A CFO’s Guide to Transforming the Close - Events · A CFO’s Guide to Transforming the Close...

www.cfo.com | www.blackline.com

A CFO’s Guide to Transforming the Close MODERN FINANCE CHIEFS LEVERAGE PEOPLE, PROCESSES AND TECHNOLOGY

©2017www.cfo.com | www.blackline.com

INTRODUCT ION

As the end of the month, quarter, or year rolls around, many finance teams find

themselves putting in long hours. Two-thirds of respondents to a recent Institute of

Management Accountants (IMA) survey say they face pressure to speed the close,

which is the reason they are working late into the night to meet their organizations’

financial reporting demands.

What’s even more disheartening is that only 28% of the IMA survey respondents

trust their financial reporting, and even fewer — 20% — are happy with their current

closing procedures. Some of the biggest concerns surrounding the close are

collecting data from other departments and correcting errors.

Does the close and reconciliation process have to be this roller coaster ride that

yields such unsatisfactory and unreliable results? Experts point to the continuous


close — distributing routine tasks throughout the period and automating rote

processes — as a way to reduce the last-minute crunch.

A more efficient close procedure is needed to accommodate the changing role

of the finance chief, and the evolving nature of business, experts noted. Today’s

finance professionals are focused on building efficient accounting operations,

maintaining accurate financial statements, enforcing strong financial controls and

executing a clean audit.

“Finance chiefs are strategic advisors to the business, which involves a strong

understanding of the performance of sales, marketing, operations and other facets

of the organization,” says Susan Parcells, Senior Director, Finance Transformation

at BlackLine, a finance automation solution provider. “It is the role of finance to


provide data-driven insights to support business decisions.”

While basic accounting knowledge is still critical, there is also a need to be adept

at risk management, technology, Big Data, and project management outside of

the accounting scope. “Transformation will take place by emphasizing automated,

real-time processing that frees up highly skilled employees to provide proactive

analysis,” Parcells says. “Finance leaders have to think about technologies such as

robotics that can handle some of the routine tasks.”

As a result, forward-thinking companies are looking to upgrade their systems and

processes as finance moves beyond the traditional accounting tasks into a role of

strategic business partner. According to Accenture’s Digital Disruption Impacts by 2021 study, automation will yield a 40% reduction in finance costs and a two- to three-

times improvement in productivity. This will enable finance teams to spend 75% more

time on analysis, and a three-fold increase in performing analytical tasks.

Topics explored in this eBook include:

�The benefits of distributing and automating some of the routine tasks surrounding the close;

�How CFOs can be agents of change to transform finance with the right people, technology, and processes; and

�A look to the future of the people, processes, and automation to improve the financial close.

A CFO’s Guide to Transforming the Close


Always Be Working TowardClosing the BooksFor more predictable outcomes, as well as more predictable work

days, progressive finance teams are implementing Continuous

Accounting processes. Continuous Accounting embeds automation,

control, and period-end tasks within day-to-day activities, allowing

the accounting calendar to more closely mirror the activities and

demands of the broader business.

“This doesn’t mean that the close never ends, but it does mean

having a smart strategy for handling rogue, mundane tasks by

spreading them out across the month so that you can dedicate

more time for analysis,” says Parcells.

As close and reconciliation tasks are broken down into smaller

and smaller chunks, and more automation is brought into play,

reconciled and validated reports are produced with virtually no

added work, according to experts.

“This doesn’t mean that the close never ends, but it does mean having a smart strategy for handling rogue, mundane tasks by spreading them out across the month so that you can dedicate more time for analysis.”

— SUSAN PARCELLS, SENIOR DIRECTOR, FINANCE TRANSFORMATION, BLACKLINE



Parcells says splitting up processes into manageable, logical

increments can ease the crunch at close time. “If an invoice comes

in in January, but it will be amortized on a monthly basis, don’t wait

until the end of each month to enter that data into the system. The

more work you can get done up front, the less chaotic the close will

be,” she advises.

There are benefits to what Parcells describes as a “soft” close — a

process in which the final numbers are not available but the majority

of the data is in the system. “While everything is not done or in, the

‘soft close’ enables you to make an assessment on where you stand

and get a feel for where the business is headed.”

How CFOs Can Lead the Driveto a Better Close To successfully transform an organization’s close and reconciliation

processes, a finance chief must exhibit a willingness to experiment

and push the limits, Parcells observes. “You need a leader with vision

who recognizes that they’re going to have to challenge the way

we’ve always done things.”



While being a visionary is important, finance chiefs also need

to prove the benefits of streamlining and automating the close.

“Modern finance chiefs need to have the ability to collect data for

quick and easy benchmarking. The idea is that if it moves, automate

it, and measure everything to identify areas for incremental

improvement,” Parcells advises.

Tim Coburn, Assistant Financial Controller for Graham

Construction, a provider of integrated construction solutions, says

a lack of transparency was one of the challenges that led him to

spearhead a transformation of the company’s close.

Another issue was the company’s complex legal structure. “We had

many individual accounts, all requiring reconciliation,” Coburn recalls.

The lack of standardized recordkeeping also made the close process

challenging. According to Coburn, “Records were not managed in

a timely manner, they were not complete, they were in an incorrect

location, or they were not reviewed. This made it difficult to know

what was done and when it when done.”

“Records were not managed in a timely manner, they were not complete, they were in an incorrect location, or they were not reviewed. We recognized that there was a need for change.”

— TIM COBURN, ASSISTANT FINANCIAL CONTROLLER, GRAHAM CONSTRUCTION



Concerns around higher audit fees and a greater risk of

misstatements also spurred the company to automation. “We

recognized that there was a need for change,” Coburn says.

The company is pleased with the results since implementing

BlackLine, Coburn notes. The benefits of automation include:

�Role-based workflow management, risk weight, and

prioritization of reconciliations;

�Standardized information contained in reconciliations,

resulting in consistent documents;

�A transparent view into account balances, resulting in

more accurate and relevant reconciliations; and

�Email warnings and reminders producing more timely

reconciliations and better management of data.

The goal is to build a team of trusted senior accountants that can

make data-driven business decisions, Parcells says. “As a CFO, you

want to build a great team and unleash your people.”


Left unexamined, manual processes, together with expanding data volumes,

hamper the finance team’s ability to shift from back-office accountants to strategic

business partners. Human-driven — and error-prone — manual procedures to

close the books and reconcile accounts expose companies to the undue risk of

inaccuracy or, worse, restatement.

End-to-end process automation is critical for keeping pace with change and elevating

the strategic role of finance. According to The Hackett Group, top-performing finance

organizations take four fewer days per cycle to close compared to bottom performers

and have 90% greater automation. The result is lower costs and lower audit fees. While

top-performing finance teams have 63% fewer full-time employees relative to bottom-

performing finance teams, they have 24% more full-time employees who are focused on

value-added initiatives than their lower-performing counterparts.

CONCLUS ION


The shift toward Continuous Accounting involves rethinking the way that accounting is

done throughout the organization. According to Parcells, “It isn’t just changing accounts

receivable or accounts payable, but moving toward modern processes that make

accounting a strategic function.”

Moving to a continuous close and automating routine tasks sparks new thinking about

account balance reconciliation, among other processes. “We are now able to look

at what type of reconciliation is needed for each type of account based on data and

analysis, Coburn says.

Many organizations are resistant to change, and Coburn says the best way to counter

pushback is to have a well-thought-out plan. “I would advise developing a plan far

in advance to ease any concerns. In addition, conduct thorough testing of what

reconciliations will look like using your own data.”

Key takeaways from this eBook include:

Break the rigid accounting calendar of legacy processes to meet the needs of modern business;

Empower finance to provide strategic value and better guide business decisions with real-time intelligence;

Facilitate process standardization, technical automation, and continual analysis; and

Modernize management reporting and analytics to increase data quality, efficiency, and consistency to compare operational outcomes.


ABOUT THE SPONSOR

BlackLine is the creator and premier provider of Enhanced

Finance Controls and Automation (EFCA) software to streamline

financial close operations. BlackLine’s unified cloud platform

and broad range of solutions puts it in a class by itself — a

company recognized by Gartner as a Leader in providing both

EFCA and Financial Corporate Performance Management

(FCPM) software solutions.

BlackLine is designed to automate and control financial close

processes for midsize and large organizations, and complement

ERPs and other financial systems. The SaaS solution increases

operational efficiency, real-time visibility, control, and compliance

to ensure end-to-end financial close management, fueling

confidence throughout the entire accounting cycle.

BlackLine’s mission is to continuously improve the quality,

accuracy, and efficiency of Accounting & Finance by centralizing

key accounting functions within a single, unified cloud platform.

BlackLine enables customers to move beyond outdated processes

and point solutions to a Continuous Accounting model, which

embeds real-time automation, controls, and period-end tasks

within day-to-day accounting activities. As a result, BlackLine helps

companies achieve Modern Finance and ensure an efficient and

more accurate financial close. More than 1,800 companies around

the world trust BlackLine to ensure balance sheet integrity and

confidence in their financial statements.

A CFO’s Guide to Transforming the Close - Events · A CFO’s Guide to Transforming the Close...

Documents

Transcript of A CFO’s Guide to Transforming the Close - Events · A CFO’s Guide to Transforming the Close...