLine. “If they’re still using spreadsheets, they’re likely caught in a snarl of new complexities as they try to handle the move to remote operations.
“They need to realize that retail is facing a fundamental change, and they need to change their mindset in order to catch up and get ahead of the consumer.”
To get started, Morris notes that accounting automation will pay immediate dividends in three key areas for retail.
Continuous Daily Reconciliations
Rather than waiting for month-end, or trying to perform ad-hoc manual reconciliations, an automated system can create an integrated link to all order-to-cash data sources. Reconciliations can then occur daily, greatly speeding efforts to find and correct errors.
Automated Transaction Matching
Automated matching is the best means of finding and correcting those errors because it automates the typically burdensome “ticking and tying” process to the point where human intervention is needed only for handling exceptions. This saves time and frees up staff for more value-added activities.
Standardized Policies, Processes & Procedures
Automating accounting processes with a single, unified data platform lets the retailer create a centralized command center for tracking accounting and finance tasks, as well as standardizing and communicating best practices across all groups involved—not just Accounting.
“A unified platform also expedites the move to additional automated processes,” says Morris. “Once the platform is set up, adding processes such as journal entry automation or flux analysis is just a matter of working with your BlackLine expert to turn on functionality within the home page.
“These and other processes all make use of the same underlying data and mechanisms that are already in use for the reconciliation and transaction matching processes. This is the best way for the retailer to finally get ahead of the trends and challenges they’re facing, and will open a path to future growth in a very challenging industry.”
Listen to this podcast on-demand to discover the finance and accounting secrets of high-performing retailers. In the latest edition of The Omni Talk Spotlight Podcast Series with Chris Walton and Anne Mezzenga, BlackLine Chief Transformation Officer Tammy Coley talks about:
How and why manual finance and accounting processes are still holding retailers back
Practical F&A strategies every retailer can use to increase agility
How Red Wing Shoe Company, which operates over 4,000 US retail locations and distributes products in over 100 countries, recently transformed their F&A organization