I come from a family of accountants. Both my father and sister are accountants, especially my father who has been an accountant since graduation. Even as a child, I had always wanted to follow in my father’s footsteps, which led to me pursuing a degree in Accountancy.
As with most accounting graduates, I landed my first job in one of the Big 4 – KPMG. As an Audit Associate, I dove into this role head first. I enjoyed the vibrant work culture that came with colleagues and teammates. I relished the opportunities to be exposed to various businesses and industries by getting a deep understanding on the way they operate through the audit procedures we performed.
Ultimately, I grew professionally through the various engagements that took me around South East Asia and being exposed to different big and small businesses and work cultures in the region.
In this article I would like to summarize my experiences in the financial sector and give 5 reasons how your company can benefit from digital processes in accounting.
Still far from digital accounting
However, after the first few years of joining the firm, I realised that what my father had described about accounting “back then” was still largely applicable to the work that my clients and I were doing:
- constant lack of time
- peak-period frenzy for reporting
- difficulties in ensuring accuracy when tying financial reports and statements
And of course, just like my father, I spent most of my time toggling between endless workbooks of GL listings, Trial Balances and Lead sheets.
At that point of time in my career, if you were to compare the current and past state of other departments, it was painfully obvious that other departments were well ahead of the curve with regards to keeping up with technology.
1. Comparing with digital transformations in other functions
Take marketing for example. Marketeers used to engage in fierce battles to secure prime spots on the print newspapers and magazines. But in today’s world, an increasing proportion of marketing efforts have gone digital.
Or take Human Resource as another example. I can vaguely recall the confidential envelopes that we used to receive at the end of every month. Today, we get notified digitally, and we get to see our bank balances in real-time via mobile applications.
Don’t even get me started on professions that did not even exist 30 years ago, such as mobile app developers, data analysts or social media managers.
On the accounting and accounting software front, one of the biggest digital revolution over the past 30 years was the introduction and adoption of ERP systems. ERP systems have helped to significantly reduce the time and effort required in the bookkeeping process of accountants. But, has that been the only significant change that has happened in the accounting industry for the past 30 years?
2. The danger of not digitalizing accounting
It goes without saying, the world that we live in today is vastly different from that of 30 years ago.
Companies now have easier access to internationalisation. Companies are also churning out much more data that is readily available for analysis. Accounting standards are constantly changing to keep up with the way the global economy of today operates. And with the recent Covid-19 pandemic, the pressure is on accountants to provide quick and reliable data to guide business decisions.
Changes like these, just to name a few, are not making the lives of accountants and finance professionals any easier.
A study conducted by CIMA Global shows that accountants and finance professionals are spending more than half (64%) their time gathering financial information and analysing it for insights, and only a third (36%) of their time communicating these insights to influence business decisions and guiding corporate actions that ultimately create value for their companies.
Given the speed at which the global economy evolves, it is simply insufficient for accounting and finance professionals to remain status quo. Financial insight that takes a whole day to prepare is simply a day too late.
3. Hiring more accountants will not solve the root cause
For many traditional companies that are struggling to manage, muscle and deliver meaningful and timely insights based on the mass of data, their most intuitive measure to combat the increased demands on accountants and finance professionals is to hire more accountants. But does this method really help reduce the bottlenecks in their finance processes?
Simply put, no!
Often, with additional headcount, companies still face the same problem, such as the need to have a centralised platform for managing the completeness and accuracy of their various data sources.
This problem is further exacerbated when the number of spreadsheets being churned multiplies together with the increased demands by your organisation.
“Throwing additional headcount at such a problem is like adding an extra runner in a relay race.”
Considerations such as how efficiently your team works together, how do individuals build and grow upon one another’s strengths and weaknesses. And most importantly, how do YOU manage this entire team. Therefore, hiring more people may work in the short run, but it might not be the most elegant solution that you are looking for as a leader.
4. Digital accounting is the key to success
Companies are adopting Robotic Process Automation (RPA) to automate repetitive (and mundane) tasks that are better left to a computer. At the same time, companies are also adopting technology that can seamlessly integrate and transform data, thus removing the manual load of muscling data, otherwise known as number crunching.
On another spectrum, companies are also adopting live feeds of their financial data and information, whilst incorporating predictive analytics through statistical modelling, therefore banishing the concept that financial reporting is only an exercise in retrospect.
Challenges can become opportunities for growth if a company can leverage on the right set of technology to empower their work.
Based on my experiences working in the accounting sector and with a wide range of finance teams, there is one key element that separates top-of-their-class organisations apart from their peer.
The key element boils down to their ability to harness and analyse data.
5. Embracing technology to eliminate pain points
When companies can turn things about and dedicate more of their time analysing data instead of muscling data, they will be several steps ahead amongst their peers.
Take one of my clients as an example, an international manufacturing company that is listed in its home country. Due to the size and geographical reach of their business, it used to take them 25 days for the close of their financial process. As mentioned earlier, that is financial insight and data that is 25 days too late.
That’s when enough was enough, and rather than throwing additional headcount in an attempt to reduce time and effort spent of financial close, they decided to invest in technology. Technology that replaced tedious and cumbersome tasks such as data validation, intercompany reconciliation and group reporting.
Through this initiative alone, they were able to reduce the time taken for their financial close process by 70% to that of 8 days. Leaving the time freed better dedicated for in-depth analysis and strategic planning. This is just one of many successful examples of how companies have embraced technology and revamped the accounting sector and finance processes.
From manual accounting to digital accounting
I truly believe that, with the plethora of solutions in the market right now, every finance department is at the perfect moment of technological progress to transform themselves from a cost centre to that of a value centre.
And this is what will set the finance leaders of today apart from the finance leaders of yesterday. It’s 2020, and it’s time to fix what is broken (besides Excel formulas).
Find out how a financial performance management software is the ideal solution to digitalize your accounting process.
Read in this blog post, what opportunities work-from-home brings for finance leaders to improve their team’s performance and about the relevant tools that will help finance leaders achieve so.
G2 ranked LucaNet as a market leader in its summer 2020 rankings for best Corporate Performance Management (CPM) software. Read about the software comparison.