“It’s possible the traditional financial close may be gone for good” (Deloitte CFO Insights).
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In what now seems like a simpler, pre-pandemic world, quarterly close was a stressful time for every financial team, from the CFO down to the AP Processor. In a traditional office setting, with paper invoices and receipts on desks, in drawers, and possibly in trash cans, you had to manually track down paperwork. Someone had the task of asking everyone what invoices they haven't submitted or coded or approved. The process was even more complicated if your organization was decentralized, with invoices and receipts being sent to a variety of office locations.
The transition to remote work accelerated many CFO’s plans to invest in cloud processes and substantially higher levels of automation (Deloitte, CFO Signals). If you are like 70 percent of the CFO’s polled by Deloitte, you plan on giving your workforce the option to continue to work from home going forward. Now you face new challenges as you prepare for the upcoming virtual quarterly close. You may be facing time delays due to a remote and distracted workforce or a lack of updated effective controls for remote close and reporting. If you and your team found the traditional closing process stressful, we have good news and bad news. The good news is, Deloitte’s CFO Insights predicts that “it’s possible the traditional financial close may be gone for good.” The bad news is, your company needs to adapt to a future of virtual financial closes.
According to Deloitte, the first virtual quarterly close back in March 2020 was a testing ground for finance executives. “CFOs and their teams had to rewire their processes on the fly, likely sacrificing a level of clarity or communication. Relying on strained resources and working around technology gaps—not to mention employees’ mounting anxieties about their own physical and fiscal health.” It was after this trial by fire that finance executives realized that they need to consider cloud-based software that automates reporting.
As we look ahead to the next quarterly close, Deloitte recommends that you start with an assessment of deficiencies that impeded your last virtual close by asking the following questions:
Which month-end tasks remain to be automated?Look for areas that still rely on manual processes, in-person communications, or spreadsheets, and explore automation options.
Which workflows remain to be automated?By digitizing any lingering paper-based processes or streamlining the disparate electronic ones you might be getting from your countless vendors, close tasks—such as reconciliation and journal entries—can be conducted on a unified platform, which can further enhance efficiency and effectiveness.
What’s missing from your quarter-end checklist?Checklists tend to be only as perfect as the humans who create them. No amount of transparency can compensate for a checklist that fails to accurately track the progress of the close. With employees working remotely, it’s especially important for all to see exactly where the group is in the close process. An automated checklist, residing in the cloud, can help remote workers focus on the stated priorities.
Have all standard procedures been documented?Making sure to do so, in addition to promoting cross-training, can make it easier to address issues that arise as a result of employee illness or other COVID-19-related absence.
Does the virtual process accommodate the human element?Reimagining how close-related work is allocated and completed in a virtual environment can’t just be achieved by investing in digital technologies. Coordinating a successful virtual close may require thawing silos and solidifying collaboration—which may mean loosening up an agenda-driven video meeting to accommodate a barking pup or crying baby. After all, the need for the virtual close can’t be separated from the circumstances that led to it.
Once you have completed that assessment, DataServ is here to help you make those changes to enhance your efficiency and effectiveness. In a recent virtual gathering of DataServ clients, they all agreed that the AP automation they had in place saved the day. Our solutions can help your organization improve workflow controls, gain visibility, identify cost reduction, and improve audit compliance.