The accounting sector has experienced seismic changes in the past decade but are finance teams keeping pace? In the era of automation, it’s more important than ever for Australian organisations to find and develop the optimum skills mix.

Australia is home to around 189,000 accountants, according to the federal Department of Jobs and Small Business. More than 80 per cent are in full-time work and they command an average weekly pay of $1400.

Cloud based technology, changes in global regulations and tax reporting and the expansion of shared services models have impacted on the way they work, over the past decade.

Meanwhile, senior management has come to expect finance teams to perform as much more than mere bookkeepers and number crunchers. Accountants and finance professionals are commonly required to be strategic partners within the enterprise; all-rounders who can be called upon to lend their expertise and insight to all aspects of operations.

Disruption in the sector looks set to intensify as automation continues to relieve the profession of a swathe of its traditional tasks.

Managing the transition

Against this backdrop, many organisations face a two-fold challenge. They need to assist existing employees with traditional finance skillsets to adapt to new duties and expectations and ensure staff are provided with opportunities to undertake challenging, non-routine work.

The latter has become more of an issue as millennials continue their rise through the ranks of the profession. As a cohort, they’re more educated than their predecessors – many millennials begin their working lives with advanced degrees in hand – and are typically more resistant to the notion of spending their early career years doing repetitive, transactional work.

Requiring them to do so is not just a poor use of valuable resources. It may result in a revolving door of recruits, if new hires opt to look elsewhere rather than serve out their ‘apprenticeships’ undertaking unsatisfying and unchallenging work.

Old skills and new

Data analysis is high on the list of skills accountants may do well to acquire, as their roles evolve beyond their traditional number crunching.

Becoming proficient in predictive modelling and forecasting – along with the tools used to carry out the data analysis companies increasingly rely on to inform decision making – can make finance folk even more valuable members of the corporate team.

Meanwhile, many in the profession are positive about the prospect of Robotic Process Automation (RPA) relieving them of many of the repetitive tasks of yore.

The term RPA refers to the use of systems with artificial intelligence (AI) and machine learning capabilities to complete high volume, repeatable tasks, such as simple calculations and reconciliations.

Research has found RPA can reduce operating costs by up to 80 per cent. Researchers expect up to 40 per cent of transaction accounting work may be performed by the technology within the next few years.

Planning tomorrow’s team

Organisations need to plan and restructure their finance teams to reflect these emerging realities, or risk being caught with skillsets which no longer meet their requirements in the AI-driven automation era.

Here are five ways to build the right talent mix.

1. Create a roadmap

Developing a roadmap that shows how business processes will evolve as automation takes hold will provide clarity about the future direction – for both executives and finance employees.  The starting point should be an audit of accounting and finance functions to identify which roles which will be most heavily impacted.

2. Retain, retrain and realign

As automation relieves finance professionals of more rote tasks, finding higher value assignments for them to complete should become an imperative. Creating individual development plans to help employees upgrade and broaden their skillsets will ensure the organisation helps them achieve their potential and derives maximum benefit from their expertise.

3. Communicate and set expectations

Regular communication is vital during any period of major change. Helping staff recognise the value of automation and working with them to ensure their new roles are well defined will help ensure a smooth transition.

4. Change the hiring mix

Reduced focus on manual accounting and greater emphasis on data analytics and other business tasks calls for a different mix of skills. To avoid recruiting for yesterday’s jobs, organisations’ hiring criteria will need to evolve. Employees who can use data to challenge convention and inform business decision making should be high on the list of desirable hires.

5. Encourage technology leadership

The shift to cloud computing has seen IT departments’ control of technology systems and infrastructure loosen. The onset of the automation era may see their trend continue, particularly as self-service data analytics become the norm in more workplaces. Finance and accounting professionals should be encouraged to take the lead in the move towards machine learning and data modelling and analysis.

Claudia Pirko is Australia and New Zealand Regional Vice President at financial automation software provider, BlackLine.

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Claudia Pirko discusses how to support accounting and finance compliance with the right systems and processes.

As accountants, we know compliance means making sure a company’s accounting and finance functions are operating in accordance with laws and regulations. But how can we be sure we’re staying on top of those ever-changing compliance requirements?

Is the goal of “achieving compliance” like assembling furniture? It’s easy. These 16 screws go here and these two eerily similar looking screws go here. And this panel magically fits on top. The only problem is it is not that easy.

Luckily – unlike those “clear as mud” instructions – achieving compliance in your accounting and finance organisation can be straightforward with the right tools and processes. Like furniture assembly, it’s best to take a step-by-step approach to compliance by identifying and sorting all of the pieces first, matching them up to the manual, and then starting with step one.

Don’t skimp on substantiation

Various government regulations all require balance sheet substantiation, or the process of periodically confirming that ERP balances reconcile with transactional records and are corroborated by supporting documentation.

Traditionally, accounts are reconciled using spreadsheets and this is very manual and error prone. It’s like trying to build that bookcase without a guide. There’s an intrinsic lack of visibility throughout the process – a transparency that management needs to course correct when necessary to gain confidence in the completeness and accuracy of the reported balance sheet.

In some cases, transaction volumes are so high that many companies don’t reconcile all accounts prior to reporting – adding to the risk of misstatement. Without a platform to automate and transform this process, balance sheet integrity is often nothing more than an abandoned stack of shelves.

The challenge of a high volume of projects

Have you ever purchased an entire room full of furniture at once? Which pieces would you delegate to your partner and be able to trust that they’ll correctly follow each step? Similarly, the substantiation process for certain balance sheet accounts requires reconciliation at the transactional level; however, accounts that fall into this category are often high-volume, which adds to the complexity, risk, and time investment.

In many organisations, historically-applied logic is not documented well, and accounting teams are over-reliant on “tribal knowledge” which creates additional risk. These human-dependent approaches are not scalable, repeatable, or transferrable. Processes lack visibility and control, and often do not result in a high probability that exceptions are reported correctly and resolved in a timely manner. Look at handing off this tedious, high-volume process to someone, or something, you can trust.

Be Flux-ible with your analysis

If your firm is required to do flux analysis (identifying and analysing changes) the lure of this simple concept can be quickly spoiled by poor execution. In fact, flux analysis can be so daunting that businesses often wait until the end of the month, if at all, to compile and analyse variances. This involves rifling through Excel files, disparate databases and emails, manually inputting balances into a spreadsheet, and resurfacing the ole VAR function to calculate changes.

What’s the point of even doing this analysis if the numbers are outdated and management has moved on to more pertinent issues for next quarter? Imagine comparing your finished bookcase – something you poured passion, blood, sweat, and tears into – with the picture, and realising yours doesn’t look remotely similar. That’s why it’s important to analyse progress throughout the process so you can catch mistakes before it’s too late.

Collate your journal entries

You probably won’t ever write a novel about your furniture building adventures, but journal entries do require robust and timely documentation.

The average enterprise accounting department posts thousands of journal entries each period and each must be prepared, supported and approved, resulting in significant manual effort. Many journal entries also impact the balance sheet, and therefore must be substantiated with the same type of supporting documentation.

The journal entry process often involves checklists or email and hard copy sign-offs to ensure completeness, internal controls are supported and to maintain an appropriate audit trail. Look for solutions which ensure journal entries are properly supported in one centralised location.

Reduce the risk of manual processes with technology to capture workflows and supporting documentation, but also automate certain entries. Journal entries can also be tied to their related balance sheet reconciliations, which saves additional time.

With everything in one place you will eliminate the chore of running around the office (or multiple furniture stores) looking for what you need.

With the proper tools, controls are embedded in day-to-day activities with documented workflows and full audit trails. And achieving compliance actually does become as simple as it sounds.

Claudia Pirko is Australia and New Zealand regional vice president at financial automation software provider, BlackLine.

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Most businesses, regardless of their size, have the same basic processes. They sell a product or service, manage its sourcing and delivery, and then report on the outcomes.

While large companies have integrated, end-to-end systems to support these tasks, such systems tend to be too complex and expensive for small and mid-sized firms. As a result, most SMBs instead have to rely on less expensive, point solutions to help run their operations and track results.

This collection of disparate systems is known as a technology stack. The stack could include sales and record management systems, business intelligence and analytics tools, and financial close management applications. Increasingly, businesses are seeing clear benefits in evolving their stack to take advantage of continuing improvements in technology.

Why update the tech stack?

In the accounting department, upgrading an existing technology stack can make sound business sense. Manual, spreadsheet-driven processes that have been in place for years can be removed and replaced with streamlined, automated alternatives.

For example, rather than having to extract data from an ERP system, manipulate it in an Excel spreadsheet, and then export it into a reporting application, all these steps can occur seamlessly.

The business can also benefit from improved visibility. Data can be readily accessed via on-screen dashboards that can display custom views, specific metrics and KPIs. This can deliver levels of business insight that have not previously been possible to achieve.

Governance and control processes can also be improved. Senior managers are more easily able to see how their business is tracking and whether it is meeting its compliance requirements.

Factors to consider

While there are clearly business benefits to be gained from undertaking a financial technology stack update, there are also some key issues that should be considered. These include:

• Sequencing: The order in which new technologies are deployed can be as important as the technologies themselves. Consider the impact each will have on existing workflows and determine how the rollout can be completed with the least disruption to the business.
• Resource availability: Determine how many staff will be needed to implement the changes and whether they have sufficient time free to devote to the project. There is always the option of bringing in external consultants to assist with the project should resources be tight.
• Data quality: It’s important to remember that the outputs from new applications are highly dependent on the quality of data they are being fed. Examine all data sources across the business and ensure they are delivering the most up-to-date and accurate information possible.
• Integration: It’s likely that some existing systems will remain in place, so it is vital to consider how these can be effectively integrated with new applications and processes. This removes the chance that a slew of new manual workarounds will be needed.
• Change management: Ensure all staff understand what is being undertaken and the benefits it will deliver to them. Getting their buy-in early will help to smooth the transition process.

Benefits of an end-to-end solution

With an integrated technology stack in place, the accounting department will quickly see some significant benefits. It will allow the business to continuously evolve, automate and scale accounting processes to support timely and accurate reporting. This, in turn, will increase opportunities to analyse results and support ongoing business decisions.

Looking specifically at the close process, better integration also allows the systems of record to be more closely tied to the financial planning and analysis (FP&A) application being used.

Traditionally a business’ accounting team would have to extract data from sources such as bank records, the general ledger and sub-ledgers. This data would then be processed by staff undertaking manual account reconciliations, transaction matching and examination of spreadsheet variances. Once these tasks were completed, the data would then be fed into the FP&A application.

Through better integration, these processes can be significantly improved. By using software, such as BlackLine, to bridge the gap between the systems of record and the FP&A application, the financial close process can be streamlined and automated.

Taking this approach means the business can extract the most benefit from a truly integrated financial technology stack. Data integrity is boosted and the quality of output is improved. Transaction matching can be automated and previously manual workflows embedded. It also provides the opportunity to control document storage which can further improve staff efficiency.

Continuous accounting

The end result of a successful finance tech stack upgrade is the ability given to the business to embrace the concept of continuous accounting. This embeds control and period-end tasks within day-to-day activities, thus allowing the rigid accounting calendar to more closely mirror the wider business.

Rather than having a shifting workload that can put significant pressure on staff at certain points in the monthly, quarterly and annual cycles, that workload can be spread more evenly across the entire period.

The result is a better-balanced workload for all accounting staff at all times which, in turn, frees up more of their time to focus on value adding tasks such as analysis and forecasting.

Real-time visibility of business performance can also be achieved. This will boost business agility as management will know where the business is now rather than where it was last period.

Taking the time to revise a business’s financial technology stack will deliver significant benefits – and the best time to start is now.

Ann Furlong is director, operations APAC, for BlackLine. This article is sponsored by BlackLine.

The post The accounting benefits of evolving your business technology stack appeared first on InsideSAP Asia.

“CFOs are facing a perfect storm of accounting regulation, with three major International Financial Reporting Standard (IFRS) standards converging in rapid succession. Time to implement these new processes is running out,” said Gina McNamara, chief financial officer, SAP Australia and New Zealand.

“It takes approximately 18 months for the average Fortune 1000 company to make a change of this magnitude, and we just passed that point in the countdown to the mandatory effective date of the new standards. Corporate finance departments should act now to ensure that they are prepared for the transition and have the right tools to automate and simplify the process.”

The new IFRS 15, IFRS 16 and IFRS 9 accounting standards will apply to all entities – public, private and not-for-profit – that have contracts with customers and will supersede virtually all current revenue accounting requirements.

The SAP Revenue Accounting and Reporting application is the first in a series of IFRS solutions designed to help finance executives comply.

The IFRS 15 revenue recognition standard eliminates the transaction and industry-specific revenue recognition guidance under current US GAAP and replaces it with a principle-based approach for determining revenue recognition. The rule, which generally takes effect in 2018 for public companies and 2019 for private companies, can affect companies’ reported revenue, how and when they report financial performance, and overall financial decision-making, and will require multiple quarters of testing and preparation.

New features in SAP’s Revenue Accounting and Reporting 1.2 release include cost recognition, capitalised costs integration with project systems and results analysis from SAP, improved contract combination and modification capabilities, and integration with service and billing scenarios in the SAP CRM application, as well as advanced features to assist in the transition to IFRS 15.

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