The Virtual World Of Finance and Accounting
For finance and accounting departments around the world, the COVID-19 pandemic created a whole new degree of uncertainty. With very little time to prepare, they had to figure out how to work from home and close virtually with a dispersed workforce.
Audit teams had to determine the most efficient ways to perform their procedures remotely, and the barriers created by manual close processes and undocumented institutional knowledge became even greater drawbacks than before.
However, we live in the Digital Age, and while the transition to a virtual professional environment isn’t simple, it is feasible to leverage what may seem like chaos into a strategic advantage. The key to doing this successfully comes down to using the appropriate technologies.
In 1991, the World Wide Web was essentially born. The next year, the first genuine smartphone was released, followed by other technologies and solutions, including Skype and Zoom, that have enabled finance and accounting departments to adjust to working remotely. All of these technologies have emerged within the last 30 years, yet it’s difficult to fathom how we would have dealt with the pandemic without them. So why are organizations still closing the books using spreadsheets and manual processes?
The electronic spreadsheet is over 40 years old, and the framework of the general ledger hasn’t seen many modifications. Yet, to close the books every month, quarter, and year, many finance and accounting teams still rely on spreadsheets and time-consuming manual methods. Meanwhile, accounting and finance-specific technology solutions are driving digital transformation for leading enterprises all over the world, and these solutions have become even more vital during these unprecedented times.
When manual processes are used, it is much more difficult to close virtually and conduct remote audits. Since the pandemic began, companies that already had the necessary finance automation tools in place have been closing nearly on schedule and with confidence.
It’s not too late for you and your team to modernize your accounting technology and consolidate data and procedures, automate repetitive work, and drive accountability through visibility during this crisis and beyond.
Improving Accounting Through Automation
As many finance and accounting professionals began working remotely at the start of the pandemic they realized that traditional manual accounting systems are unsustainable. Organizations must use contemporary accounting to succeed in a period of increased uncertainty, risk, and accelerating change, which begins with adapting to changing circumstances through collaboration, visibility, and control.
Accountants have been handling the month-end close using manual processes and checklists for decades. Until recently, the only choice was to put in repetitious, brute force effort, but now, innovative technology is automating those repetitive tasks and workflows with rules-based logic, and the sophistication of these solutions is expanding.
According to Deloitte’s State of AI in the Enterprise survey, 74% of adopters agree that AI will be integrated into all enterprise applications within three years. Furthermore, 67% of all respondents are already adopting machine learning, with 97% either using or planning to use it within the next year.
Here are five ways in which technology is assisting finance and accounting teams in transitioning to modern accounting and succeeding in this virtual environment.
1. Record To Report In Real-Time
According to Gartner’s research, 72% of businesses aim to use the cloud for financial applications in the next three years. Meanwhile, The Hackett Group states that more than 70% of financial businesses that have implemented cloud-based solutions have met or exceeded their business goals.
Powered by in-memory and cloud-scale computing, Continuous Accounting is an approach that embeds automation, control, and period-end tasks within day-to-day activities, allowing most accounting processes to happen in real-time rather than creating a crunch at the end of the period. This better aligns the accounting calendar with the rest of the business, leading to a faster close, more accurate and complete financials, and a more successful organization powered by real-time data and deep analytics.
Continuous Accounting shifts teams away from the typical record-to-report calendar's high end-of-period effort and toward a more balanced cadence, giving them more time to focus on exceptions and judgment-intensive operations.
Because of the increased skill set that is now necessary, accuracy and integrity rise significantly, and traditional positions can finally adapt. Real-time data analysis and reporting are also more important than ever before as business environments continue to evolve at a rapid pace.
Continuous Accounting requires a holistic approach that combines technology, process, and people to achieve ongoing improvements across the accounting business.
Using technology to automate month-end operations improves the benefits of process optimization while also enhancing accounting team members' overall productivity. The entire accounting and finance function will benefit from improved processes since they will reduce risk, improve accuracy, and increase efficiency.
2. Shifting To Analytics
Accountants are often underappreciated in the workplace. However, once the most time-consuming and onerous tasks are automated, they can truly showcase their value. They're more likely to get noticed if they start producing business outcomes than reporting on what happened four weeks ago.
We live in an age of analytics, and the demand for finance experts who can interpret data is only going to grow. According to McKinsey, an American worldwide management consulting firm, two million to four million new positions will be generated in the next decade involving interpreting machine insights, highly exceeding the demand of qualified professionals.
Furthermore, by providing deeper company insights, accounting professionals may become more proactive and better manage risk by detecting it early on. This leads to a career shift that many accountants strive for - becoming a strategic partner on all levels.
To get the ball rolling, start with a high-level measure of success such as time to close. Functional drivers provide the next level of drill-down—so link them back to your overarching metrics. Operational drivers provide the most detailed level of process insight and are the jumping-off point to take action.
Rolling forecasts and continuous planning projects are driven by financial planning and analysis (FP&A) require a steady stream of financial information. Accounting initiatives such as reducing the number of days it takes to close using approaches like Continuous Accounting or even shifting to a virtual close can give FP&A access to financial statements sooner or in real-time.
3. Finance and Accounting Are Embracing Business Partners
For years, business partnerships have been on the accounting and finance agenda. However, double-checking financial statements, tracking down reconciliations, certifying controls, and supporting audits have all taken precedence, as these tasks necessitate substantial, if not all-encompassing effort.
When the business looks to accounting and finance for support and to provide timely insight into key financial figures, it needs that data to make decisions now—not after the month-end crunch is over and the reporting is complete. And in a virtual world filled with uncertainty, timely and precise accounting insights are critical, as business actions have a substantial impact on future performance.
With technological advancements and intelligent data analysis, the finance function is in a unique position to deliver useful insights for the future of the business it serves. Accounting's role in leading enterprises is being restructured by applying the technology that leads to business partnering benefits.
In a survey titled Finance business partnering: Making the right move, Deloitte identified commercial acumen and decision making, customer focus, strategic thinking, and relationship management as the top skills that every finance professional should strive to add to their competencies.
To add a partnering element to your team's skillset, you'll need to improve your business abilities and become more proactive about recognizing business risks. To do so, you'll need to free up workloads and adjust accounting processes to create room for the change.
A modern accounting platform handles month-end responsibilities in real-time throughout the accounting cycle, not only at the end of the month, speeding up the close and allowing more time for collaboration.
4. Technology Enables Efficient Remote Audits
Under normal circumstances, audits can be a terrible ordeal and a regular burden for accounting teams. With the majority of organizations employing a remote, distributed workforce, conducting audits in this manner is inevitable.
The difficulties that auditors face will only grow now that audits are mostly conducted virtually - from being able to access basic information and supporting documentation to conduct the audit or quarterly review to be able to attest to or assess the accuracy of the financials, which is an entirely different situation.
However, anxiety and stress do not have to be a part of the audit process, and a successful remote audit is achievable. Companies that utilize financial close technology complete audits faster and with better results, and their financial management is stronger and more visible throughout the year.
To do so, finance and accounting teams must have the appropriate technologies in place. As a starting point, consider the following: Do you and your auditors have a shared Provided by Client (PBC) list where both parties may access items, automatically link supporting documentation, and check real-time status without needing to schedule meetings? If not, now is the time to start looking into the technology that can help you get there.
Technology fosters transparency, and transparency fosters confidence among accounting and audit teams at all levels, from staff to senior executives. It's a win-win situation that will pay dividends long after the COVID-19 crisis has passed.
5. Top Talent Is The Future Of Finance
Retaining and attracting outstanding talent is critical to thriving during and after the crisis. “Together with analytical skills, the Finance workforce of the future requires an appetite for risk, a stomach for ambiguity, and the guts of a savvy business advisor,” according to Accenture's Architecting the Future Finance Workforce. Attracting, retaining, and developing these abilities necessitates significant changes in finance talent strategy—because finance work, who does it, and how it is done, will never be the same.
Embracing change and navigating uncertainty successfully begins with creating a culture that attracts top talent and allows your employees to compete on a whole new level. This may entail automating tedious operations and transitioning to a modern accounting methodology, allowing your highly qualified accountants to devote their time to function as a business partner.
We're reaching a critical point in terms of change, and the accounting and finance companies who embrace and effectively prepare for it will benefit. Those that are effective in building their skill set in preparation for the rising tide of intelligence will be rewarded. Retaining and attracting great talent has always hinged on employee morale. Taking care of your employees, appreciating them, and understanding their circumstances is critical right now.
Consider the following questions:
Are my employees feeling concerned about their jobs? Are they finding it difficult to work from home while juggling personal and family obligations?
Is the work I'm asking my employees to accomplish engaging and motivating?
Can I retain them with the current processes?
Will I be able to attract and recruit digital natives to a world of spreadsheets, laborious processes, and inefficient habits in a few years?
Purpose-built technology is essential for defining the way you work now and in the future, as well as attracting and retaining great personnel.
Success In The Virtual World
These are unprecedented times, and the COVID-19 pandemic has taken a toll on accounting and finance in ways we never imagined. It cannot be predicted how long this will be our new normal, but one thing is certain: how we respond to this crisis is a decision we all have.
We can either focus on the obstacles—and there are plenty of them—or we can choose to adapt and look for possibilities, which are plentiful as well. Organizations that transition to modern accounting and adopt the necessary technologies to become more strategic and adaptable will succeed in this virtual environment.
Focus on these two areas as a starting point:
What can I do to assist my organization in adopting and accepting new technology?
What can I do to put myself in the best possible position?
Building your skillset to help you capitalize on the inevitable disruption is the only way to fully prosper through and beyond this season of so much change and uncertainty.
Aimee Leishure, former senior vice president of business transformation at Laureate Education, Inc., says, “I’ve run many transformations in my career and have seen how resilient people are. We will get through this moment in our history and come out better on the other side.
“People and organizations might not look the same as they did [at the beginning of this year], but we will overcome and business will come back even stronger. People will adapt to change and improve the future.”