“Change before you have to” – Jack Welch
If you believe it’s better to stick with “the devil you know,” it may not be surprising that so many finance departments continue to endure the hellish nature of manual account reconciliation.
This is the thing about big shifts in process or strategy: even when it’s obvious it’s better to make a change, taking the first critical steps can be incredibly difficult. No one sets out to make their financial close for the quarter or the year a laborious process, for example, but diving into automation may feel like an intimidating journey into the unknown.
This was reflected in a blog post earlier this month from SAP, which conducted survey data that suggested CFOs and their teams were starting to realize that, despite the uncertainty, something has to give:
“Eighty-three percent of respondents believe their companies would financially benefit from devoting less time, attention and resources to data migration and manual reconciliation,” SAP said. “By working closely with IT, and leveraging technology to automate outdated systems and standardize financial reporting across an organization, CFOs can not only widen the breadth of data insights available, but also deliver those insights more quickly.”
Data aggregation, from multiple sources is the most time consuming aspect of any reconciliation process, but putting tools and technology in place to eliminate the manual aspect of this task is key; it provides the office of finance with more time to focus on the analytic aspect of account reconciliations, essentially understanding in granularity what is transpiring within the respective accounts, this will then feed into the ability to have more depth in its management reporting.
The Tide Is Turning
Believe it or not, but there are signs that account reconciliation is already surging past the tipping point where automation is beginning to demonstrate tangible ROI. Several months ago, for example, consulting firm Robert Half published data showing there’s been an 11% change in the number U.S. teams who reconcile accounts the “old fashioned way.” That’s by no means a seismic difference, but Robert Half suggested the tide is slowly turning:
It seems inevitable that reconciliation work will eventually all be automated. Companies that still reconcile manually need to start planning for change if they’re going to stay competitive.
Both SAP and Robert Half offer tips for making the transition that sound so simple that they could be applied to many similar shifts in business. These include assessing your needs, choosing cloud tools carefully, monitoring the results and making adjustments as necessary.
The process of account recs (aggregating of data into predefined templates) should be transparent to the close process yet the results should be extremely visible to finance as it provides valuable insight into the actual results of the company. Undoubtedly, getting rid of manual efforts to reconcile accounts in a must.