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Frictionless, AI-driven record-to-analyze

February 26, 2021

Next year, you tell yourself, will be different. Next year you’ll be better organized. You won’t leave things to the last minute.

But the months pass, other things take priority, and before you know it, it’s that time of year again, and you’re no more prepared than usual.

I refer, of course, to annual tax returns. There aren’t many of us who carefully file and log each item of information away when it comes in, and make an early submission to the tax office as soon as we have the last piece.

No. Most of us delay. There’s a deadline, so we work to that, instead – and as a result, there’s way more last-minute stress in our lives than there needs to be.

The once-a-month mindset

In business, finance functions tend to be the same. A once-a-month mindset prevails: when the monthly close comes round, there is a rush to draw information together, to reconcile data from ledgers held on disparate systems, to execute checks and controls on transactions coming from upstream processes, resulting in people having to work late to meet the deadline. Compliance depends upon it.

The difference, though, is that the problems with personal tax returns are largely of our own making – but for month-end close, a number of factors are at work. High on that list is the disparity I just mentioned: data sources are all too often mutually inconsistent and disconnected, and until these mismatches are resolved, they are going to create work each and every time the deadline comes round.

AI-driven record-to-analyze

What’s needed is a permanent fix. When processes are re-engineered, when systems are interconnected, when accountants are augmented with artificial intelligence (AI) and intelligent automation, when the data from different sources and ledger are orchestrated and consistency is established, the effort involved in closing the month reduces substantially. In fact, it’s possible to do away with the month-end process altogether.

How so? By embedding intelligent automation and AI into the record-to-analyze (R2A) function. At Capgemini, we have what’s termed AI Controllership. This is an integrated R2A platform with embedded AI controls, real-time journal entries, continuous certifications, a virtual controller, and AI accounting insights, that delivers a seamless, continuous accounting and close.

With AI Controllership, everything can be posted seamlessly and completely – and in real time. It’s rather like that example I just gave of logging and filing your personal tax data as soon as you receive it: it happens straight away. There are no gaps, and no accruals – and what’s more, no one needs to wait until month-end to see how things stand. Instead, they have information that can be pulled up on demand, and at any time.

The difference this approach makes is quite stark. Traditionally, R2A involves identifying and locating errors in upstream processes, and those errors are often the result of the data integrity and inconsistency issues I mentioned. Within what we at Capgemini call the Frictionless Enterprise, the flow of data is seamless, because controls have been put in place at source, and not retrospectively. We eliminate the siloes between the process towers and operate as one frictionless finance function. If any errors do occur, they are identified and corrected as they happen, and not at month-end, and so the data entering general ledger and ERP systems in real time is dependable.

It’s worth summarizing the benefits:

  • Continuous accounting – move away from “once a month” approach to create a balanced workload
  • Continuous analysis – identify errors at source, when transaction occurs. Act earlier, rather than later. Predict
  • Imperceptible period-end close – minimal interference to the Business
  • Finance intelligence – generate insights supporting business and CFO strategy to enable informed business decision-making
  • Confidence – ensure compliance, minimize the risks, and provide assurance to completeness and accuracy of financial statements

One of the most important advantages on this list is implicit in the point about insight. When everything can be processed on demand, and the whole burden of month-end pressures goes away, people can instead spend time on what they do best – analyzing and thinking. Instead of striving to put the numbers on the page, they have them right there in front of them, and they can focus on what they mean, on what they suggest as a course of action for the business. That’s a way more productive use of their time.

Incremental benefits

One last thought. I said just now that achieving the fix of cross-functional consistency may be a permanent proposition. But that doesn’t mean it has to be monolithic. It’s possible to introduce elements of frictionless incrementally, one process at a time. As new elements come on-stream, so the benefits will multiply.

The R2A function is a pretty good place to start. Last year, in this area alone, a major multinational in the media and entertainment business achieved efficiency savings of more than 30%, with a significant portion of achieved through enabling touchless journal entry processing, which is one of the paradigms for continuous accounting.

It’s worth considering, not just because of the immediate benefits it delivers, but because of the implications of extending frictionless principles across the entire finance operation. With less time fighting fires, you’ll have more time to think, and plan – and maybe more time, too, to address the way you approach your own tax return.

To learn more about how Capgemini’s Frictionless Finance can help you start your frictionless  journey towards enhanced R2A processes and improved customer satisfaction, contact:

Robert Piotrowski partners with clients in their transformation journeys, leveraging AI and intelligent automation to reimagine their finance functions.