What Is Virtual Accounting?
Virtual accounting is achieved when your accounting and finance teams have the technology they need to perform all their activities and tasks virtually, without needing to be physically present in the office. This modern way of working is more flexible, efficient, and cost-effective.
It’s also scalable and sustainable—unlike the traditional, manual processes that have long challenged accounting teams and bound them to working in a corporate office five days a week. Virtual accounting reduces travel expenses and commuting time, and it can boost productivity with less interruptions.
Regarding the impact the COVID-19 pandemic has had on virtual accounting, Andrew Borsuk, Principal at UHY Consulting says, “At the start of the pandemic, I think a lot of companies were doubting whether they were going to be able to pull off working with a distributed workforce. And companies operating with antiquated systems that were very manual in nature had a much more difficult time becoming virtual, but many have been forced to adopt new accounting automation technologies and undergo some sort of finance transformation.”
Andrew adds, “Leadership needed something that gave them the comfort, visibility, and controls they had back when they were able to walk to somebody's desk, get a signature on something, and be comfortable that the right person had reviewed it. With the right technology, companies can do the same activities that they were performing in person, but now virtually.”
Defining the Virtual Close
During a recent Genpact webinar, 70% of participants said that COVID-19 has had a positive impact on their financial close process.
It was a challenge to pivot so suddenly to virtual work, but it also helped accountants (who have been resistant to change) realize that they are capable of changing the way they work. And it’s caused them to embrace technology and automation that makes their lives easier and equips them to close virtually with confidence.
A virtual close is the successful monitoring and execution of period-end financial close processes in a distributed environment. A virtual close means accounting and finance teams can collaborate from anywhere to unify data and processes across disparate systems, with visibility and reporting on all activities.
Andrew defines the virtual close this way: “It’s using technology to produce financial statements at any time, on demand. First you need the technology. Then you need to look at the underlying processes that are involved, eliminate the non-value, nonessential activities, redesign some process flows, automate, and then, most importantly, continuously evaluate and improve your processes.”
The Role Your People Play in a Virtual Close
When your manual processes are automated, your people have more capacity to do value-adding work.
Andrew explains that a true virtual close is when someone can produce a financial statement at any time, so they have the ability to do real-time analysis—and a finance team needs people with the skillset required to perform that analysis.
How Virtual Accounting Improves Business Agility
The real-time access to accurate and detailed operating data equips decision makers to achieve sales targets and better manage expenses.
“From a business development perspective, they may know when it's time to do inventory—if it’s necessary to increase marketing efforts around a particular product, and make critical decisions in real time. They can also be confident that things like their sales forecast are accurate (or inaccurate), and they can course correct far more quickly,” says Andrew. “This is a focus for us with our clients at UHY Consulting.”
He adds that when companies take weeks to close the books, so much time has passed that information may no longer be accurate or relevant. So companies are making decisions based on old data instead of accurate, real-time data.”
Building Resilience with Virtual Accounting
With an impact on customer behavior, supply chains, liquidity, foreign exchange, country-level operations, and business functions, enterprises are still faced with economic uncertainty.
Finance and functional leaders are continually adjusting forecasts and assumptions, and require faster access to data to do so.
The real-time data that modern, virtual accounting enables better prepares management to tackle future challenges, manage growth, and even analyze trends by regions.
“Say Asia has a downturn in their economy,” Andrew said. “Maybe you'll be able to predict that earlier based on current, real-time data. This gives accounting and finance organizations the ability to shape the direction of the organization.”
He also pointed out that a virtual close allows them to change direction and refocus resources quicker. This gives companies a competitive advantage over those that are making decisions seven to ten business days later, because this team is getting the information closer to real time.”
Keeping Your People From Burning Out
When companies shut their doors last March and accountants began working from home, the line between business and personal was immediately blurred, and it didn’t take long for people to near burnout. After a year of working from home, many accounting and finance teams still feel on the edge.
So, while virtual accounting delivers multiple benefits, if your teams are working remotely, it’s essential to help them set boundaries and remind them to exercise flexibility and take time off—which should be enabled by their modern approach.
On a personal note, Andrew says, “At UHY Consulting, we’ve had to be very conscious of not burning out our staff. But I will say that my team has been very happy to be working from home and accounting virtually.”
Visit our Virtual Close Hub for the resources you need to close virtually with confidence.