Case study: Automating key processes for a more efficient month-close

    Background

    A global software company with over $2 billion in annual revenue experienced rapid growth through a series of acquisitions. However, the financial function did not keep pace, and as a result, the company spent more time on data preparation and managing close activities and workflows than on analysis and decision-making. With a time to close of roughly 14 days, and no formal system for monitoring key close milestones, the company looked for ways to become more adept at departmental coordination, improving systems, processes, and reporting capabilities, and establishing a finance function befitting its stature, all with the goal of freeing up time to perform more value-added analysis.

    Challenge

    The company relied exclusively on spreadsheets and cumbersome analysis and email to manage the account reconciliation and financial close processes. This approach made visibility into the close process difficult and required excessive effort to manage the process. Historical files of account reconciliations and supporting schedules, compliance sign-offs, and other documentation were shared via email and stored in shared drives and decentralized locations, rendering it onerous for stakeholders to manage the close end-to-end and, more importantly, transparency.

    Solution

    CohnReznick performed a comprehensive financial close assessment, honing in on critical close activities, to document and map current-state of the pre- and post-close timelines to uncover pain points and determine what activities impeded the process. We identified multiple issues affecting the financial close and reconciliation workflows: decentralized documentation, manual workflow management, non-standard manual reconciliation procedures, and lack of reporting and management visibility.

    Through collaborative selection with the client, CohnReznick identified implementing a leading finance automation platform as part of an approach that would address account reconciliation, task management, and transaction matching issues. The CohnReznick team held global discovery workshops across all future end-users to identify and build out the optimal organizational structure needed to properly administer task workflows and reconcile accounts. Information on all end-user reconciliations and tasks was collected and configured within the technology tool to ensure that the future-state workflow environment met the company’s need for a streamlined financial close.

    • The task management module enabled a formal, enterprise-wide standard for preparing, approving, and disseminating financial information, allowing management to track the status of all tasks and target areas for improvement. 
    • The transaction matching module allowed for the partial automation of bank accounts with high transaction volume, permitting a shift to a “manage by exception” work style from what was a tedious, manual process.
    • The account reconciliations module drove standardization with account auto-certification rules, enabling an automated reconciliation for accounts meeting materiality, transaction activity, or zero-balance criteria.

    The tool is now used as an automated close management system and documentation repository to provide better controls and visibility and manage risk for reconciliations and tasks. The shift to a system with audit trail reporting has reduced the time needed to comply with SOX controls without increasing organizational risk. 

    Business Breakthroughs

    • 35% of accounts system-certified in first month 
    • Shortened the financial close by two business days, road-mapped four total day savings
    • Six key bank accounts auto-reconciled through transaction matching
    • Approximately 2,500 financial close tasks shifted from email to system-based workflow and document management system

    Success

    The company shortened its financial close by two business days globally, in part by transitioning roughly 2,500 financial close tasks across its global operations into a centralized task management product. Workflows are now structured and standardized within and across all entities; users can share and collaborate on documents and reports with full audit trail capabilities, reducing the time needed to comply with SOX controls without increasing organizational risk.

    With a complete close management system and documentation repository, the company is able to automate the reconciliation of low-risk accounts and better direct resources to more complex reconciliation requirements and analytical processes. 
    Freed from low-value tasks, the company’s accounting employees can now focus on analysis of data rather than the preparation of spreadsheets and reports, leading to a higher-quality close, driving a better front line and stakeholder experience. Management can be confident in the effectiveness of newly available data, analytics, insights, and streamlined processes that support business goals, scalability, and growth initiatives.

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    This has been prepared for information purposes and general guidance only and does not constitute legal or professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its partners, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.