An end to financial compromise in business?

As with many aspects of finance, the budget is a balancing act. The same can be said of the financial period-end close at many companies. It's a process that's full of compromises. But does it have to be that way?

Many politicians use dramatic financial compromises to drive public relations initiatives. This is certainly not the case for corporate finance leaders; they rarely openly discuss any financial compromises. However, corporate finance leaders do accept the grim reality that compromises have to be made -- or at least many think there is no other option. It’s not uncommon for accounting and finance professionals to spend hours passing emails, spreadsheets and explanations back and forth in order to keep the close moving along.

The painstaking and slow manual activities of the close include reconciling, posting and documenting items such as accounts receivable to sales orders. Each of these processes has to be repeated hundreds of times across every entity close -- typically with many people watching and reviewing the numbers again and again.

Hidden Costs

Finance leaders at the top of the organization may not even be aware of exactly how much costly and risky effort is required overall. That's because most of the labor-intensive local close activities are distributed across many different people deep within the ranks of finance and accounting teams -- or within a shared service center. What finance leaders everywhere do see is that the close is a slow and often expensive process.

But what if we lived in a world where we didn’t have to compromise?  Unfortunately, there isn’t a magic solution to end painful budget compromises for government officials. There will always be members of the public either happy or unhappy with the way they spend -- or don't. But corporate finance teams can take heart. There is a way to complete a quality close with the speed and efficiency needed -- without compromises. The key is process automation.

The Mandate for Automation

In fact, the repetitive nature of the close and the need for rigorous governance, accuracy and auditability makes it the ideal core business process to automate now -- whether the close is completed entirely in-house, or with a shared service center or outsourcer. One look at research from top analysts shows an unmistakable trend.

The "2014 State of the Shared Services Industry Report" from the Shared Services and Outsourcing Network (SSON) clearly states: "With regards to future investment priorities, the main targets are automation for efficiency, internal collaboration and paperless processes".

End-to-end automation of repetitive local close activities is being used right now by top organizations to get the accuracy, efficiency and control they need without burning through manual work hours of members the finance team in a periodic fit of compromise and effort. Process automation simplifies the close and frees up valuable time while it produces accurate and reliable results. It's the best way to stop compromises in your close.

Image credit: Lisa F. Young/Shutterstock

Neil Kinson is vice president, EMEA, at Redwood Software