Automating Financial Operations
6/14/22
Tom Zehentner

Financial Operations Automation, Financial Close Automation -- What's the Difference?

Every accountant wants to close the books faster. Financial close (“close”) is often a high-stress, high-pressure period for accountants who balance strict deadlines with the need for a meticulous review of the financials. In today’s climate, turnover is placing immense pressure on smaller teams and eroding process standardization, preventing them from achieving this goal. 

Speeding up close allows teams to analyze performance faster to inform leadership and investors – and automation solutions exist to help achieve this historical pipe dream of a goal. What kind of automation makes the most sense for your business?

Financial Close Process & Automation

Financial close automation helps streamline the tasks commonly executed after the period ends – between the first and fifteenth of the following period. 

Most companies leverage checklists or other tracking techniques to execute each close process task. Tasks typically have a separate preparer and reviewer assigned, as well as a target due date, to give structure to the close process. Financial close automation helps transform these manual checklists or trackers into a streamlined workflow to ensure steps are followed by assigned personnel, and approvals are formally documented before advancing to the next step in the close process.

Financial close automation tools may also help execute reconciliations and month end financial reviews. Smart, machine-learning enabled tools can guess what unreconciled transactions may be related to, cutting out some of the legwork typically done by humans who now just have to accept or deny the automation’s suggestion. Financial results may also be automatically visualized in a dashboard to show valuable trend analysis for leadership once close is complete. 

Financial close automation does a great job of automating the human-to-human handoffs in the close process, but does not address the ongoing financial operations and accounting processes that are executed on a daily basis.

Financial Operations (“FinOp”) Processes & Automation

FinOp automation tackles the day-to-day, transaction-level activities that prolong the manual steps in the close process if done incorrectly.

Consider all of the different functions in your business and the people, processes, and technology supporting them: revenue and accounts receivable, expenses and accounts payable, payroll and commissions, cash matching, inventory, and more. The day-to-day tasks to execute each function require varying levels of human interaction based on your organization’s technological setup: some systems are integrated, some have integrations that require manual adjustments after the fact, and some are completely disjointed and require manual processes to sync data. 

Each instance of human interaction presents a risk of manual error that impedes the close process due to unmatched transactions and unreconciled balances. The volume and monotony of these tasks creates bottlenecks and lowers employee morale, increasing the risk of human error.  FinOp automation executes data extraction, preparation, and blending in tandem with software robotics that emulate human actions like clicking and dragging to eliminate errors from the day-to-day tasks of your business. 

Cleaner books during the period means less time fixing them during close!

Which is right for my company? 

Automation fit depends on several factors including business process maturity, current systems and technological debt, and compliance requirements. 

Younger, less complex companies are more likely to be plagued by disjointed systems, making them a great candidate for comprehensive FinOp automation solutions. By automating the day-to-day, the close process can occur in just a few hours without the need for financial close automation or a large finance team.

Larger, enterprise-size companies with technological debt and full-blown finance organizations may want to consider a mix of FinOp and financial close automation to achieve their goals. Strategic deployment of FinOp automation in high-volume pain point areas can significantly cut down the manual close tasks, while complimentary financial close automation keeps all of the moving human elements in coordination and in compliance.

FINANCIAL TIMES IS SO YESTERDAY

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