Across the entire Record-To-Report (R2R) cycle, businesses face the extremely labor-intensive and risk-prone process of completing a close cycle within specific timelines and that too in an error-free manner. However, with automation available to improve process efficiency and effectiveness, the benefits of the R2R solution are immediate and demonstrable.
For long, Excel spreadsheets, despite inherent risks like lack of visibility, have been the backbone of Record-To-Report (R2R) practices of many an organization.
With process automation available to improve efficiency and effectiveness, many businesses face the challenge – why should they transform their process? And, what are the benefits?
Across the entire R2R cycle, businesses face the extremely labor-intensive and risk-prone process of completing a close cycle within specific timelines and that too in an error-free manner. Transaction matching, journal entries processing, month-end close, and compliance, including balance sheet reconciliations, are – in a majority of cases are completed with tedious workflows using spreadsheets and disparate financial accounting systems.
Besides, companies worldwide are looking for ways to gain audit transparency into all period-end processes and improve their financial governance to minimize risk.
Recently, Forrester Consulting, a leading research firm that provides independent and objective research-based consulting, conducted a survey of over 335 finance and IT leaders around the world to understand further about challenges being faced in today’s Office of Finance.
They found that 90% of their respondents experience challenges with the immediate financial process. The typical close is rife with time-consuming manual steps, under-supported, and at serious risk of experiencing errors.
Additionally, they found that the organizations that don’t rectify these core areas become less agile and are at risk of not catching up with competitors who are introducing advanced technological capabilities such as AI that benefit the entire organization.
RECORD TO REPORT CHALLENGES
Many finance executives will agree that they face consistent productivity, visibility, and risk challenges when managing the R2R process across account reconciliations, journal entries, close, compliance, and matching efforts. The following details are some of the universal concerns.
- Operational Inefficiencies
Managing the day-to-day operations of the R2R process is consumed by detailed and repetitive tasks. Many executives acknowledge the above point while using Excel spreadsheets to manage reconciliations with limited standardization across multiple countries and business units. Journal entries need to be manually reviewed to ensure proper approvals are in place, to see no duplicate or error postings. Retrieval of posted journal’s supporting documents is one of significant concern from an audit standpoint. A lack of visibility into the close process and duplicate testing for the compliance process were also common.
- Lack of Transparency
Having control and consistency over the balance sheet’s quality is also a top priority for all users. This will help them improve the level of confidence in their compliance status. Lack of accuracy and transparency across key R2R processes, including reconciliations, journal entries, close, and compliance, could negatively impact essential company priorities such as reporting, audits, and employee satisfaction.
- Financial Statement Risk
While rare, restatements can be devastating for the company and individual accounting and finance employees when caused by errors made during the close process. If finance executives can catch any potential mistakes/errors before they happen, they can spend significant time rework with their previous manual approach.
There are multiple benefits from Techwave’s complete R2R solution across three broad business objectives:
- IMPROVE EFFICIENCIES
- Reduce the overall no. of accounts to be reconciled through bulk reconciliations
Gathering data, ensuring proper formats, and manually reconciling accounts is a time-consuming process. Zero balance accounts and accounts with low risk often unnecessarily slow down the reconciliation process. However, with Techwave’s R2R Solution, businesses can reduce the accounts’ overall number to be reconciled. One can leverage the solution’s capabilities, which automatically confirm account balances, including – Accounts with zero balances, ledger to sub-ledger with no balance differences, accounts with no movements, and low-risk accounts, partially reconciled/fully reconciled accounts with pre-defined commentary
- Reduce time on reconciliation for reconcilers and reviewers
Using Techwave’s Solution, businesses can now focus on exceptions rather than matching all reconciliations since the R2R solution alerts them to possible risk factors that truly require their attention. The embedded dashboard shows when reconciliation is due, responsible for its review and approval, and system.
- Reduce time preparing, reviewing, and adjusting journal entries
Managing thousands of journal entries each month is tedious and complicated. Businesses can streamline their approval and adjustment processes significantly by using Techwave’s R2R Solution. The system facilitates automatic approvals and posts this information back into the organization’s ERP. Our RPA capabilities help organizations save time, allowing journal entries to be routed automatically to a list of people or forgo the approval process based on business rules and risk-based intelligence.
- Reduce time to prepare and complete close tasks
For most companies, this was managed outside the ERP through emails, spreadsheets, calls, and on-premise meetings. However, Techwave’s streamlined process, delivery of appropriate supporting documentation, automated workflow, and rework elimination reduced the time necessary to research and complete the close.
- Reduce time testing controls
Businesses are known to spend a significant amount of time each year testing controls, but this effort can be significantly reduced by using Techwave’s R2R Solution. The standard workflow and control testing framework from Techwave, including shared controls and remediation activities management, manages attachments to assure immediate delivery and use of correct and relevant reference information. Additionally, email task notifications remind participants to complete required control activities.
2. IMPROVE VISIBILITY/INSIGHT
- Reduce the effort to support internal and external auditors
Pulling documentation to support an external audit effort can be a recurring time commitment for internal accountants. With Techwave’s Solution, one can achieve substantial time savings for the internal accountants. The solution allows transaction changes, and tracking of supporting information, in a detailed audit trail and directly associated with each transaction.
- Reduce employee turnover
Using Techwave’s Solution, one can reduce the number of menial tasks for the reconcilers, journal entry, close task, and compliance accountants. Ultimately, employees can focus on more value-added activities and experience improved morale and overall satisfaction in their job because of their more strategic responsibilities.
3. MITIGATE RISK
- Reduce write-offs
Write-offs often occur because issues are identified with limited time to locate the supporting documentation or understand the business decisions and appropriate responsible party behind a discrepancy. With Techwave’s R2R Solution, users can find better tracking, identify issues, and appropriately remediate and resolve differences.
- Reduce rework and risk of misstatements
The overarching concern for all the users is the risk of a misstatement. Usually, many never experience a misstatement at their company but know that it would have severe ramifications throughout the organization and to external shareholders if one were to occur. Techwave’s solution transparency, visibility, and increased control reduce both the rework required to avoid misstatements and the risk of misstatements overall.