Staying on Track During a Finance Transformation Project

Finance Transformation Project

Written by Claudia Pirko

If you’re sitting in the finance department of a mid or large-sized organisation, chances are there’s a significant transformation occurring all around you. Processes are being removed or replaced and new technologies are evolving workflows.

What you’re experiencing could be part of a wider digital transformation program taking place throughout the organisation. All operations may be under review to identify where efficiency gains can be made and operational costs reduced.

The bottom line is that such transformation projects are a journey rather than a destination. Progress may have already been made, but it’s highly likely there is still more to be done. Providing better insights into operations, shedding low-value workloads and revamping legacy accounting tasks that create risk are all still to be achieved.

Benchmarking progress

Because of the ongoing nature of financial transformation, it can sometimes be difficult to accurately assess how much progress has been made and where current efforts should be focused. To ensure a transformation remains on track, it is important to evaluate the following five criteria:

  • Speed: The biggest concern for many CFOs is that finance and accounting won’t meet reporting deadlines. If your financial close is averaging more than five or six days, there is room for improvement. However, the key is not only being faster, but also achieving improvements without increasing risk, removing controls, or burning out accounting teams.
  •  Cost: On average, organisations spend 1.2 per cent of revenue on their finance functions, which includes personnel, systems, and other costs. For those organisations at the higher end of the cost spectrum, manual tasks are typically the top driver including repetitive, high-volume transactional tasks. All should be constantly reviewed and improvements made. 
  • Intercompany: While intercompany accounting remains a smaller part of most finance organisations, it’s forecast to become one of the fastest growing areas. With the rise in globalisation, M&A activity and new tax regulations, it also presents an outsize risk to organisations and should be closely watched.
  • Reporting:Spreadsheets typically abound for management and financial reporting processes and many errors can often be traced back to transactional issues within them. Organisations with weaknesses in underlying transactional accounting processes can see error-rates substantially higher than those that have more automation, stronger approvals, and better workflows.
  •  Analysis: While there are constant conversations about finance becoming more strategic, currently only a fraction of finance FTEs are devoted to planning, analysis, and reporting. It’s important to recognise improving transactional accounting processes doesn’t only free up resources, it also makes the job of reporting and analysis easier by improving accuracy and availability of data.

Key transformation enablers

To achieve the benefits of a comprehensive financial transformation, an organisation needs to focus on a number of key areas. By working to evolve each, significant business benefits can be achieved. These areas are: 

  • Improve SSC efficiency: Most finance organisations, run a Shared Service Centre (SSC) and there’s likely to be substantial room for improvement. Standardising processes can create significant savings that can be driven to the bottom line, or reallocated to strategy and analysis.
  • Efficient reconciliation:One of the most labour-intensive and manual accounting resources remains reconciliations. Automating the process using Robotic Process Automation can dramatically cut the required effort by automatically reconciling low-risk accounting and using exception-based analysis.
  • Intercompany centralisation: With ongoing growth in intercompany accounting likely, it’s important it doesn’t overwhelm teams or block future strategy and analysis initiatives. Centralising transactions, documentation, pricing, and approvals can enable an organisation to mitigate growing resource and regulatory risk.
  • Controls and close orchestration: A faster close can come at the risk of compromising the granularity of closing tasks, however doubling down on detail can mean getting bogged down with managing the process itself. Close automation technology provides the scheduling, centralised checklists, and approval management to accelerate the close without creating risk.
  • Continuous Accounting: Continuous Accounting is a process shift of traditional period-end activities to occur over the course of the month, as they happen. By doing this, accounting gains more efficient utilisation of resources and lessens uneven workloads.
  • Robotic Process Automation: RPA is the use of rules-based technology to simulate traditionally human-based tasks at scale. It’s ideal for introducing consistency and automation at scale, for matching transactions, identifying variances, scheduling tasks, and directing workflows.
  • Retain, retrain, and reallocate talent:Talent is perhaps the most important enabler for finance transformation success. Use the gains from automation to retrain talent while creating an organisational roadmap around changing roles and business processes.
  • Cloud computing: Many CFOs see cloud computing as having significant potential, however most transactional accounting still takes place in on-premise ERP systems. Cloud Financial Corporate Performance Management apps work with existing ERPs and their potential should be explored.
  • Continuous planning and forecasting: Finance organisations are moving to rolling forecasts to improve accuracy by factoring in the latest drivers and actuals. The biggest challenge remains getting current financial data into the models for analysis, without adding spreadsheet complexity. Creating a point-in-time financial close can help, because it doesn’t just mean a faster close, it also helps ensure the latest financial data is readily available at any time.

An effective financial transformation project comprises many different individual improvements within an organisation. By focusing on each and monitoring changes over time, the value that is achieved can be noted and appreciated.

Modern Financial Corporate Performance Management apps provide reporting on internal process performance, as well as benchmark against peer groups. Having one at the heart of the finance department will ensure the long-term goals of the transformation process are realised.

Claudia Pirko is Australia and New Zealand Regional Vice President at financial automation software provider, BlackLine.

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