Top Performing Organizations are Driving Toward An Automated Digital Close

A Core Element of the Finance Value Chain

Record to Report is at the center of the finance family of processes and plays a critical role in the finance information value chain — transforming transactional data from upstream operational processes into complete, correct and compliant information — information that can be used to populate the group consolidated results; feed reporting processes at the legal-entity level; and provide the basis for statutory reporting — information that is also consumed by finance and other business areas to develop insights and support critical management decisions.

Because Record to Report is an essential link in the flow of internal information, financial transformation initiatives must maintain a strong balance between cost reduction, information integrity and service quality.

Complexity: Controllable vs. Non-Controllable

The promise of technology is impacted by underlying complexities. More often than not, it is the controllable complexity decisions that create many of the challenging hurdles. Business complexity is essentially non-controllable for Record to Report professionals but the service delivery model decisions (people, processes, technology) are controllable. Record to Report professionals and leaders need to answer a couple of questions:

• What is causing our complexity? Have we over-engineered?
• What is slowing down our ability to drive to a digital future?

Recent studies by The Hackett Group support the concern over unnecessary complexity. Seventy-five percent (75%) of companies still have concerns about the manual effort in their close, consolidation and reporting process(es); Fifty-five percent (55%) are concerned about the number of manual postings, and 47% have concerns over systems interfaces.

Record to Report Organizations Must Reduce Complexity in Key Areas:

• Tasks in the close process
• Master data structures including stewardship, control, quality and consistency
• Policy, process design and service placement
• Role and responsibility clarity between upstream and downstream processes

Key Trends Impacting Technology Decisions

Record to Report professionals must harness all the tools that are available to them. Much of the digital magic comes from having keen awareness of the capabilities of technologies and then effectively combining said technologies including ERP, best-in-breed purpose-built, and RPA:

• Digital technology is rapidly changing the way we work
• There is a need to reimagine how we execute processes
• New digital tooling will co-exist with traditional technology
• There is a constantly evolving system of digital technologies
• Ambitious design thinking is a key to ERP re-platforming

Record to Report Automation

Successful automation depends on identifying process areas with high volumes or that require a significant degree of human touch. The usual suspects include journal entries, account reconciliations, intercompany accounting, the management of workflows around master data, and the preparation and issuance of standard analysis and reports. Top performers in this area:

• Focus on automation – They have already achieved synergies and wage-arbitrage benefits through centralization, so they concentrate on automation for productivity enhancement
• Target higher-return projects – Top performers are more likely than peers to adopt bolder and more creative solutions
• Screen processes carefully – Top performers are more successful than peers at selecting value-creating automation because they use strong criteria and maintain a disciplined approach

Transformational Technology Program

Key questions to ask before embarking on a transformational technology program are:

• What benefits are you looking to gain from the technology investment?
• How do you intend to articulate the benefits of technology to senior stakeholders?
• What specific investments are needed to improve the efficiency and effectiveness of your specific Record to Report process?
• What methodology are you going to follow and how are you going to execute transformational change?

Digital Record to Report is not something that just arrived or may be coming soon. It is already here. The big change is that companies are accelerating this transformation. Accelerate or be left behind!

Written by: Bill Marchionni, Account-to-Report Advisory Global Program Leader, The Hackett Group