A key part of business life is getting the books closed on time, with clean financial reporting that allows a high-level and granular view of what needs to be done next. Yet, in this most crucial of processes, inefficiencies exist, so much so that timeliness lags.
In a survey conducted by the Institute of Management Accountants (IMA), and sponsored by Blackline, titled “Process Automation in Accounting and Finance,” examining the attitudes and concerns of 750 financial professionals surrounding accounting and month-end closing processes, manual activities remain prevalent — at the cost of time and money.
The firm said that as much as 43 percent of respondents said that more than half of their time is spent on data collection and validation. Data accuracy — especially data flow between departments or far-flung operations — the survey found, remains among top concerns.
One overarching theme: The hours spent reconciling data and closing the books, stretching out over an average of six days, could be better spent on other endeavors — particularly in finding new ways to boost results at the firm rather than simply dealing with historical data.
In an interview with PYMNTS, Kip Krumwiede, director of research at IMA, said that among the more surprising findings of the study was “the continuing high usage of spreadsheets” among two-thirds of those surveyed. In the meantime, such reliance might be understandable, given the fact that the spreadsheets themselves are flexible in the ways they can be used.
At the same time, the executive noted, as many as two-thirds of respondents said that they work with some form of packaged accounting software, which speaks to some automation. But technological advances mean that there can be better integration between the two, he said.
The move to embrace automation, said Krumwiede, represents a “slow evolution,” with inefficiencies still extant as there must be communication between departments and data must be compiled and formatted in the practice of reconciliation. The optimization of the accounting process, he said, is difficult at times with limited staff. And yet, it remains key to have access to, and reconciliation of, data that ranges from sales to travel expenses. Only 28 percent of respondents said they “completely” trust the accuracy of data tied to the closing process, and noted Krumwiede, “the more points of input you have toward data [manually], the more likely it is you’ll have errors.” This is especially true when multinationals must reconcile data across different accounting standards, such as GAAP and IFRS. Thus, the report concluded, firms would benefit from what is known as continuous accounting, where traditional month-end processes would be accelerated to occur more often and more rapidly.