The rise of automation in corporate accounting is underpinning a shift in the corporate accountant’s role, from spending much of the month preparing backwards-looking reports to one where they are a strategic adviser to the business.
An accountant takes three or four years to earn their bachelors degree and then another 15 to 18 months to gain professional certification and these skills and knowledge could be put to better use than preparing month-end reports, says Terry Smagh, APAC head of cloud accounting provider BlackLine.
The role of accountants is evolving with the better technologies available today. Getty.
“The process here is to take them and to elevate them from this mundane task, which is very rudimentary, very straightforward, and elevate them into more strategic business thinking,” says Smagh of the role of smart technology.
“The finance office and, more importantly, the CFO should be a key partner to the CEO in making strategic business decisions for the organisation itself.”
Typically, as the end of the month approaches, accountants devote their time to preparing to close the books. They also spend the first few days of the new month working on the previous month’s numbers.
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Continuous accounting allows this entire process to be done on a daily basis, by automating and embedding the month-end process into the daily activities. In doing so, it can also provide the business with earlier insights, by flagging exceptions or scenarios that might require intervention before the end of the month.
The process matches and reconciles transactions in real time and can highlight exceptions.
This is important, because the cost of having to re-list earnings or restate profits after the close of the quarter can be significant.
“That’s going to have dire consequences for any organisation,” Smagh says.
“It helps the organisation to be more nimble and also brings more governance and transparency to the process.”
Typically, it takes an organisation between eight and 10 days after the month end to close off the month and then the accountants have to start on the next month’s numbers several days before the new month ends. It leaves only a few days in the middle of the month for the accountants to do more high value work.
“The question here is that how much are they then really spending in terms of analysis, insights and, more importantly, providing strategic value to the business if all they’re doing is just closing their books and they’re delayed every month,” says Smagh.
“Continuous accounting allows them to close their books efficiently but, more importantly, in an innovative platform that is transparent, it’s on the cloud, we are purely safe. It gets shared across multiple stakeholders within the organisation.”
Month-end accounting is being transformed through cloud-based solutions. Getty.
BlackLine’s cloud-based platform can cut this time in half, he says.
“But it’s not just about closing the books quickly,” says Smagh. “It’s also about providing insights on the organisation’s finance health, and advising how they can achieve greater efficiency and transparency within their system. If f there’s any issues they can flag them because they’re actually looking at them on a day-to-day basis.”
The system surfaces new data points that can be used to derive business insights.
For instance, continuous accounting might show which products are selling well and which aren’t, and in which channels, which is valuable information for the sales and marketing department.
Deloitte, which partners with BlackLine to deliver continuous accounting, describes technology as an enabler for high performing finance functions. “When humans work with technology, finance has more time and resources to focus on providing value added services to the business,” the consulting firm says in a report.
The firm outlines some of the benefits of continuous accounting.
It can streamline the financial close by simplifying the account reconciliation process with automated, rules-based workflows with embedded controls, and touchless certification. Additionally, it reduces the risk of reporting errors by automating the agreement of consolidated financials to underlying, reconciled ledgers.
In particular, company accountants can discover discrepancies and fluctuations in balances quickly through automated alerts and timely notifications when further action is required.
Smagh says the need for an automated cloud-based accounting system has increased as a result of the COVID-19 pandemic, because fewer accounts are on site, thanks to lockdowns and social distancing requirement.
Another change driven by the pandemic is a much closer focus on short-term results, because of the uncertainty the business disruptions are causing.
“If I look at companies right now, they’re going through a big shift. Everyone’s focused on short-term results, and for very good reason. Because things are changing so fast and are so fluid they want to get an idea that how are we going to start moving things,” he says.
“The best example is the tourism and airline industries. Whether it’s Australia, Asia or anywhere else in the world, the tourism industry has always forecasted a very long projection of growth and then they build new resources, new hotels, new attractions or new jets. You can’t do that anymore where we are.”
