White Paper

Speeding to a Faster Close

Put The Days of a Manual

Financial Close Behind You

e
I n n o va t

Strategies for a successful financial close

Position your finance and accounting

organization to be a trusted leader within your
organization
Deliver accurate financial data that will help your
business thrive
About the Author

Jim Link
Engagement Manager, EPM
Jim.Link@itelligencegroup.com

Jim brings 12+ years of SAP experience

to itelligence, with exposure to BPC,
SEM-BCS, SEM-BPS, BW and FI/CO.
Jim’s industry experience includes real
estate, banking, power and utilities,
and food products and he has acted
in many different roles ranging from
business subject matter expert to lead
solution architect. A CPA by trade,
Jim’s background also includes 6
years as an auditor with PwC and in
financial reporting departments. Jim
is active in the SAP community as an
ASUG Volunteer, specifically the ASUG
Enterprise Performance Management
SIG Chair, BPC Influence Council
Chair, and former Business Process
Architecture SIG Program Chair.

2 itelligencegroup.com/us
Table of Contents

1.| Introduction 4

2.| The Challenge 5

Speed
Compliance
Resources

3.| The Solution 6

Automate the Manual
Reduce Complexity
Improve Visibility
Ensure Data Quality
Handle Exceptions
Go the Last Mile

4.| What to Look For 11

Training
Automation
Real-World Experiences
Specialization

5.| Conclusion 13

itelligencegroup.com/us 3
1.| Introduction

In today’s dynamic business environment, finance and accounting departments

are expected to play a more strategic role. No longer is it acceptable to simply be
responsible for keeping the books, they need to be leading the charge to deliver
actionable and timely information to the organization’s key decision makers. But
you can’t do that if your data has flaws, if you spend added days during month-end
close correcting and reconciling it, or are devoting too much time making sure you’re
staying in compliance with Sarbanes-Oxley or other regulatory requirements.

Organizations that have cracked the code on getting to a fast close are those who
also are able to successfully turn data into information to support business decisions.
They’ve resolved the headaches of data consolidation, enabled accurate, swift closes
through automation, and use powerful, flexible tools that empower their employees
to deliver strategic insights, all while continuing to stay on top of the recent
accounting rule changes.

We’ve put together some strategies for success so that you can put the days of a
tedious, manual close behind you, position your finance and accounting organization
to be a trusted leader within your enterprise, and deliver information that will help
your business thrive.

4 itelligencegroup.com/us
2.| The Challenge

Finance and accounting departments are being asked to do more with less, and that’s
never been more challenging. Between gathering and validating data, preparing
and filing financial statements and regulatory documents, meeting compliance
requirements, and facing budgets that are getting increasingly tighter, it’s tough to
deliver the information that helps business leaders make good decisions. Here’s a
look at some of the challenges organizations face.

Speed
A lot of factors combine to make it hard to close the books in less than a week.
The average close time is six to nine days. Companies who do it well get it done in
four days; companies who don’t take two weeks or more. To complete the Close-
to-Disclose process, add to that the amount of time spent compiling the full set
of financial statements, which can take up to 15 days, according to the American
Productivity & Quality Center (APQC). That means three working weeks out of a
month at quarter-end—a great deal of time, allowing for very little time to move
on to the next month. What this tells us is that companies are spending a lot of
time collecting data and preparing reports, rather than performing analysis of their
business results. But the answer isn’t to rush through your close; your data must be
accurate to be helpful in a strategic sense—and more importantly, when it’s reported
to shareholders and analysts. With the increasing volume of data coming through
most enterprise systems, rushing it isn’t a viable alternative anyway.

Here’s the bottom line: the longer it takes you to close the books, the less visibility
leadership has into the business insights the company needs to succeed.

Compliance
Just as finance departments face increasing pressure to deliver business insights,
there’s increased regulatory pressure as well. Inaccurate data doesn’t just hurt your
ability to make good business decisions—it also presents a legal risk to the company
and its key executives should that inaccurate information be released to the public.

While many companies are striving for a faster close, it can’t come at the expense of
compliance. Organizations must deliver timely audited financials, which includes
validating that figures are correct as well as testing of controls.

itelligencegroup.com/us 5
 Resources
According to Robert Half ’s 2017 Benchmarking Survey, 62 percent of the largest
organizations report that their accounting and finance teams are at least somewhat
understaffed, and US accounting and finance managers work an average of 47 hours
per week, up from 46 hours last year. And all too often, these finance staff find
themselves mired in manual work like compiling data and reconciling accounts
instead of adding value to the business. Their time would be better spent on activities
such as analysis or budgeting and forecasting to give insight as to where the business
is trending.

3.| The Solution

Driving a faster close can help you become a more valuable partner to the business,
drive down regulatory risk, and use your staff more strategically. Tools like SAP
Business Planning and Consolidation (BPC) can help you close the books more
quickly and help ensure compliance with regulatory and financial standards.
Below, we’ll explore a few ways BPC can help you optimize your business processes,
including automating processes, reducing complexity, improving both visibility and
accuracy, handling exceptions, and compiling supplementary documentation.

Automate the Manual

Generally speaking, several steps of the close-to-disclose process involve manual
interaction: posting manual journal entries in the ledger, calculating the effect
of currency fluctuations on reporting, generating a standard set of reports for
distribution to group controllers, and the preparation of the statement of cash flows,
just to name a few. Fully automating every step of a close process is every accountant’s
dream, but there are usually procedural barriers and system limitations that prevent
that dream from becoming a reality.

6 itelligencegroup.com/us
However, with BPC, you can take steps toward achieving that goal and ultimately
shortening your time to close. For instance, an enterprise solution such as BPC can
help automate 80 to 90 percent of the statement of cash flows. A majority of financial
reporting departments are currently managing this component of the process with
a tangled web of Excel schedules and need to rely on other departments to provide
details that aid in preparation. While there will always be exceptions that need a
human being’s attention, automating 80 to 90 percent is achievable and can result in
significant time savings.

An enterprise solution can automate 80 to 90 percent of the

statement of cash flows

Here’s how it works: rules are configured in the software that, when executed as part
of the overall consolidation, prepopulate the line items of that statement of cash flow.
Then members of your financial reporting team review the report using the Excel
interface and can make manual adjustments to those line items wherever necessary—
for accounting for a specific business transaction, for example. BPC uses Excel as
a front end, acting as a window into the database, which makes for a seamless
transition into a new piece of software for finance and accounting personnel who are
already intimately familiar with it.

Many other facets of your close-to-disclose process can similarly be automated

using BPC. While you won’t achieve the accountants’ dream of a fully automated
close at the push of a button, switching to a modern finance technology can make a
difference, automating many steps your organization may be performing manually
today. According to the results of the itelligence Insights: Finance Technology Survey
2017, 30 percent of respondents said fewer manual processes and more automation
would make the biggest impact on planning and forecasting in their organization.
This was the most common answer among survey respondents, showing increasing
desire for more automation in finance.

itelligencegroup.com/us 7
 Reduce Complexity
We’re in the middle of a multi-year boom in mergers and acquisitions, but you don’t
have to tell that to enterprise finance and accounting professionals. They’re often the
busiest groups when businesses are combined, while departments like R&D or Sales
in two merging companies often stay separate for months or years after the deal is
done. Accounting has no such luxury. The financial statements need to report the
facts and figures of the combined entities and intercompany transactions tend to
become a necessary evil that must be accommodated. No matter why an organization
must deal with them—whether they’re because of a recent merger or acquisition or
simply handling transactions between subsidiaries that have been doing business
with one another for years—the transactions between separate legal entities must be
reconciled and eliminated, or you run the risk of under- or overstating your earnings
or grossing up your balance sheet.

Mergers can make things particularly tricky, though, since the two companies are
using different accounting systems, at least for a while. Often it’s not until data is
consolidated from these multiple sources at the corporate level that the information
can be combined and discrepancies come to the surface. Moving to the same ERP
system for both entities can help, but this may take months or years to convert.

Whether waiting on the migration to a single source system or even for enterprises
who are already there, loading data to BPC earlier in the month-end process can
help facilitate intercompany reconciliation. Because the intercompany balances must
ultimately be eliminated upon consolidation, the connections to the source systems
to load that information are already in place, meaning that changes to business
processes are really the only factor holding back an earlier reconciliation. In addition,
by granting access to BPC to personnel outside of corporate headquarters, the
responsibility for the reconciliation can be passed down to business unit accountants.
Corporate then becomes more of a facilitator to the process than the one who
oversees making sure that balances are in agreement and communicating that to
those responsible for the accounting.

8 itelligencegroup.com/us
Improve Visibility
The faster you can get accurate data to leadership, the better they’ll be able to
capitalize on market trends and form strategies to help the business succeed.
Unfortunately, if you are a large, complex enterprise with a disconnected close
process, getting to a quick close may be challenging. Subsidiaries can be on different
close timelines or may be in multiple time zones, making it difficult for corporate
headquarters to consolidate data quickly and get a clear picture of the overall close
process.

The good news is that no matter what your situation, BPC has a couple of ways to
help you track the progress of your close. Here’s how they work:

n Tracking the work status: Work states in BPC are defined by the corporate
team, and are akin to checkpoints of the overall process. For example, each
entity that submits its GL balances to BPC for consolidation must validate
their data by performing certain checks, such as whether the trial balance
nets to zero. Once validated, the entity controller can update the status in the
system that their data has been submitted and reconciled. Next, once it has
closed its ledger for the month, the entity controller can then set its status
to “Closed General Ledger” and so forth through the rest of the process
Corporate accounting can run reports to view where each subsidiary is
throughout the close and take any necessary action.

n Tracking business process flow: For processes that are well-defined and tasks
are performed in a specified order, Business Process Flows can be configured
in BPC to assist with the execution of that business process. Users can be
assigned tasks and can be notified that it’s their turn to take action in the
system. Corporate accounting can then monitor the overall execution of the
process via a dashboard-like monitor and can make sure that the close goes
smoothly.

By using either or both of these capabilities, the days of Corporate sending emails
and making phone calls simply to check on progress can be safely put in the past.

itelligencegroup.com/us 9
 Ensure Data Quality
While it’s important to close the books fast, it’s just as important to deliver accurate
data. Otherwise, the insights you gain from that data will be flawed. Using
Validations and Controls in BPC can help you make sure that your data is as accurate
as possible.

Every organization has a different set of criteria for making sure their data is reliable,
including ensuring that net income equals current year retained earnings, increase
in cash on the statement of cash flow equals the change in cash on the balance sheet,
and assets equal liabilities plus equity. Software solutions such as BPC can provide
visibility into these validations, so you can quickly build reports, note any deviations,
and take corrective action, but these validations of data are done after the fact.

Controls, however, are more proactive and up-front in comparison. When you use
BPC Controls, you define criteria that the data must meet, but can also determine
whether a user can move forward with the process. For example, if you decide users
shouldn’t be able to submit a trial balance into your system if it isn’t balanced, you
can set the controls to stop that user from proceeding until it does. That’s helpful for
stopping errors in their tracks and fixing them right then, instead of looking for a
needle in a haystack after the fact. In addition, Controls can be used in conjunction
with work status tracking, so that you can’t change your work state until you’ve met
the control criteria.

Handle Exceptions
When it comes to month-end close, there are usually exceptions: the events that
require a one-time adjustment to consolidation. In BPC, you can use journal entries
to handle these last-minute or top-side adjustments that you don’t want to—or don’t
have time to—go back to the source system to post. You define what the requirements
are for that journal entry, such as the ability only to post a balanced entry, so that
you’re meeting your validation criteria.

Modern enterprise software also helps you protect against

fraud and collusion by building in security
Modern enterprise software also helps you protect against fraud and collusion by
building in security. BPC allows for segregation of duties so that one user can create
a journal entry but doesn’t have the rights to post it and another user can post the
journal entry but doesn’t have the rights to create it. In addition, full auditability
exists via system reports that allow you to track who creates and posts each journal
entry.

10 www.itelligence.com/us
 Go the Last Mile
All the supplemental information the regulators require in documents like the 10-Q
or 10-K can add up to hundreds of pages, quite apart from the primary financial
statements. Collecting it all can be daunting and is often a manual task, but modern
finance software enables you to store that information in a database instead of having
some lucky young staffer create a spreadsheet and send it to 50 colleagues before
consolidating all their changes into one master.

Here again, it pays to use a software solution that can be set up to accumulate all
that information, from legal issues to footnotes, giving financial reporting staff
the comfort to know that the latest information resides in the system rather than
worrying whether they are using the most recent spreadsheet that’s been emailed
around or stuck on a shared network drive.

4.| What to Look For

We can safely say that enterprise software solutions like BPC can help you get to a
faster close, save time and money, reduce risk, and position your finance organization
as integral to the success of the business. We have a few best practices to recommend
when designing a solution that fits your business needs and identifying an
implementation partner that can help you not only with this solution, but become a
strategic partner for the future.

itelligencegroup.com/us 11
 Training
Look for a provider who will train your staff concurrently with implementation.
Not only instructor-led classroom-based training, but the kind of unique knowledge
transfer throughout the project that ensures that your staff is fully trained by the time
implementation is complete. You want to feel a sense of ownership over the solution,
providing input throughout, while taking away hands-on experience that leads to
deeper knowledge of the solution. This way, you can be self-sufficient and lower your
spend from a support perspective once the functionality is successfully live.

Automation
We can’t stress it enough: invest in automation, and you’ve given yourself the
equivalent of rocket fuel. Once you automate tasks like data collection, validation,
allocations, and reconciliations, you’ll find your staff has been freed up to work on
more strategic issues, bringing more value to the business, like what-if modeling and
scenario planning. Not only can automation that double your accounting efficiency,
but it can also lead to a satisfied, engaged finance and accounting organization.
According to the itelligence Insights: Finance Technology Survey 2017, only 31 percent
of survey respondents said the finance technologies used in their organization today
make it easy to perform their specific job function.

Real-World Experience
Another thing to look for in a provider is a track record of hiring consultants
with backgrounds in finance and accounting. Usually, when it comes to software
implementations, providers send consultants who are proficient in IT. That’s fine
as far as it goes, but when it comes time to gather requirements to help fine-tune
a solution for your business, you want someone with experience in finance and
accounting. Consultants who have real-world experience in those fields can help you
spot problems before they start and more often provide solutions that are better in-
line with your expectations.

Specialization
Look for a solution that’s designed for Finance—and a provider who specializes in
enterprise business applications like SAP. That pays off in terms of experience: instead
of having to choose from a wide array of software, some of which isn’t built for your
needs, you’ll have an expert to advise you on the tools that will work best for your
organization. And investing in a purpose-built tool means you’re getting software
with built-in business processes that map to your needs, including consolidation,
strategic planning, budgeting, and forecasting.

12 itelligencegroup.com/us
5.| Conclusion
If there’s one takeaway here, it’s to think through your entire process. It can be
tempting to see new software as a ready-made solution to your organization’s
challenges, but it’s important to make sure it covers all the bases, and can
accommodate your business processes while providing users with the flexibility to
close quickly, accurately, and efficiently.

Want to take the next step? itelligence offers a full one-on-one review of your EPM
systems to help align your strategic, functional, and technical goals with the SAP
EPM solution suite. Reviews like this can help you explore the tools available to help
you digitally transform every area of your finance organization and learn more about
solutions for a faster close. They can also help you discover solutions for broader
accounting issues, financial planning and analysis, treasury and risk management,
financial operations, and risk and compliance management. For more information
about the EPM Alignment Review, contact itelligence. For more information about the
services itelligence provides, see https://itelligencegroup.com/us/.

itelligencegroup.com/us 13
 About itelligence

In the digital age, you need an IT partner you can rely on. Someone
who understands the digital and real-life challenges of your industry
and helps you rethink your business. A partner who is with you
every step of the way.

With over 25 years’ experience, itelligence knows SAP software

inside out. We work closely with our clients to identify their specific
needs and fulfil them. Numerous SAP awards, certifications, and
our SAP Platinum Partner status are testament to our success. From
consulting to implementation and managed services, we have over
7,000 employees with the expertise to take your business further.

As part of the NTT Data Group, we can draw upon a global

network of over 9,000 SAP specialists. And our presence in 24
countries around the world ensures we are always close to your
business. What’s more, our strong ties to SAP mean we stay up to
speed with the latest innovations and can help you get more from
them. No matter what industry you are in – we are the IT partner
for your digital transformation. Think ahead. Go beyond. Visit
www.itelligencegroup.com for more information or email us at
marketing@itelligencegroup.com.

itelligence North America Headquarters | 10856 Reed Hartman Highway, Cincinnati, OH 45242 • 1-866-422-8858 • marketing@itelligencegroup.com