Can the financial industry meet the demand for faster closings, more automation?

A recently released poll by Montvale-based Institute of Management Accountants Y Deloitte Control Center found that 95% of finance and accounting professionals admit that their organizations’ control functions “have more work to do or are not progressing fast enough” to prepare for the future of accounting and finance. The shortcomings: not preparing to generate reports and information in real time, improve the financial close process and redesign and automate manual activities. NJBIZ spoke to some experts to get an idea of ​​what’s going on.

Bible

“I’ve seen this movie before,” he said EisnerAmper Chief Risk Officer Peter Bible. “Any time technology advances, many CFOs and other internal accounting officers find themselves trying to catch up, often due to funding constraints.”

Large publicly traded companies “with multibillion-dollar market capitalizations” are often under shareholder and regulatory pressure to close the books faster and delve into business analysis, he noted. “But for smaller private companies, financial resources often need to be allocated to business operations first, and then finance and accounting can pick up any leftovers.”

However, that does not leave them completely blameless. “Creditors want up-to-date financial information on their commercial borrowers,” Bible said. “The pressure is not as great for smaller businesses, but at some point lenders will start to increase their applications.”

Meanwhile, firms like EisnerAmper are replacing. “We are a resource for clients so they can leverage our experience and knowledge in making decisions,” she said. “Executives often operate in an isolated world and don’t always see what’s going on with outside industries, but we can give them that perspective.”

“These kinds of problems are pervasive, across all industries and all sizes of companies, from startups to large companies,” according to Ethan Brysgel, Markum LLPnational leader in financial advisory and accounting services. “Business owners and other stakeholders, including shareholders, regulators and bankers, want faster closings and reporting that is more analytical, but many companies, especially smaller ones, find themselves with financial and human resource constraints.”

Accounting and advisory firms like Marcum “can provide outsourced support and expertise,” he said. “So instead of trying to retain employees with increasing wages and benefits, companies can call on us or others as needed.”

for the perplexed

Roman Matatov, PKF Senior Manager O'Connor Davies

Matatov

“Organizations of various sizes and stages are experiencing rapid changes in their roles, including their finance and accounting departments,” according to Roman Matatov, senior manager at PKF O’Connor Davies. “One of the key responsibilities of a finance team is to produce quick, actionable organizational insights to improve decision-making and help drive value. Whether it’s a formal monthly financial reporting package in a mature business, or a rolling 13-week cash flow forecast installed to keep a new organization’s focus on liquidity, your team would be well served to possess or quickly develop this capability. criticism”.

Capital allocation and control are also vital, he added. “To allocate capital, you and your team will need to have the ability to develop and track a budget and any periodic re-forecasts, often with non-financial data input and in alignment with other department heads. Control maturity can scale according to the risk profile and complexity of the organization, and care must be taken to balance the need for effective controls against the costs to implement, monitor, and evolve those controls.

To accomplish this, “Consider deploying your team to design, deliver, or facilitate oversight of key systems; instill a division of duties and create an authorization matrix for key transaction types,” Matatov explained. “You can often start by using short, single-page spreadsheet and policy checklists for key processes, and evolve as needed.”

Nina Chmura, Partner at Withum and Market Leader, Outsourced Accounting Systems and Services.

Chmura

“More and more companies are turning to outsourced services as a way to “keep up with processes and procedures,” said Nina Chmura, a without partner and market leader, Outsourced Accounting Systems and Services. “Small and medium-sized businesses in particular may be comfortable with the way they do things and may not update as often as they should. Also, a business may start with certain systems and procedures that work well, but as it grows, it may need to add controls and technology that keep up with the expansion of the business.”

Unfortunately, he added, “accounting and finance are often considered ‘back office’ functions. Property and equipment or research and development will get available funds, but management may not realize that investments are also needed to keep accounting and financial systems up to date. If your mechanic worked on today’s vehicles with equipment from 20 years ago, they wouldn’t work very well. Accounting and finance functions are no different. The technology means we can do more with fewer people, but first, the systems need to be in place, working and tested.”

What does it take for a business owner to be wise? “A lot of times it happens when an integral person leaves the company,” Chmura said. “Suddenly, the owner realizes there is a huge void they can’t fill.”

There is no way back

Laptop

The COVID pandemic — and the need for many people to work remotely — hastened the timeline for companies to digitally upgrade their accounting and financial approaches, according to Al Traverso, a partner in the nonprofit and manufacturing and distribution practices of Sax LLP. . – PEXELS

The COVID pandemic — and the need for many people to work remotely — hastened the timeline for companies to digitally upgrade their accounting and financial approaches, according to Al Traverso, a partner in the manufacturing and distribution practices and nonprofit at Saxophone L.L.P.. COVID may be less of a threat now, but the digital transformation of accounting and finance is “not being reversed,” she said. “Businesses need fast access to trusted information, and stakeholders want to see more automation, which not only reduces expenses, but also allows accounting and finance professionals to spend more time on analytical and value-added activities.”

The “traditional monthly closing is out of date,” Traverso said. “Now you need daily, or at least weekly, ‘flash’ reports so the CFO can track KPIs [key performance indicators] and spot trends quickly. Some software packages, for example, may mark material cost or other changes that exceed a set percentage.”

But the transition can be difficult for growing companies. “Maybe they started with a proper but basic accounting software package, like QuickBooks,” he said. “Then as the company started to grow, they added plugins for inventory, material requisition and others. However, at some point, the expanding business will need something strong, and it can be difficult to get to the next level. Will a controller, who may have been comfortable with the basic accounting package, be motivated to invest the human and financial resources to implement a new package?

Sax professionals can help clients make the migration, he added. “First, we warned them that they need to know their costs so they can manage their margins. We can then help them balance their financial and other resources by focusing on mission-critical areas that need to be addressed early on. Finally, we can help you design and implement processes, using your new software packages, so you can adhere to a faster close. Today, it’s about having reliable information at the right time. And the time span is getting shorter and shorter.”

There is no escape

“All companies, regardless of size, must be open to the adoption of new technologies to advance their control functions to compete in what is now a data-driven world,” according to a joint statement from WilkinGuttenplan Directors Bryan Saftlas and Daniel Fiorentino. “Larger companies may be ahead compared to smaller ones as they may have more resources at their disposal, but all sizes need to address these issues.”

In addition to quicker closures and other upgrades, they said companies need to “reassess existing staffing in the control area to ensure the right people are in place to advance the control function in an expeditious manner, so that the company does not stay behind your competitors. ”

And systems, as well as departments, need to communicate. “Enterprises need greater integration between their various software systems,” they advised. “If they could further integrate these systems, it would speed up processes and provide them with more meaningful information leading to actionable items.

“Our firm recognizes that many companies struggle with these areas, including our own clients, which is why we become their trusted advisors to help them navigate these challenges. For clients who want to resolve issues with their own staff, we help them through the recruiting process, interviewing and screening candidates to ensure they have the right employees in the right places.”

While the biggest hurdle to change is often cost, they caution that “drivers failing to prepare for the future of accounting is directly related to the shrinking talent pool in the accounting industry as a whole. With fewer accountants entering the workforce each year, building the best team creates a challenge.”

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