We’ve had ‘cloud’, now it’s time for ‘dreams’!!!
For anyone who’s ever called themselves an accountant (I have!) will at some stage have lived a life ruled by month end. For many including myself, the monthly process which can last weeks, dictates when I can and can’t have time off, whether or not I can book that holiday I’ve been desperate for or even if I can leave the office in time for a well deserved beer. As each month end draws closer I dread the nightmare week(s) I face!
Putting aside my personal problems, a long drawn out month end cycle will be to the detriment of the business. A faster month end close can not only be a sign of how well a company is run but will also put financial information into the hands of managers faster allowing them to stay ahead of the game and make decisions proactively rather than reactively.
But does month end really need to be a nightmare? Does it need to take weeks on end to close the books? Can “Digital” allow companies to become so automated that month end becomes a process that takes place whilst we’re fast asleep in dream world?
Looking back at the organisations I’ve worked for, public or private sector, month end seems to have its similarities. A meticulous accountant (that’s me!) going through budgets, actuals, forecast and any other document I can get my hands on, with more excel spreadsheets open than my laptop can handle at one time, trying to work out how much needs to be accrued, what journals need posting and which balance sheet it needs posting to. But what’s to stop this happening whilst we lay resting in bed at home? If sales ledgers and purchase ledgers were linked to ERP systems, in turn linked to the finance systems, what’s stopping the systems from working out the differences, generating the accrual and getting the journal ready? This could leave one step for me to check the accrual in the morning and sign it off with the click of a button.
There’s no doubt that elements of the month end process can never be automated. No amount of technological advancement can replace processes such as management review. But where a process is entirely transactional and free from judgement, then what’s to stop this becoming automated? In the modern economy companies are always looking to save costs and support functions like finance are traditionally the first ones to get hit. Many companies are trying to offshore transactional finance roles but instead of outsourcing the same problem why not fix it yourself with automation? The question to answer is what should be automated?
Ok I can already hear you saying “what about the cost?” and you’re right. Getting the right systems in place will require significant capital investment. And all of this just to shave a few days off a month end close? No! The use of Digital to affect an efficient month end close is only one benefit from a company’s digital journey. Finance functions are changing dramatically and freeing up time from an accountants day to day job to think more strategically. I think I speak for the majority of those in my industry when I say that I want to spend my time doing value add activities rather than transactional ones. Previously there was a demand for accountants to become ‘business partners’ and now these ‘business partners’ are moving towards a ‘business catalysts’. Finance is no longer the scorekeeper but an operational and strategic corporate decision maker. Digital is setting the environment which enables this to happen.
So what are the benefits?
I mentioned earlier examples such as the ability of management to have information at their fingertips to allow proactive decision making being and cost savings. But the benefits are limitless. Standardisation and automated controls built into the process will results in lower errors and cleaner results. A company which had the digital capability to implement a fast close is likely to have a ‘Digital Advantage’ over its competitors. Capgemini research with the MIT Centre for Digital Business indicates that companies with the presence of a ‘Digital Advantage’, demonstrate significantly better financial performance than their peers, experiencing up to 26% higher profitability
Digital is upon us and now is the time to act. Becoming Digital and getting the right technology in place can change month end from weeks to days, ultimately freeing up your accounting resources to think more strategically. Put the nightmares of rigid process to bed and start dreaming…