As each month comes to a close, finance departments typically experience a flurry of activity as they focus on closing the books. This time is often characterized by long hours, meticulous data reconciliation, and a frantic rush to meet deadlines. However, with advancements in automation technology, this scenario is quickly changing. The concept of finance automation and the ‘Touchless Close’, a term introduced by analyst firm Gartner during the pandemic, is emerging as a transformative force in innovative record-to-report (R2R) initiatives. It offers a stress-free, efficient, and strategic approach to financial close processes.
Exploring the Benefits of Automation in R2R
At the core of the touchless close is the strategic use of automation to handle the majority of R2R processes, including those that are not part of ERP systems like SAP. Automation enables activities such as reconciliations, error detection, error correction, and other internal controls to be carried out throughout the month, even on a daily basis, eliminating the peak workloads at month-end. By automating critical financial tasks, stakeholders can significantly streamline their month-end close, improving both efficiency and accuracy:
Journal entries made effortless: Automation revolutionizes journal entry processing by automating data collection, financial calculations, validations, approvals, audit trails, and posting to finance systems. This not only saves time and manual effort but also significantly reduces human error, enhancing the overall integrity of financial records.
Seamless reconciliation processes: Automated account reconciliation tools can handle even the most complex account, intercompany, and other reconciliations with precision, significantly reducing the time and effort traditionally required for manual reconciliations. Daily reconciliations, made possible by automation, can simplify the month-end close.
Efficient error detection and correction: Automation tools excel in identifying and rectifying errors, optimizing both the detection and adjustment process. Error detection and correction processes can be automated continuously throughout the month to enable quick issue resolution. This capability is essential for maintaining the accuracy of financial statements and ensuring compliance.
Simplifying complex accruals and adjustments: Automated systems seamlessly manage accruals, provisions, and reclassifications, which are typically complex and prone to human error. This ensures consistency and reduces the likelihood of errors. Automation can identify, calculate, and post accruals and adjustments, eliminating the need for key finance staff to handle this critical activity.
Automating asset accounting: Automation simplifies dealing with asset acquisitions, disposals, transfers, revaluation, and depreciation, especially for organizations managing a large portfolio of assets across multiple locations and companies.
Dynamic close checklist management: Automation extends to close checklist management, turning it from a mere tracking tool into an active participant in the close process. This ensures tasks are executed in the right sequence based on critical dependencies, leading to a timely, efficient, and error-free close.
Advanced reporting and data analysis: Automated systems not only collect, validate, adjust, and consolidate financial data but also provide deep insights through advanced analytics, enabling more informed decision-making and strategic financial reporting.
From Stress to Strategic Insight
The shift to a touchless close transforms not only the close process but the entire culture of the finance department. The end of the month changes from a stressful pressure cooker to a time for strategic review and insight:
Continuous improvement and predictability: Automation’s predictability allows for continuous business improvement. Finance teams can shift their focus from data compilation to analyzing trends and offering strategic insights.
Reallocation of valuable resources: With manual tasks eliminated, finance professionals can concentrate on higher-value activities such as strategic planning, forecasting, and financial decision-making.
Enhanced compliance and control: Automated processes ensure financial compliance and provide greater control over financial data, reducing risks and enhancing audit preparedness.
Reduced time to value: The touchless close reduces the time needed to ‘close the books’, delivering trusted information and meaningful insights to the management team faster than ever, enabling a more agile response to business opportunities.
Embracing a New Era in Finance
The concept of a touchless close is quickly moving beyond an innovative idea to become a practical reality for forward-thinking CFOs and finance leaders. This transition represents a significant advancement in financial operations, reshaping day-to-day finance operations and the end of each month from a source of stress to an opportunity for strategic growth and insight.
The future of finance lies in embracing automation, with the touchless close leading the way in this transformation. It’s a journey towards a more efficient, strategic, and stress-free financial function, where month-end closes are no longer rushed but seamless and insightful processes. The touchless close is not just about speed; it’s about working smarter, unlocking the true potential of finance teams in the modern business environment.
To learn more about the touchless close, download the whitepaper: “Master the touchless close” here.
Sign up for a demo of Redwood’s record-to-report automation here.
