The ROI of Automated Reconciliations and Close Management

A recent study by The Hackett Group found that accountants and financial personnel spend 65% of their time on manual, low-value processes. These are tasks such as reconciliations that accountants spend countless late nights completing and leave no time for completing more strategic tasks. With a growing amount of pressure on the CFO and office of finance to produce more results and increase the integrity of the financial close, more CFOs are turning to automation to fill these gaps.

Here are two of most challenging aspects of the financial close—reconciliations process and close management—and the return on investment (ROI) organizations can reap from automating them.

Challenge #1: Manual Reconciliation

The primary tool finance teams have historically used is spreadsheets, which have created a manual, disjointed and high-risk environment for organizations, especially when it comes to the reconciliation process.

With spreadsheets, the bulk of the reconciliation process tends to be split in two categories:

• Gathering and formatting the data
• Manually performing the matching process

Due to the inherent lack of visibility of spreadsheets, many bottlenecks and errors arise, consuming more time to complete the process and increasing balance sheet risk. These can include:

• Forgotten accounts or reconciliations, or multiple people performing the same reconciliation without knowing
• Write-offs due to a high volume of transactions to reconcile, in which some are duplicated or lost
• Month-end batch posting to accommodate discrepancies, also resulting in delayed investigation time and write-offs

An Automated Approach to Account Reconciliation

With a traditional, manual approach to reconciliations the time and effort split of finance teams tends to be 90/10, with 90% of accountants’ time focused on data management and matching, and only 10% of their time directed towards exceptions.

Automated account reconciliation automatically reconciles low-risk, non-key accounts and flags inconsistencies. This shifts accountants’ time and effort to exceptions, such as identifying the core issues that created the exception and working to improve organizations’ process to decrease exceptions over time. Additionally, this shortens the financial close process due to faster, continuous reconciliation.

Challenge #2: Manual Close Management

In many organizations, the manual management of close activities is conducted through spreadsheets of various sizes and a checklist to ensure all the critical activities in the financial close are managed. However, because manual methods are so repetitive and time-consuming, it is easy for finance teams to skip steps and forget to add tasks to the checklist. Therefore, the close checklist only exists in accountants’ heads, while the physical list is never updated. This significantly affects the entire organization, because it affects the accuracy of the financial reporting from the close, and leadership makes large-scale decisions from the data in the financial reports.

An Automated Approach to Close Management

Implementing automation into your financial close process gives finance leaders a consolidated, central location to manage the close. Between the ability to track the completion of close activities, assign tasks to certain team members and monitor the approval of specific tasks, automation gives you back the visibility into your close activities that spreadsheets don’t allow. Financial automation moves the close checklist from your team’s heads to a single system and enforces the checklist, so finance and accounting teams aren’t forgetting to perform certain activities and increasing the risk profile of their organization.

ROI of the Right Solution: The Adra Suite

Though the prospect of moving your financial processes from manual methods and spreadsheets to an automated solution might seem challenging, it is necessary for a more streamlined, accurate close. The Adra Suite delivers four products that seamlessly integrate with your ERP to complete your financial close.

Each product works together to save your office of finance time, effort and money to close faster, in addition to improving data accuracy and reducing your risk. In the Adra Suite,

• Automated transaction matching lets you focus on handling exceptions.
• Matched transactions seamlessly integrate into account reconciliations.
• Centralized checklists and documents provide full visibility and control of the entire financial close from start to finish.

Another insight from The Hackett Group revealed that finance departments are seeing significant results from the increased sophistication automation tools, with labor and outsourcing costs being cut by 20%-35%.  Automating the financial close process provides ROI in both a financial savings and time savings allowing your team to focus on higher value tasks.

Estimate your specific organization’s ROI savings from the Adra Suite with our calculator.

To see another company’s ROI and benefits with the suite, read the Genesis Systems case study.

Written by: Ashton Mathai