Automating the ‘last mile’ of finance

29th September 2014

Accountancy was one of the earliest professions to exploit business automation tools: when the first spreadsheet, VisiCalc, became available back in the 1970’s the ‘killer app’ was so popular that accountants bought computers just so that they could use it – helping to kick start the personal computer revolution. Since then, our personal and professional use of information and communications technologies has evolved significantly and the finance function has embraced all sorts of specialist applications: from budgeting and tools, through enterprise resource planning (ERP) systems, to online procurement platforms. Yet some processes have remained stubbornly spreadsheet and paper-based, and the financial close is one of them, says FSN writer, Lesley Meall.




Now, according to a recent report from the analyst firm Gartner, a step change could be on the horizon: witness the renaming, by analyst Nigel Rayner, of the ‘close/reconciliation management’ class of software application to ‘enhanced finance controls and automation’. “These solutions cover many of the functions required to automate the ‘last mile of finance,’ that is the processes required to finalise period-end accounts,” says the report, adding that over the past year, the functionality of the products in this class has extended, “beyond the month-end close into a broader solution that can enhance the management and control of any finance process throughout the accounting cycle”.

You can download a free copy of the relevant Gartner report by registering here with the specialist software provider BlackLine Systems; and for those of you who are wondering why a software provider is giving away copies of a $1,995 research reports, the answer is that the analyst firm is now singing from a hymn sheet that BlackLine has been singing from for some years. “In announcing the renamed category, we believe Gartner has validated our vision for financial control and automation technology,” says Therese Tucker, CEO and founder of BlackLine, a provider of tools to automate the manual and spreadsheet-based processes that typically characterise many financial close processes.

As deadlines loom, the close process often involves late nights and weekend spent reconciling, balancing, posting journal entries and researching discrepancies; but it doesn’t have to be this way. Tools to help organisations automate and better manage the last mile of finance have become more plentiful over the past decade. BlackLine isn’t alone. Varying amounts of ‘close to disclosure’ functionality is now built into the performance management products of Host Analytics, IBM Cognos, Oracle Hyperion, Trintech and others – and they are constantly being updated. The latest release from Tagetik, for example, made user navigation and customisation easier, speeded up consolidation, and improved mobility (as FSN reports in more detail here).

To gain real insight into what can be achieved by automating and speeding up financial close processes it helps to go straight to the horses mouth, and learn from the experiences of other finance professionals; such as Danny Long, a senior accounting to reporting specialist with consumer goods giant Kimberly-Clark, who has overseen the introduction of a web-based BlackLine system for global account reconciliation. “Our main area of concern when I took the project on was how we cope with our treasury banking work in the reconciliation area,” says Long, who oversees a team of outsourced general accounting colleagues to ensure that the processing of month-end transactions is accurate, timely and complies with internal controls.

“The system gives us a central place to consolidate our information,” says Long, and it has provided Kimberly-Clark with some key controls and audit evidence, an area where there had previously been deficiencies. “BlackLine gives us full visibility and transparency of our reconciliation process, with evidence of preparation, approval and review processes,” he says, “and the fact that we can genuinely prove that people are preparing and configuring reconciliations has given us a great level of comfort in our business.” Automating the monthly and quarterly reconciliation of 25,000 general ledger accounts is also more efficient. “We’ve saved somewhere in the region of 14,000 man hours on reconcilations for Kimberly-Clark global,” says Long.

Przemyslaw Seroka is now the CFO at SMT SA, a business software producer and outsourcing specialist, but when he was the financial systems development manager at Empik Media and Fashion SA he used Oracle Hyperion applications to improve financial reporting and cut the time required for this; something he explains by citing the key performance indicators (KPIs) selected to measure success. The first KPI was the amount of time required for data preparation. “We managed to completely shift the percentage of time required,” he recalls, from 10% of the time spent on data analysis and 90% of time for data preparation, to 10% of time for data preparation and 90% of time for analysis.

The second KPI was the time taken to produce monthly reporting packs. “It used to take around four days and it was cut down to around 30 minutes,” which he attributes to the combined use of Oracle Hyperion Financial Management and Oracle Hyperion Financial Data Quality Management (which helps companies to standardise financial management processes using web-based workflow). It was a system implementation Seroka learned a lot from. “At the start of the process, people were reluctant,” he recalls, until they realised that they were not just getting more spreadsheets. “Then, when they see how much power and flexibility the system brings, their information needs grow and they start generating more and more reports,” he says.

The financial close can also be made more efficient and effective by using technology to automate parts of the financial close process in a way that makes it easier for those involved to collaborate and communicate - as well as giving them better visibility into their close processes. RTI Metals has been using an accelerated financial reporting module (AFRM) from Hyland Software and Silicon Valley Accountants to get people more engaged in the financial close process. “AFRM works by taking all of those closed processes that we used to have to have in a notebook, in an Excel file, or taped on somebody’s filing cabinet, and putting them into a database that has visibility to all of our users,” says Brian Vondran, corporate controller at RTI Metals

“All of those closing tasks and all those closing journal entries are now in AFRM,” says Vondran, in a centralised repository, which is used with alerts and emails to give everyone involved the insight they need into the close process. “You don’t have to wait for team members to update the checklist, or for a close meeting to get status updates,” he says, as every step of a process monitored. The controller, the CFO and various other managers can see where they are in the close process at any given time and the people in finance always knows what they need to do to complete it. “Before we used AFRM our close process was what I would consider a dark process,” says Vondran, “now everyone has much greater visibility.”

If none of this echoes your financial close experiences, now might be a good time to revisit financial control and automation tools. “They can reduce the time and resources required to execute the month-end closing, balance sheet reconciliation and other financial processes. Many can be deployed across multiple core applications, enabling organisations with a heterogeneous financial application landscape to improve and better control their finance processes without major investment in the underlying applications,” says the Gartner report. “If your current close and other financial processes are manual and rely on spreadsheets, evaluate within the next 12 months” it suggests, “and look for solutions that will enable finance to improve both controls and process effectiveness.”