B2B Payments

How Real-Time Data Recharges The Monthly Financial Close

Financial technology innovation has opened the doors to massive transformation of corporate finance departments. More sophisticated tools can empower teams to more accurately predict cash flows and guide their organizations’ growth strategies, with opportunities to collaborate across procurement, accounts payable, accounts receivable, treasury and beyond.

While flashy corporate FinTech is exciting, innovation efforts have rarely focused on a mainstay of corporate finance teams: the financial close process, a crucial, but continually outdated function.

Today’s chief financial officer is headed in a strategic direction, says Trintech President Darren Heffernan, “but the bread and butter is you still have to produce accurate and timely financial statements.”

In a recent conversation with PYMNTS, Heffernan dove into the ways that digital transformation efforts by corporate finance teams have unlocked an optimized financial close process, and even encouraged the most cutting-edge firms to buck the rarely questioned status quo of monthly and quarterly reporting.

Transformation Through Data

For middle-market organizations, the largest barrier to efficient financial close processes remains the struggle to obtain high-quality data. Inaccurate or incomplete data not only bogs down operations, it elevates the risk of errors in financial reports.

For corporations that continue to rely on paper and manual processes, this challenge is significantly elevated.

“Dealing with paper is fraught with dangers regarding the integrity, accuracy and quality of information,” explained Heffernan, who said mid-market firms operate across a wide spectrum of digitization and automation capabilities.

For years, the enterprise resource planning (ERP) system has operated as a critical source of data for processes like the financial close and others. But platforms that store information, whether it be an ERP system or an Excel spreadsheet, were not built for reporting purposes. Further, these portals rarely contain all of the data necessary for a complete view of corporate financials.

As a result, data integration is key for a technology solution like Trintech, which automates the financial close process by embracing data connectivity across the enterprise. Having integrated with dozens of ERPs, the portal also recently announced connectivity with corporate accounting and finance technology firm Sage to augment its data capture capabilities.

But streamlining the financial close process today isn’t only about data integrations with financial platforms, according to Heffernan. Indeed, Trintech has also integrate with workforce collaboration platforms like Slack to help finance teams within complex organizations achieve the collaboration they need to seamlessly close the books.

“Data integration is absolutely critical,” he said.

From Data To Intelligence

Data integration not only ensures efficiency and a holistic view of corporate financials, but also enables finance teams to trust that a portal like Trintech is able to preserve the integrity of data.

That’s an essential component of technologies embraced by finance teams today, particularly as these professionals begin to rethink the status quo as they dig deeper into the potential of automated technologies.

“We as a profession have never really looked at technology as something that finance and accounting people can actually use, whether it be in their close process or other processes,” said Heffernan. “It’s only very recently that we have embraced technology as a game-changer for us.”

One of the most pronounced advantages of automated technologies like artificial intelligence, robotics process automation and machine learning is the ability for finance professionals to take on more value-added activities for their organizations, rather than waste their talent (and their employers’ money) number-crunching and data-keying.

There is also a shift brewing among the organizations most advanced in their digital transformations, he said, with firms beginning to consider real-time financial analytics — rather than simply reporting on a monthly or quarterly basis.

“Why are you doing things monthly just because they’ve always been done monthly?” Heffernan said. “Why not look at everything from a risk perspective to adjudicate whether things should be done daily?”

Challenging the status quo can enable a more robust vantage point and elevated transparency into financials, further empowering finance teams to add strategic value to their organizations.

The financial close process remaining a key staple of corporate finance operations, but as finance professionals explore how to boost efficiency and wield technological innovation, Heffernan said a paradigm shift is beginning to emerge that encourages businesses to not just reconsider the role of the financial close process, but of the finance department at large.

“It’s about being able to turn the data we have within the financial close process from being just data, into intelligence,” he said. “That’s the differentiator of what finance teams can bring to the table.”

——————————

LIVE PYMNTS ROUNDTABLE: MODERNIZING & SCALING FOR THE NEW NORMAL

The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

TRENDING RIGHT NOW