Seven ways to increase trust in accounting processes
Ask any finance professional to nominate the most frustrating part of their roles, and the chances are they'll point to manual processes.
Despite the increasing range of tools and services now on the market, too many finance departments are still plagued with tedious, manual workflows that soak up staff time and distract people from higher-value activities.
The challenges caused by manual processes have been highlighted by the disruptions caused by the COVID-19 pandemic, which has led to finance teams working remotely. Processes that may have worked when everyone was in the same location now need to be replaced.
These crisis-related changes have also highlighted the issue of trust. If processes and workflows have been disrupted, how can management trust the results? Manual accounting has always been risky, and now it is unsustainable.
There are seven critical ways in which trust in an organisation's finance processes can be improved. They are:
Remove labour-intensive, manual processes
Manual accounting processes will inevitably be more prone to errors. A recent survey by Censuswide found that, of the finance leaders who did not trust the accuracy of their financial data, manual inputting was nominated as the cause by 41%.
Modernising accounting by ensuring tasks like close checklists, reconciliations, journal entries, and intercompany processes are as automated as possible can ensure consistency and standardisation that is a critical trust booster. Taking these steps is no longer optional but a necessity.
Errors tend to occur when finance teams are burnt out by performing repetitive journal entries or manual bank, credit card, POS, or other reconciliations.
Automating transactional accounting throughout the period reduces overtime during the close and other high-intensity accounting periods. This can help to increase employee engagement by enabling accounting professionals to spend more on higher-value analytical work.
Avoid the ‘SALY' approach
In the wake of the COVID-19 pandemic, taking a ‘same as last year' (SALY) approach is no longer sufficient. Whether an organisation is launching a new product, changing to a subscription model, or dealing with new reporting requirements, accounting processes must change and adjust in a scalable way.
The old spreadsheet-based processes that worked last year won't get the job done in this new environment.
Drive change management
Successful change management initiatives do not happen by chance. It's essential to put the required processes in place and nominate someone to manage it from start to finish.
It's also vital to identify a champion who can work with everyone across the organisation. Their role is to identify process improvements and find ways to apply technology, such as financial close automation to make the process better.
Define ‘value-added activities'
Automation is vital to ensure trust in data and process; however, it is also crucial to provide a clear roadmap for accounting staff to understand how their roles will change.
They need to be able to see how these changes will benefit them in areas such as reduced overtime, lower risk and more satisfying work.
Invest in staff
With the rate of change in the business world showing no sign of slowing, it's important that staff be given the opportunity for continuous learning and career development.
As well as helping them as individuals, this will also ensure the organisation is well placed to take advantage of new opportunities as they appear.
One approach is to create an online corporate university. This can become the go-to place for people looking to learn new skills and knowledge.
Tighten the relationship between accounting and finance
Despite often existing in the same department, in many organisations, accounting and finance teams don't always have a solid working relationship.
Accounting's trust in finance can be damaged when demands for data are unreasonable and require extensive overtime to provide. Also, finance may struggle to trust accounting when data is not totally accurate.
Automation can help to improve this situation by cutting cycle times and improving accuracy. Also, providing more transparency can help to cement things as everyone will know what others are doing and when outputs can be expected.
It's clear that the disruptions caused by COVID-19 will continue to be felt for many months ahead. For this reason, it's important to take the time to complete these steps now to ensure disruption is kept to a minimum.
Improving trust in accounting processes now will pay big dividends in the future.