by Steve Pugh
The new economy requires a new way of doing business. Businesses must be flexible to accommodate the changes that arise in today’s rapidly fast-paced business environment, where mergers and acquisitions, restructuring and new regulations can change business needs at a moment’s notice.
In this pressure-cooker business landscape, strategic finance is more important than ever. Corporate management is relying on the ‘sages of financial insight’ to provide up-to-date financial information so they can make better, more informed decisions. The accounting department is also expected to effectively navigate the world of changing regulations and mitigate risk. At the same time, it has to provide financial visibility over a geographically dispersed organization with multiple systems and changing corporate structures that result from mergers, acquisitions or organizational restructuring.
How can an accounting department accomplish all of this? Unfortunately, all too often, the day-to-day requirements of closing the books, and the real-world reality of having to do more with less, make this very challenging.
However, by automating as much as possible, accounting departments have been able to successfully gain efficiencies and visibility. Following are best practices to help you achieve the flexibility and visibility that you need:
• Focus on the process. Create processes that are visible, repeatable, auditable. Implement a process control framework that can easily integrate new subsystems, manual processes, and ad-hoc spreadsheets. For example, if a new company is added, process and controls should be able to be instantly expanded to accommodate the new company, its systems, and employees. You will not only be able to streamline processes, but you will also be easily able to make changes in the accounting system.
• Consolidate your ledgers. Use a single-ledger system incorporating GL, AP and AR in one place, so there is one version of the truth across the organization.
• Implement “multi-everything” capabilities – Make sure you are effectively capturing key information across your organization by implementing a system that can accommodate and integrate data across geographies, regardless of currency, language, taxes, regulations, etc. This will enable you to gain critical real-time visibility to information organization-wide.
• Ensure system agility. Make sure that your system has built-in flexibility to handle inevitable changes that occur in the marketplace, your organization or in the regulatory environment.
• Establish seamless application integration. Ensure that your accounting system has the flexibility to easily incorporate new applications and adapt to change without the need to re-write business logic.
• Use flexible reporting. Establish a “one-to-many” system maintenance approach to enable any changes in the data to be automatically picked up by reports and system routines. By doing this, you will avoid the problem of having a change in one area cause errors in other reports. Additionally, use a multi-dimensional reporting model that accommodates different accounting coding schemes. This will enable different lines of business to measure profitability, for example, differently, while retaining a single ledger that’s always in balance and that accommodates changes on the fly.
• Analyze the data. Use business analytics to turn insights into actionable decisions that address the needs of the entire organization, while also meeting regulatory demands. Here are best practices for accomplishing this:
o Plan a strategy for incremental performance improvement. Define a performance management strategy – developed over time – that addresses pain points and quickly begins to deliver value.
o Establish integrated decision-making. Use a business analytics solution that incorporates planning, forecasting, modeling, budgeting and reporting. To be most effective, everyone should be on the same page. Establish a clear, closed-loop decision making process to accomplish this.
o Get senior-level buy-in. It’s critical to engage senior executives and other key stakeholders to get everyone on board. Determine needs across the organization and develop processes and solutions that address them. Conduct user training and communicate benefits to key stakeholders on an ongoing basis.
o Measure and monitor. Since it’s hard to improve something that you can’t measure, it’s important to build in a performance monitoring process. Consider how KPIs and scorecards can be used to help you effectively monitor progress in your organization.
To remain competitive in a fast-changing environment, accounting must be able to support business agility, allowing organizations to respond to changing requirements and take advantage of new opportunities – with minimal cost, disruption or risk. A flexible and robust accounting system, such as Coda Financials, will provide the agility that is needed to accommodate change, the real-time visibility to see across your organization, and the multi-everything capabilities that will allow you to effectively manage across a dispersed or global organization. Companies that not only adapt, but thrive in this rapidly changing environment will be winners in the new economy.