While accounting leaders, CFOs and financial controllers have embraced a move toward month-end close optimization, there still is a long way to go to produce timely, accurate and complete financial statements. Business executives still refer to month-end close as a “black hole:” Many activities can occur without transparency into status, due dates and quality of work.
As an auditor and process consultant, I believe in the power of reconciliation automation software for accounting professionals to access more efficient and user-friendly ways to approach reconciliations and the month-end close.
Here’s what you must know and consider before adopting new accounting software:
The Trends and What to Watch Out For
Your financial close process may have been tried and tested, but everything changed with the pandemic. It revealed deficiencies in automated processes, added fresh pressures, and forced businesses to operate in hybrid and remote work environments. This triggered cuts in back-office costs and executives reviewed existing financial close software.
The issue is that many accounting professionals are still bogged down with manual, repetitive tasks like signing, dating, printing, scanning, or storing documents and updating spreadsheet numbers.
Companies that rely on just accounting staff to execute most of their month-end work instead of a real-time central tracking and management system are very much suffering in the financial reporting process.
However, some 43% of accounting professionals said they plan to invest in automation for time-consuming tasks such as data entry in the next three years, according to the Practice of Now research from Sage.
That’s because finance and accounting executives are starting to expect far more out of their management accounting software and staff during the month-end close. They want updates about the close status in real-time and potential delays flagged through automated algorithms before they become problems.
Machine learning and artificial intelligence (AI) can handle the bulk of the work to speed up the month-end close and lower the costs.
The sooner the books get closed, the sooner accountants can get to everything else on their plates. Therefore, easy-to-use technology platforms are in high demand, enabling dispersed teams to use a shared system and collaborate.
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Reconciliation Software to Improve Financial Reporting
Research shows that accounting automation software pays for itself within six to 18 months—so there’s no need to view it as a financial burden.
End-of-month reconciliation software helps companies keep water-tight control over their financial statements, streamline and eliminate manual tasks, and strengthen internal controls and company governance. A core benefit of automation is that existing accounting staff do less work while getting more reconciliations done.
Modern software is built on the philosophy that communication between finance teams isn’t the only important thing for month-end close. The whole business could thrive by having shared financial close software for timely and accurate information analysis.
The software reduces the time to review each document and eliminates the need to provide status updates through email or messaging. Automation monitors and internal controls also allow leadership to have more oversight, bringing attention to potential write-offs, stale open items and poorly done work before anomalies occur in real-time.
How Do Accounting Professionals Choose the Right Software?
Those wondering which third-party software programs to invest in must weigh up several factors.
When accountants think about the month-end close, they refer to balance sheet accounts, reconciling transactions, monitoring critical tasks and controls, and supporting audits. Therefore, companies must review the automation capabilities within their business’ general ledger package.
In my experience, many businesses have already paid for a platform when they realize the accounting package has limited automation in some areas, like month-end close.
When shopping for month-end close software, businesses should start with a list of must-haves. Consider who will be using the software and where it ranks in terms of ease of use and accessibility.
For example, do you want the software to be used only by accounting professionals or team members from different departments?
Also, accounting professionals want reliable solutions that already have multiple features so that as a company grows and scales, they do not need to switch providers. Therefore, exceptional customer service and hands-on technical support are some vital elements to look out for.
To discover more about these features, check out all online reviews—good and bad—and evaluate customer service ratings. You should be able to work out how long the software company has been in business, too.
Most importantly, what security measures does the provider take to protect your information? If it does not seem clear, ask them directly and see if they have had any security breaches or issues in the past.
With cutting-edge SaaS technology, status dashboards and workflow management tools can control your financial close processes more efficiently. But the offerings are constantly evolving, so if you are going to invest in reconciliation software, make sure to do your research.
Shagun Malhotra, founder and CEO of SkyStem, is the visionary behind the product and user experience. A CPA, CIA and an experienced auditor and process consultant, she designed ART for accountants. Having gone through the broken and inefficient process various times over, she believed there was a more efficient and user friendly way to do reconciliations. Being process focused, Shagun injected process within ART to deliver a product that is highly integrated and process centric. Shagun started her career in public accounting and has worked in Fortune 100 companies such as Marriott and Freddie Mac. Her work focused primarily on internal controls and risk mitigation in both, the international and domestic arenas. She has been a speaker for Fast Trac—a Kauffman Foundation program and is very passionate about entrepreneurship.
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