Strategies to Leverage Gen AI for a Touchless Close

Blog post

Generative artificial intelligence (Gen AI) and other AI technologies are disrupting how finance and accounting (F&A) organizations operate while reinventing what is possible. A record-to-report transactional processing Gen AI-driven transformation is fast approaching:

Today’s reality: human effort assisted by rules-based automation

Tomorrow’s reality: autonomous processing by AI agents that request human support by exception

The Touchless Close: Why the Need?

Senior F&A leaders are asking, often and with a sense of urgency, “How can I get to a touchless close?”

They are asking this question because F&A organizations must focus on business partnering (e.g., deliver greater value; provide more prompt and sophisticated business and competitive insights) in a dynamic and competitive business environment. And do this without adding human resources. It is now a business imperative to move toward a touchless close.

The Touchless Close: What to Expect.

Does the touchless close mean that we walk in on Day +1, and it is all finished – the books are closed, management reports have been developed and distributed, and regulatory filings have been prepared and transmitted? That the only thing we need to do is grab a cup of coffee? Not likely (in the near term). Here, though, is what we should expect:

Transaction Processing / Subsidiary Close / Controls:

All transactions are recorded and seamlessly interfaced with the GL. Automation looks at the ledger real time and finds outliers, analyzes and groups the outliers, hypothesizes on the reasons for the outliers and provides recommended dispositions. Key controls are perpetually tested. Controls design recommendations are made by the systems.

Enterprise Consolidation:

Calculations are made automatically. JEs are automatically prepared, in accordance with dynamic materiality standards, and presented for approval and posting. Eliminations are made automatically. Analytical reviews of accounts are performed automatically. Flux explanations are prepared and presented to management.

Reporting:

Robust and accurate drafts of management reports and commentary are automatically prepared. Instead of compiling and looking at a blank slate of paper. F&A professionals can “take their pens out’ and focus on review and offering value added insights. The same can be expected for statutory filings.

F&A Human Resources:

According to The Hackett Group® the typical F&A organization currently spends 56% of its time compiling data as opposed to performing value added analyses and business partnering. This is a lose-lose. Support for the business is sub-optimal and F&A professionals are underutilized and do not grow professionally. This lose-lose is also true for top performing companies (i.e., 35% spent on collecting and compiling).

This would be different in a touchless close environment. In a touchless close, it is a legitimate expectation that F&A professionals would bring an intelligent business perspective to the information and would bring critical thinking and problem- solving skills and expertise to financial and organizational issues. A touchless close process would provide them with the needed capacity to deliver on higher expectations.

Targets. Enablers. Inhibitors.

	Transaction Processing / Subsidiary Close / Controls	Enterprise Consolidation	Reporting
Target	Touchless	Minimal Touch	Minimal Touch
Enablers	-Simplified systems architecture and workflow -Real-time end-to-end controls -Automated anomaly detection and correction -Data assurance -Dynamic close management	-Real-time connectivity -Automated calculations, automated journal entries -Daily automated account reconciliations -Automated anomaly detection and correction -Automated creation and booking of accruals, adjustments	-Standardized definitions -Natural language generation (NLG) -Agile orchestration -Visualization tools
Inhibitors	-Business changes -Lack of data readiness -Risk and materiality -Process quality issues	-Legal entity structure changes -Management reporting bloat -Allocation complexity	-Changing regulatory requirements -Inconsistent statutory interpretations -Legal and Board of Director reviews -Stakeholder expectations

Gen AI Will Support the Journey to the Touchless Close

Domain-specialized AI solutions are expected to deliver high record-to-report productivity gains. According to The Hackett Group ® 46% of organizations expect that Gen AI will yield high productivity gains (e.g., >70%) in transaction processing; a similar percentage of organizations expect high productivity gains in anomaly and fraud detection.

Area	Leading Company Expectations from Gen AI
Transaction Matching Analysis	• 71% expect faster reconciliation of accounts leading to high productivity, lowered costs and reduced effort
Journal Entry Creation	• 67% expect higher JE automation to drive significant productivity gains • 50% expect a faster close cycle time
Accounting Policy AI-enabled Chatbot	• 57% expect query resolution efficiency to drive high productivity gains in the application of accounting policy and standards
Technical Accounting Research	• 43% expect stronger compliance with new accounting regulations resulting in high productivity gains
External Reporting	• 43% expect increased speed to drive high productivity gains • Meaningful improvements are expected to drive lowered costs and improved employee fulfillment
Cost Allocation Scenario Modelling	• 57% expect faster, more comprehensive, and deeper insights/analysis to drive high productivity gains

Governance. Ethics. Risk.

AI governance and ethics are front of mind. 81% of companies have established (or are establishing) an AI governance framework. 73% of companies have established (or are establishing) ethical guidelines for AI usage.

Top risks cited by record-to-report organizations are Gen AI model accuracy, data quality and integrity, and data privacy and security.

Final Thoughts: This is the Time

This is the time. Solution providers are quickly and aggressively embedding GenAI and domain specific capabilities into their offerings.

F&A organizations must build a roadmap toward a touchless closing. They must assess risk, implement governance models, set up ethical cultures for using Gen AI and address data quality and security.

The next several years will decide which F&A organizations will, sadly, “specialize in heads-down” processing,” and which, through their embrace of Gen. AI will become intelligent F&A organizations.

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