23 September 2021
Driving Finance Efficiency: Automated Consolidation & Close Should be Top of Your List
“With automation as a foundational objective, CFOs are getting their own houses in order to free up the time they need to branch out and take on entirely new tasks with broader impact.” That’s according to Accenture’s The CFO Reimagined report. But in terms of automation, what does “getting your house in order” actually involve?
Most finance professionals would be more than happy spending more time on analysis, trendspotting and coming up with creative solutions to business problems. However, the chances of this happening are slim unless you can radically streamline the type of resource-sapping accounting tasks that crop up month after month. It follows that to create the bandwidth necessary for value-added work, automation of the consolidation & close process needs to be a top priority.
Here’s a closer look at why the close cycle is a prime candidate for automation, and at how a leading solution such as CCH Tagetik can enable the finance function to realise its ambitions…
The problem with routine processes
Just because a task is routine or familiar, this does not necessarily make it less difficult or time-consuming. The monthly close process is a case in point.
According to Accounting Today, monthly close takes organisations an average of 6.4 days, with some spending as much as two working weeks on it. Add it up, and it means that some accounting and financial teams are spending more than 100 days each year trying to marry financial reports, reconcile data, chase up information and numerous other tasks.
Consolidation brings further problems. In many organisations, Covid has led to structural overhaul, including merger and acquisition activity. Bringing additional legal entities into the fold invariably means a more complex process for financial consolidation on a periodic basis. This is especially the case if different reporting units have their own systems in play, and if tasks such as data integrity checks, group adjustments, elimination of intercompany balances and FX translations all rely heavily on manual input.
For any CFO seeking to make the finance function more efficient, it makes sense to focus on the areas where your transformation efforts are likely to have the biggest impact. In short; if you are looking to automate, consolidation & close is a natural starting point.
Getting automation right with CCH Tagetik
Customers we speak to from a range of sectors are looking for similar outcomes: they want a quicker, more accurate and less labour-intensive close process. The CCH Tagetik solution provides precisely what businesses need to streamline the most complex and time-consuming tasks routinely encountered by the finance department.
Key features of CCH Tagetik include the following:
CCH Tagetik can link directly to your ERP or source system. It means you can consolidate data from its source, with no redundancy, while preserving data consistency across the entire process.
A customisable ‘process cockpit’ provides an easy way of entry to all close processes, including reconciliation, consolidation and reporting.
Financial close typically involves multiple participants. For team leaders, the process cockpit makes it easy to see what’s been done, what’s next and who’s responsible. Across the workflow, users can see which steps they are responsible for, the status and due date. It keeps financial managers in control of the process, ensures everyone is on track and reduces bottlenecks.
It provides true support for double entry accounting. Adjustments flow through to all areas, such as balance sheet, income statement and statement of cashflow, while also supporting many multi-purpose regulatory reporting requirements.
Tagetik automatically matches intercompany information, including immaterial variances, taking into account currency translation. It also enables faster data validation. For example, you can define specific quality checks and rules to deal with errors at source level, and Tagetik does the rest.
If you need to better understand a particular entry, just select the cell and instantly drill into the source detail. Move from granular data to the aggregated picture and back again with a few clicks, and without the need to log into different systems.
Instantly create a journal format for your month end reports. Easily model mergers, acquisitions, divestitures and deconsolidations.
Allocations, depreciation calculations, manual journal postings, data validation: these are just some of the close-related tasks that arise month after month. They are precisely the type of tasks that solutions such as CCH Tagetik enable you to streamline.
PwC found that finance automation coupled with behavioral change results in average time savings of 30-40%. This means more time for driving your business forward.
Best-in-class corporate performance management software is not just about automation. It also enables you to delve deep into your data, to connect finance with operational performance, reduce risk and tackle problem areas at the earliest possible stage.
Accuracy and compliance
In a traditional consolidation & close workflow, spreadsheets are typically shared, updated, re-checked and amended in a laborious cycle. Each stage creates further scope for error. The best automated solutions reflect the fact that the close process is a complex and collaborative procedure. They help you to devise a workflow that keeps you in control of the process, ensuring accountability and auditability.
The last few years have also seen a raft of revised obligations impacting the treatment and presentation of certain items within accounts and financial reports. One of the major benefits of CCH Tagetik is that it offers pre-built add-ons addressing specific accounting rules. Examples include Lease Accounting (IFRS 16), Insurance (IFRS 17), iXBRL, Solvency II, FINREP & COREP, Revenue Recognition and more. This helps ensure accurate accounting to meet whichever compliance obligations your business is faced with.
Find out more
As a trusted CCH Tagetik implementation partner, MHR specialises in helping finance departments massively reduce their consolidation & close cycles, while also gaining greater visibility on performance. To explore what’s possible, speak to us today.