Recent events have shown us that taking action without obsessing over perfection will result in learning and growth. We must make a concerted effort to overcome the fear of assuring outcomes and respond to the well-equipped efforts of technology. Otherwise, a timely virtual financial close process may prove to be an ongoing challenge.
The current reality has placed before us an opportunity to lean into resilience on all aspects of organizational functions. This has spared neither accounting nor finance professionals.
If you had asked anyone work in finance in January 2020, “How about doing this month’s financial closing remotely?” People would have laughed. But guess what? Many finance teams did it.
In a poll during a recent Deloitte webinar, over 40% said that no one involved in their financial close processes worked remotely. An additional 31% said that less than one-quarter of their teams were offsite during a typical close. That was prior to the pandemic.
Now, over 75% of those surveyed say that the majority of their professionals are working remotely on the financial close process.
Surmounting the challenges of a virtual month-end closing is a notable accomplishment. The monthly closing of books once took place behind closed doors in resounding silence and tensed contemplation. This financial sacrament has now been challenged towards completing it remotely.
Any thoughts that this monthly routine of financial closing would be a relatively simple process given its repetitive nature, is misguided.
Have you observed how most people are respectful of the invisible “Do Not Disturb” sign during the month-end closing? This offers an insight into the intensity of preparation, review and analysis the completion of the process entails. Many finance teams try to keep to the allocated time frame of the ideal three days of work. This means that all the journal entries would have to be booked, high-risk transactions reconciled prior.
The operational success forged by finance teams for their first virtual financial close process has been stunning. The agility at which managers stepped up to respond in leading their teams, reinventing core processes demonstrates true digital maturity. It has made dramatic changes to the mammoth commission of month-end closing.
Don’t confuse digital maturity with digital transformation. Digital maturity involves a shift in leadership mindset to adapt and respond to a changing environment. Gerald Kane has described this concept in the MIT Sloan Management Review.
Financial analysis and expense reporting was once performed in a centralized corporate setting with on-site systems and in-person collaboration. But we have learned that change is possible once we have obtained the working knowledge of digital possibilities.
Having achieved such powerful outcomes, could this new operating model be permanent and improve the financial close process?
A recent article in the Singapore Business Review suggests that finance teams would continue doing the financial closing of their books remotely. They would do so even after lifting of the remote-work mandates.
Volve believes that with the right tools, you can sustain a seamless virtual financial close process in ways that will inspire and engage employees. To further validate findings, Volve spoke to finance managers, accountants and CFOs about their struggles on an operational level. We gathered possible solutions that would build capabilities to lean into scaling transformation.
You need an optimal finance operation process for virtual accounting practices. This allows remote financial closing to be performed as effectively as in-office. This is in general imperative for building execution excellence.
To prepare for a more automated future, leaders can take action in four key areas:
In April 2020, an article in The Wall Street Journal notes, “Companies that rely heavily on cloud-computing technology to automate accruals, adjustments and internal transactions may be in for a smoother close than those that use on-premise technology on virtual private networks or enter data into spreadsheets manually.”
While prioritizing innovation has been talked about for a while, it had been growing off a small base. Despite the availability of technology and an increasingly virtual world, many finance departments are still quite traditional. Most finance and accounting professionals still rely on traditional, manual processes to do their month-end closing.
By automating parts of the workflow, the opportunities to save time and resources are infinite. Timely, accurate and transparent reported data is paramount. Finance teams no longer have to spend time chasing up missing information and manually reconciling receipts to expenses. The risk of (human) errors associated with manual excel sheets can all be eliminated.
Gone are the days of sending expense reports by email, waiting for approval and waiting again to be reimbursed. Thanks to today’s solutions there should be no more misplaced receipts, forgotten deadlines and omission of critical information. Automation can pick up duplicate entries where the same expense is submitted twice and the employee will be notified to delete the expense. This will have a significant positive impact on your financial closing process.
Furthermore, automated expense reporting can also improve communication, especially with distributed teams. While communication may not immediately be featured as one of the important aspects of company spending, it is in fact critical.
A finance function designed for adaptability and agility will see powerful outcomes. Being adaptable, however, is not only a mindset that an organization needs to have. It also requires your workflow system and tools to have the same flexibility. What is required to make permanent structural changes sustainable? Taking control of financial closing workflows, identifying steps that can be eliminated and bottlenecks that prolong the process.
Unless hardwired into the new operating model, the risk of reverting to old behaviors and processes remains all too possible.
An expense management system does not rely on managers being on call to authorize an advance for a simple payment. This will help establish coordination and aligning teams, regardless of each employee’s location.
Home-based staff can pay, attach a photo of the receipt to the exact payment within the app. This eliminates the need to wait and wonder about email approvals. It also eliminates a series of awkward conversations before making a purchase to do their job.
In such instances, a digital spend management software collaboration tool is particularly helpful in month-end closing. When configured to the company’s expense policy, the system can automatically detect and flag non-compliant expenses and notify the approving manager. This also further simplifies the work for the finance team as they can monitor compliance of the expenses in real-time.
Finance and accounting involve large amounts of data, communication, reporting and analysis. At month-end closing reconciliation time, the finance team requires every payment, approval and receipt information to be accounted for. When this process is carried out virtually, you need to have the required information and materials available on a single platform. It is crucial that information has to be accessible to all team members, regardless of where they are.
For organizational spend, you should also have a closer look at a spend management solution that includes a company card. This kind of solution integrates the entire payment cycle through to reconciliation.
An expense management solution like Volve includes the benefit of automatically assigned accounting codes (general ledger account, cost center) on each expense. This auto-fill feature populates an electronic claim form with the details of the expense, removing the need for further manual input.
With compliance checks in place and a visible authorization trail for each expense submission, you can get month-end closing done faster. You can also improve precision and to say “goodbye” to heavy reliance on estimates and accruals during the financial closing process.
Experience how one single solution can improve accountability, accuracy and efficiency. Test drive Volve today free for 30 days.