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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We are all creatures of habit, and it can be comforting to begin each workday knowing that everything will be familiar – except for the occasional (and unwanted) surprise, of course.

Change seems risky, and besides: you have all of your well-known processes and routines in place.

But if you’re completely honest, the repetitive tasks that dominate your time aren’t tapping into your talent. And some of the processes performed by your teams may create more risk than you want to admit.

If you automate a bad process, it’s still a bad process

Many organisations look to the cloud or finance technology for the solution, and rightly so. But if you make these moves without first revisiting your processes, not only will the inefficiencies remain. You and your finance and accounting teams will also reap fewer benefits from a new platform.

To avoid making this mistake, successful organisations take a deliberate but stepwise approach as they shift to a mentality of continuous improvement.

Gary Simon, chief executive of FSN, recommends this: “Start with a mindset that says, ‘I’m not going to do everything in one big bang. I’m going to make gradual improvements to the process.’ When you’re time constrained, you’re not actually going to be able to do everything at once. So you have to build into your mindset that you’re going to make continuous change.”

This makes process improvement more manageable and allows your teams to begin to see results earlier – such as fewer hours spent on transactional activities and more time to focus on analysing the data and reports.

The ability to focus on more meaningful activities also inspires a more motivated, committed workforce. As employees feel empowered to seek and suggest a better way, they become more likely to improve and grow in the organisation.

All of this reinforces the vitality of Continuous Accounting in 2018. This modern approach lays a foundation for real-time data to fuel analytics, and gives CFOs a clearer picture of the strengths and weaknesses of the business.

Continuous Accounting embeds automation, control and period-end tasks within daily activities to align the accounting schedule with the rest of business. This allows accountants to process data and transactions as they come in, significantly shortening the financial close and producing real-time reporting, analysis, and awareness.

Here are three ways to empower your teams to take a Continuous Accounting approach.

1. Challenge the way it’s always been done

It’s taken a long time for innovation to find its place in accounting and finance, and now is the time to challenge your company’s processes.

Don’t just accept the way things have always been done. Instead, challenge it. Leverage problem solving and critical thinking skills to uncover better models. This drives streamlined processes and eliminates unnecessary steps, reducing the volume of work and improving quality.

This revised mindset can elevate your role within the organisation and set an example for your teams to follow. The employee accepts the status quo. The leader challenges it.

2. Take ownership 

As you’re beginning to challenge and streamline processes, take the time to perform post-mortem reviews to identify what went right and what went wrong. Seek out root causes, and incorporate what you’ve learned into a continuous improvement model.

The best performing finance teams know that success means always adapting, innovating, and improving to create a culture of continuous improvement.

Looking for new ways to design inefficient processes can help you and your teams feel more invested, as you’re playing an essential part in meeting the evolving needs of the broader organisation – both now and into the future.

Establishing best practices and applying the right technology will deliver new levels of efficiency, control, and visibility across your accounting and finance operations.

3. Set standardisation with tasks

Finally, as you improve your internal processes and workflow try implementing a task management management solution as your most effective next step.

Recurring tasks are common in all aspects of the financial close, from payroll and procurement to consolidation and reporting.  A task management solution can map what needs to be done in each area, providing visibility and measurability along the way. Tasks can be distributed throughout the period and across resources to reduce bottlenecks.

Chances are that every close process has room for improvement.  Start with “pencils down” or consolidation as your milestone task.  Then break down deliverables by department.  Next, evaluate tasks by individual.  As you begin to aggregate tasks, identify KPIs and report on them to measure success.  Identify inefficiencies and tackle “low-hanging fruit first”.  Build on your success, and re-purpose time saved with “quick wins” to focus on larger initiatives down the road.

This article is sponsored by BlackLine. Terry Smagh is senior vice president APAC at financial automation software provider, BlackLine.

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The new solution for finance provides support for key finance functions including profit and loss, balance sheet, and cash flow planning while simplifying both data collection with SAP S/4HANA Cloud and analytics with SAP Analytics Cloud.

The solution enables FP&A teams to align operational and financial plans and to bring financial and nonfinancial data together to establish a single source of truth, eliminating the typical gulf between financial software and stand-alone spreadsheets and planning products.

The SAP Analytics Cloud application includes planning, business intelligence, and predictive analytics capabilities that enable organisations to automate insights that deliver organisational agility. The machine learning incorporated into the application highlights the key drivers of variances, creates forecasts, and augments data.

“Prior to working with SAP Analytics Cloud, we had created enormous amounts of data, but lacked the tools necessary to plan upon and analyse it,” said Stephen Filreis, director, SAP Program Management, Pratt Industries, an Atlanta-area manufacturer of corrugated boxes.

“Now we understand where we should target our efforts to maximise our collections group’s effectiveness. SAP Analytics Cloud has allowed us to gain visibility into this critical information and get our business users closer to data with intelligent visualisations and meaningful reporting,” said Filreis.

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The survey included over 900 respondents from large organisations in the United States, the United Kingdom, France, Germany and Australia.

While 97 per cent of respondents considered data to be valuable to their business operations and 67 per cent considered it to be ‘very valuable’, there was also widespread reliance on the IT department to manage and control data.

Fifty-two per cent of respondents said while finance and accounting ensures financial systems like the ERP system are regularly updated and the staff is aware of cybersecurity best practices, they leave the vast majority of the upkeep to the IT department. Another 29 per cent said they rely entirely on the IT group.

“Finance and accounting has the opportunity to actively partner with their IT and information security counterparts to better understand the safeguards that are in place; and they should, considering they are primarily responsible for the financial controls for the organisation,” said Patrick Villanova, vice president and principal accounting offer, BlackLine.

Only one in five of the respondents said their finance and accounting department takes a highly proactive role in pursuing optimal data security – but with increasing cyberattacks and the growing value of big data assets, chief financial officers may need to reconsider this stance.

“Protecting the data should be everyone’s responsibility – not just the concern of the IT group,” said Villanova. “By leveraging a cloud platform such as ours or cloud tools from other well-established companies, finance and accounting can strengthen internal controls, provide real-time transparency into enterprise-wide financial data and transactions.”

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The partnership is intended to simplify the GST process for organisations, particularly SMEs, by leveraging the strengths of BSNL as GST Suvidha Provider (GSP) and SAP as Application Service Provider (ASP). BSNL, which views the GST as an enabler of digital growth in India, currently serves approximately 115 million customers across the nation.

“As an intrinsic part of the Government’s Digital India initiative, we see GST as an important tool in the process for nation building,” said Shri Anupam Srivastava, chairman and managing director, BSNL. “Our mission is to ensure that every business in every town and village in the nation successfully adopts GST,” he said.

“As we complete nearly a year since implementation of GST, the nation’s indirect tax system has streamlined considerably,” said Hemant Dabke, vice president – Strategic Industries, SAP Indian Subcontinent.

“Our collaboration with BSNL is a step further in our continued efforts at fast-tracking GST compliance in the country and will extend this success to tier II and tier III markets of the country.”

Launched on July 1, 2017, the GST initiative is one of India’s largest tax reforms. Under the tax regime, more than 51 million SMEs in India are in a position to reinvest in or redefine their business processes.

The new regime is intended to ensure that indirect tax rates and structures in India are common across the nation and to remove the previous cascading taxes by applying a system of tax credits throughout the value chain.

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Through the strategic partnership, Wipro will offer Dallas-based Trintech’s portfolio of financial solutions to its clients worldwide. Solutions include high-volume transaction matching, balance sheet and intercompany reconciliations, journal entries, financial close task management, disclosure and fiduciary reporting, and compliance management.

Wipro will complement Trintech’s portfolio by providing its own AI and automation platform, HOLMES, to extend the footprint of Trintech’s enterprise-class Risk Intelligent Robotic Process Automation financial solution. Wipro will also plan and deliver world-class financial transformation, while providing integration services and post-implementation support.

“The demand for record to report technology solutions continues to grow as finance organisations around the world seek to increase not only the efficiency, but also the effectiveness of their overall financial close processes,” said Robert Michlewicz, chief revenue officer, Trintech.

“Wipro’s deep advisory expertise in finance and IT transformation makes them a perfect partner to deliver successful digital transformations for finance functions, using Trintech’s portfolio of solutions.”

Trintech’s Cadency solution provides financial executives with a financial governance solution that weaves all R2R activities into a single, seamless process, delivering an effective and efficient financial close cycle that minimises risk and costs, maximises resource utilisation, and gives stakeholders full visibility into the close cycle at all times.

“We are confident that organisations committed to digitally enabling their financial processes will benefit immensely from the combination of Trintech’s financial solutions portfolio and Wipro’s expertise in helping businesses simplify and automate their processes,” said Phil Dunmore, vice president and global head of consulting, Wipro Limited.

The post Trintech and Wipro partner to automate enterprise finance functions appeared first on InsideSAP Asia.

If you have a credit card, you probably don’t question whether or not you have to pay your bill. Or you know not paying will inevitably result in late fees, incessant phone calls from your credit card company’s swarms of collections agents and bad marks on your credit report. This, in turn, could lead to possible feelings of regret about splashing out on that carbon fibre road bike you haven’t actually ridden yet but that looks cool propped up in your garage.

Now it’s just you and your carbon fibre bicycle against THEM. All of them.

Suppliers also offer credit arrangements to the businesses that order from them. But in the business world, the balance is often flipped from that of a consumer/creditor. The supplier is always “the little guy”. In this scenario, they’re the ones who have extended the credit and are asking to be paid. And they run the risk of losing accounts if they push too hard.

For them, optimising working capital and receiving timely payments is key. But it’s so much more painful than just sending a late notice or sticking a credit collector on a delinquent account.

Back-breaking payment practices in the spotlight

Receiving timely payments means suppliers can meet critical business commitments, particularly in busy periods, when taxes, salaries, bonuses and more must be paid – sometimes all at once. Late payments often push them into funding working capital through overdrafts or loan facilities. These means are expensive, and, if you’re a small business or one that’s trying to expand and grow without over-trading, they can be crippling.

But the negative effects of late payments don’t stop there. Small- to medium-sized businesses (SMBs) are the backbone of world economies. That’s why it’s surprising that governments have just recently begun to spotlight this problem and look for solutions.

According to an article from The Guardian, “A staggering £26bn is owed by larger businesses to small firms in the private sector. Late payments cause 50,000 businesses to go bust every year, at an annual cost to the economy of roughly £2.5bn.” This economic drain is what spurred the UK government to back The Prompt Payment Code, an effort to set payment practice standards to protect SMBs and create a cultural shift in business norms. Businesses make a voluntary commitment to pay according to the terms set in the code.

The US took a different route in its efforts to stem the ill effects of late payments to SMBs that feed the economy. According to the US Small Business Administration (SMA), “the 28 million small businesses in America account for 54 per cent of all US sales.” Under the Obama administration, the federal government required large businesses with government procurement contracts to pay small suppliers within 10 days, says The Guardian. It also leveraged the SMA to “promote prompt payment through the federal procurement supply chain”.

Similar to the UK’s efforts, the Australian state of Victoria has recently introduced ‘The Victorian Fair Payment Code’, which asks businesses to pledge that they’ll pay suppliers within 30 days. An article from Fast Company notes that the initiative, which takes effect on July 1, 2017, has the potential to become mandatory “for all businesses in the state if the government does not see an improvement on the times it takes to clear invoices”.

For a few, late payments pay off

But the US didn’t seem to create any lasting change amongst the largest corporations with its efforts. Bloomberg View Columnist Justin Fox covered the topic of late payments in a May, 2017 article. “Only 10.8 per cent of publicly traded corporations in the US pay suppliers on time or early, according to new data from Dun & Bradstreet,” writes Fox. “If almost everybody in your peer group is delinquent, there’s unlikely to be much of a stigma attached to delinquency.”

The reason for this widespread bad behavior? According to Dun & Bradstreet insights quoted in Fox’s article, late-paying corporations have higher stock returns than those who pay on time. If the goal is to make a lot of money, and large companies are rewarded with more of it for being delinquent … well, you see the problem.

But paying late doesn’t always work out in the business’s best interest. Example: this Silicon Valley tech firm is the subject of a $10 million dollar lawsuit. Of course, most suppliers in the SMB space don’t have the funds to pay the legal fees associated with suing a huge company for non-payment.

One compelling argument for more ethical treatment of the supply chain revolves around choice. Say a large company has an account with a supplier to order a large amount of goods, amounting to tens of thousands of dollars. If that company withholds payment for the goods they’ve ordered, they put the supplier in the position of not being able to pay their suppliers.

As a result, the entire supply chain suffers. If this happens over and over again, businesses fail. In the end, big firms have less choice available within the market, and they end up paying higher prices.

It takes more than good intentions

While there are many big businesses that fit in with the crowd above, there are still many more of all sizes that want to pay their bills on time but are challenged by invoice processing complexity. With growing invoice volumes come greater numbers of exceptions, and when manual processing is still part of the equation, errors and lost documentation follow closely behind.

Lacking the right technology, many companies simply cannot get their payments submitted fast enough. And they lose out on early payment discounts offered by suppliers who hope to incentivise companies to pay faster.

The average number of days it takes for companies that “run the gamut of AP performance in 2017” to process a single invoice is 10.3 days, according to a report from Ardent Partners. The best-in-class make up the top 20 per cent of these AP departments and have a cycle time that averages out to 3.5 days.

Eighty-eight per cent of these top AP performers have standardised their processes across their organisations. “Adoption of technology is another area where the best-in-class clearly differentiate themselves from the rest of the market,” explains the report. Advanced automation technologies that integrate with ERP systems, including capture, workflow and RPA solutions, don’t just help companies achieve shorter cycle times and major cost savings. They allow them to make continuous performance improvements a way of life.

But companies face pressure to pay many different entities, including governments. For some, choosing to pay a supplier may mean not complying with tax laws. A recent many different entities, including governments. For some, choosing to pay a supplier may mean not complying with tax laws. A recent article from Forbes discusses tax evasion charges brought against the CFO of Soupman, Inc., the restaurant chain that inspired Seinfeld’s famous Soup Nazi episode on the television series.

While it’s not clear in this case whether Soupman CFO, Robert N. Bertrand, paid suppliers instead of taxes, the article makes an important point: “Any failure to pay – even late payment – is serious, regardless of how or why the employer or its principals use the money. Using the money to pay suppliers and keep the business open isn’t a good reason in the IRS view.”

E-invoicing is one technology that’s helping companies increase the efficiency and cost-effectiveness of their invoice management while also creating transparency into documentation and audit trails to ensure regulatory compliance. Though it hasn’t completely caught on in the United States, countries in Europe, Latin America and Asia Pacific are using e-invoicing to successfully streamline and standardise the sending and receiving of invoices.

The tide is shifting

In today’s uncertain business environment, more and more governments are shining the watch light on the fact that SMBs are the backbone of their economies. And backing measures to encourage more ethical payments is certainly a first step in a giving visibility to this widespread crisis.

But real change will come from organisations that believe in the potential of technology to begin a transformation that encourages both profit and ethical practices – one that ripples out from accounts payable to purchase-to-pay to end-to-end financial operations to the company as a whole and then infinitely outwards in the supply chain.

The benefits of operating ethically towards your suppliers are real. Trust, better relationships and the certainty of order delivery and fulfilment will be new sustaining forces for companies of all sizes that choose to be part of the payment practice sea change that is already starting to take place.

If you’re interested in how technology can boost your company’s ability to shorten payment cycles and optimise processes, download our P2P automation whitepaper.

This article is sponsored by Kofax. KK Tung is director, FPA Solutions. KK Tung has close to 30 years of extensive experience in project management, business consultancy, and sales in the region. For the past 10 years, KK has focused on the delivery of Financial Process Automation solutions; helping many large enterprises achieve desired business goals through automation.

The post To pay or not to pay: why it shouldn’t be a question appeared first on InsideSAP Asia.

Leading accounting and finance organisations are transitioning into a more analytical function and partnership role by building their business plan around three pillars: Close Process Transformation, Process Automation Transformation, and Integrity and Risk Transformation.

Executing each one of these pillars is vital to maximising the reduction in transactional processing in accounting, which Accenture predicts can be reduced by 40 per cent – with the right combination of people, process, and technology (1).

Close Process Transformation

Too often, the close process is run by gut, instinct, and collective knowledge, versus a defined, centralised, and orchestrated workflow and process. With so many people involved and mounds of spreadsheets constantly accumulating, roughly defined processes are often different, from geography to subsidiary. Collaboration remains stubbornly stuck in email and conference calls, with limited visibility into the process.

When you take a look inside top performing organisations, it’s immediately evident that they do things differently – and it’s time to take a page from their playbook.

The key to their success is clarity. Each stakeholder in their organisation has a clear perspective of what must happen at each step, when it must happen, and what it depends on. They’ve created a clear set of roles and responsibilities and have management-level reports that give visibility into the global close calendar.

Milestone tasks are in place to guarantee the correct sequence, flow, and rollup of related activities. Automatic notifications are set to warn stakeholders of pending tasks and to give management a heads-up of overdue tasks and bottlenecks. And a set of internal controls is established to reduce material risk while eliminating unnecessary controls that stand in the way of a fast close.

As a result, they can close and report, on average, twice as fast as their peer group.

Process Automation Transformation

It’s no secret that manual tasks drain accounting and finance efficiency, and those tasks continue to top most accounting surveys as the biggest challenge to achieving a lean close.  The issue often causes associated frustrations among accountants ― frequently the most talented ones who aren’t using their skills appropriately, and are instead performing repetitive work.

Typically, accounting organisations have significant manual overhead in several areas. This includes the operational areas of accounting, such as billing and collections and accounts receivable, and within the close and general accounting areas, such as journal entries, account and transactional reconciliations, and intercompany transactions.

Best-in-class organisations are, however, substantially leaner than their peers and able to reallocate their costs towards strategy. A key enabler for them is leveraging process automation at various levels within the accounting team.

Indeed, the Continuous Accounting model takes a process-first approach. By making more efficient and productive use of accountants’ time and valued work, CFOs, Controllers, Internal Audit and the accountants themselves are better able to achieve the company’s strategic objectives at less cost, with the added bonus of more meaningful work.

Integrity and Risk Transformation

Creating trust and continually keeping pace to minimise reporting, regulatory and strategic risk  the final pillar of finance transformation. Through strong automation, organisations can achieve better integrity, both in their balance sheets and in their controls. And those that invest accordingly have significantly more accurate financial reports and less resources devoted to trying to root out errors in the balance sheet.

While task management and automation improve speed and efficiency, data integrity perhaps provides the largest benefit, avoiding the organisational and professional exposure from an inaccurate filing or restatement.

Automation can also highlight transactions and balances that exceed control thresholds, while ensuring all reports can be reconciled back to the original data. Reconciliations, journal management, and revenue processes, like revenue recognition, can also be upgraded to become rule-based and as consistent as possible, backed by a strong record of corrections or adjustments and post-audit review processes.

The Foundation for Finance Transformation

Successfully navigating the path to finance transformation is dependent on building all three of these pillars, and your organisation can only be as strong as the weakest one.

First, optimise your processes to reduce risk, improve accuracy, and increase efficiency in a way that benefits the entire accounting and finance function. Then, establish a solid foundation for each by investing in the right technology that will result in the biggest boost of overall productivity. Finally, through automation, free your people to be more productive and help guide the business through planning, strategy, and analysis.

[i]Accenture: http://ww2.cfo.com/analytics/2015/10/death-digital-good-bye-finance-know/

Ann Furlong is APAC director at financial automation software provider, BlackLine. This article is sponsored by BlackLine.

The post The three pillars of finance transformation appeared first on InsideSAP Asia.

There’s been a lot of change for finance and accounting lately. We know. And it may feel overwhelming to have to keep up with new technology and the ever-increasing amount of available data to analyse, while trying to figure out if the robot uprising will be a threat or a liberator.

As if all of this isn’t enough to make your head spin – and we know it is – along comes blockchain technology. Tempting to ignore it and hope it goes away, right?

But it’s not going to. And based on its current trajectory, it could impact your organisation sooner than you think.

Disruption in the finance industry has become the new normal, and migrating to a growth mindset is the most effective way for accounting and finance professionals to prepare for what’s ahead. It’s also the only way to switch up the typical pattern of lagging behind as the last industry to adopt cutting edge technology.

So, what is blockchain?

A blockchain is a distributed digital ledger with built-in security that records transactions in real-time. Every ten minutes, all transactions are verified across the network, reconciled, permanently time-stamped, and stored in a block that is encrypted and inextricably linked to the preceding block. This creates a chain. A blockchain.

Blockchain is the technology that powers cryptocurrencies such as bitcoin and Ethereum, but its potential for accounting and finance extend far beyond digital currency.

Blockchain is structured as a triple-entry system, with both sides of every transaction simultaneously and directly recorded onto a shared ledger, creating a verifiable cryptographic receipt – or digital signature – that is visible to both parties.

The process provides a permanent audit trail, significantly reduces the risk of accounting errors, and guarantees the integrity of financial records. It eliminates central points of attack and protects the ledger from corruption and fraud because transactions can’t be retroactively altered.

It also holds the potential to revolutionise the areas of documentation, invoicing, and payment processing, erase waiting periods and reduce the cost of global transactions.

The trust protocol 

The heightened security of both data and information is one of the most valuable components of blockchain technology, and it establishes an unprecedented level of trust. The transaction itself can be fully trusted without having to trust the other party.

As a result of this trust protocol, blockchain is being cited as the next wave of disruption, especially for global companies and auditors.

Technology searching for a purpose

Now is the time for accounting and finance organisations to research and reveal the ways in which blockchain can benefit their companies. The technology holds the potential to provide a seemingly limitless number of solutions, and it’s growing fast – really fast.

As a result, it’s essential to ignore the hype and focus on the practical use if cases emerging from the research from financial institutions around the globe. These range from data management and record-keeping to compliance, and can begin to give your organisation a clearer picture of how to adjust your strategy to prepare for the very near future.

“The excitement around blockchain continues to gain momentum as firms see it as an opportunity to get their feet wet with a transformative computing architecture that they believe will change the [accounting] industry,” says Selwyn Halbertsma, director of business consulting at Synechron, in a Journal of Accountancy article.

Why finance automation matters more than ever 

Remember when the concept of ‘Modern Finance’ was first introduced? Since then, finance automation has emerged as the most effective way to modernise your processes, particularly the manual tasks that are part of the financial close.

And if you’re at all familiar with the Continuous Accounting model, you’ll know that preparing for finance of the future is a process-first approach. By making more efficient and productive use of accountants’ time and valued work, CFOs, Controllers, Internal Audit and the accountants themselves are better able to achieve the company’s strategic objectives at less cost, with the added bonus of more meaningful work.

Ventana Research states that “there are many ways of putting the [blockchain] technology to practical use that complement and enhance established patterns of doing business. Technology that conforms to how an organisation operates and provides immediate, clear benefits usually is adopted broadly and quickly”.

This means that in order to be ready for the benefits of blockchain, you must identify the gaps and areas of process improvement now and work toward operating as a modern finance organisation. For just as you can’t automate bad process, you can’t expect to integrate innovative technology like blockchain into a department that still relies heaviiy on spreadsheets and manual processes.

Shaping the future of finance

The value that blockchain technology could bring to finance reinforces that accurate financial data, greater reporting transparency, and  automation that streamlines intercompany accounting and ensures compliance will eventually be a permanent part of the financial landscape.

And because blockchain is still in the early stages of what’s possible, there’s an opportunity for accounting and finance professionals to lead this global initiative at its onset, playing an integral role in shaping the future of finance and our world.

Ann Furlong is APAC director at financial automation software provider, BlackLine.

The post Why you need to care about blockchain now – not later appeared first on InsideSAP Asia.

As a visionary leader in finance or shared services, you’re committed to continuous improvement, driving best practices, and digitally transforming internal processes with innovative technology.

If your organization has engaged in an accounts payable automation project, congratulations! AP automation is often the first opportunity that companies identify for process automation in SAP. It’s the low-hanging fruit, delivering a rapid return on investment and solving painful points in manual processes like invoice receiving, information matching, and exceptions and delays in processing.

Going beyond the low-hanging fruit

AP automation is an easy starting point that immediately adds direct value to your SAP system and has indirect effects like happier staff (freed from rote, manual, mind-numbing tasks to do more meaningful work) and reduced errors that help protect against compliance issues.

But AP automation is just the first step in harnessing maximum value from your SAP system. Going beyond a point solution to automate the bulk of your ERP-related processes has major rewards, driving what Ardent Partners calls a “sizable performance advantage” for best-in-class enterprises. Not only can you capitalize on a single point of entry solution for all financial processes, but automating upstream and downstream from AP creates a holistic continuous improvement revolution throughout the financial cycle.

9 essential areas to automate in financial processes

Financial processes flow through vendors and suppliers to and from your company, and through clients and customers to and from your company. Throughout these workflows, process automation will result in significant productivity and ROI gains. Here are eight areas beyond AP you should consider automating next:

1. Procurement and purchase requisition: How much of your organization’s purchasing is contracted? Experts estimate that 30-45 percent of indirect purchasing is not contracted, which results in much higher prices—around 35 percent—than contracted prices. Automating purchase requisition processing not only simplifies the process for those purchases currently being made under contract, but it can also improve user adoption and compliance to reduce those expensive non-contracted purchases.
2. Order confirmations: This manual process usually takes place in the procurement department, where an incoming order confirmation indicates that the P.O. will be filled as requested. Later, the delivery note is manually compared to the purchase order and variances entered as credit notes into SAP, then manually approved. With automation, the order confirmation is automatically captured and matched against the PO and existing master data in SAP. Only confirmations with discrepancies are flagged for manual approval, and both automated and manually approved order confirmations have a complete audit trail.
3. Delivery note processing: Like order confirmations, delivery notes, which arrive with shipments, are matched against purchase orders and used to create a goods receipt note (GRN). Imagine if you could digitally capture the delivery note information, transfer it to SAP and automatically compare with the warehouse delivery. Discrepancy? No problem. Workflows for resolution are automatically initiated before the GRN is posted.
4. Invoice processing: Matching vendor invoices against purchase orders is often an incredibly manual process. An Institute of Financial Operations study shows that about half of all invoices are still paper-based. Automating the capture, extraction, matching and verification process of invoices—even paper-based—against the PO, master data and goods received information in SAP could save up to 80 percent in processing costs.
5. Payment approval: In a manual process, invoices are typically gathered in a document and circulated for approval. Information from this approval process is manually transferred to the payment proposal, then executed as a payment run in SAP. With automation, a workflow notifies approvers, then automatically transfers the information to the payment proposal. A history of the entire process is stored within SAP.
6. Sales order processing: Within the order-to-cash cycle, the manual nature of sales order processing can create big risks for transcription errors. In an automated process, orders are automatically captured, regardless of format, and information such as stock availability, pricing, discounts and master data is checked and validated against SAP data. Discrepancies are moved into an automated workflow for resolution, and validated data is transferred to create a sales order and an order confirmation for the customer.
7. Payment advice / remittance advice: Manually keying each invoice from the remittance advice into SAP is a time-consuming, labor-intensive process that results in high amounts of unallocated cash left on account, waiting to be posted to the appropriate invoice. With automation, the conversion of receivables to cash is more efficient, with automated data matched line by line in order to clear open invoices quickly and update the accounts receivable ledger daily.
8. Master data management: Maintaining accurate master data records for vendors, customers, general ledger accounts, cost centers and profit centers is critical for continuous process improvement and customer satisfaction. Automating a master data management workflow for collecting and approving change requests not only makes the process simpler, but improves records accuracy and the downstream effect of starting with the right information.
9. Financial close: At the end of each month, quarter, and year, accounting and finance teams must complete hundreds or even thousands of simple tasks that require a high level of manual interaction. Those error-prone and time-consuming reconciliation tasks can be automated with robotic process automation, a digital robotic workforce that can perform administrative work essential for financial reporting in less time with no mistakes, freeing your staff to perform the higher-value work of interpreting financial results.

How will your organization go beyond AP automation? Learn more about essential areas to automate in ‘The Outperformer’s Guide to Total Financial Process Domination: Automating P2P Processes and beyond in SAP.’ Download your copy now.

KK Tung is director, FPA Solutions. KK Tung has close to 30 years of extensive experience in project management, business consultancy, and sales in the region. For the past 10 years, KK has focused on the delivery of Financial Process Automation solutions; helping many large enterprises achieve desired business goals through automation. This article is sponsored by Kofax.

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