ARTICLE | July 19, 2023
Authored by RSM US LLP
A step-by-step guide to assessing the four major business processes that fuel finance and accounting
The finance function has become increasingly complex, creating more opportunities for process inefficiencies. Forward-thinking leaders are assessing their organization’s finance function to proactively identify and understand weaknesses with the goal of transforming core finance processes to help their businesses succeed.
For most middle market companies, inefficient processes will manifest as long closes, a high volume of manual tasks, poor quality information, lack of insights and slow invoice processing.
If your company is experiencing these disruptions, take this self-assessment—covering the four core accounting and finance processes—to illuminate specific shortcomings within your organization. Using your assessment results, you can prioritize action items and seek process and technology solutions that will put you on a path to optimized, streamlined finance and accounting operations.
This process encompasses accounts payable, accounts receivable and financial close, consolidation and reporting. A “no” answer to any of these questions suggests your organization struggles in these areas:
Is your organization’s close process tight and efficient, with transparency into the close process status from a completion perspective?
Are your company’s financial statements consistently accurate and high quality?
Has your team moved away from heavy reliance on Excel and highly manual processes to perform core financial processes?
Is your organization capitalizing on the integration, automation and self-service solutions that digital transformation creates?
Key source-to-report benchmarks:
Timely processing, higher accuracy and a faster close
Fewer manual entries and reconciliations
Use of automation and point solutions
Success in source-to-report means an accurate, timely financial close process that meets reporting needs and regulatory guidance and minimizes risk.
Featured client success story
International global property management company builds on success with finance modernization.
Aimbridge was burdened by outdated and disparate technologies that resulted in manually intensive processes and prolonged integration activities. RSM worked with the client to streamline processes, implement automation and free up time for strategic initiatives and value-driven activities.
Key solution benefits include error reductions and time saved:
~ 65% reduction of manual account reconciliations
~ 350+ FTE hours/month saved through automation
This process includes strategic sourcing or procurement and accounts payable. Strategic sourcing is achieving maximum value for your organization by leveraging strategic supplier relationships to meet supply chain demands. Accounts payable is streamlining the process of requisitions, invoices and payment processing.
A “no” answer to any of these questions about strategic sourcing or procurement suggests your organization struggles with vendor management and supply chain issues:
Is your organization confident you’ve achieved all possible gains in contract management? Is your company realizing all possible cost savings?
Has your company maximized efficiency in inventory management?
Are your organization’s logistics and warehousing operations as tight as possible?
A “no” answer to any of these questions about accounts payable suggests your organization is challenged by invoice and payment processing:
Has your team successfully eliminated most manual, time-intensive and repetitive tasks?
Has your organization eliminated highly manual and paper-intensive invoicing processes?
Does your organization leverage digital payment methods for paying invoices?
Does your company employ an efficient service delivery model (i.e., outsourcing, onshore/offshore shared service, COE)?
Is your team satisfied with your travel and expense management?
Key source-to-pay benchmarks:
Less time spent managing contracts and suppliers
Gained efficiency from electronic processing and digital payments
Streamlined expense cycle
Success in source-to-pay means you’re proactively managing vendors and suppliers and harnessing digital workflows to eliminate manual work and mitigate risk.
Featured client success story
North American eye care surgery center holding company undergoes finance transformation.
Our client struggled with highly manual processes within source-to-pay, non-integrated technology throughout the organization and no controls framework. Working with RSM, the client redesigned and standardized their business processes and enabled technology to increase control and effectiveness.
Key solution benefits include time saved and a tighter monthly close:
Reduced manual tasks by a potential 115 hours/month
Shortened month-end close from three days to two
This process covers customer experience and accounts receivable, which spans the full customer purchase journey from lead to transaction.
A “no” answer to any of these questions about customer experience and accounts receivable means your organization has room to improve in these areas:
Is your organization delivering a stellar end-to-end customer experience?
Does your team execute invoicing, collections and customer service smoothly and without hiccups?
Has your team optimized revenue recognition, cash flow and visibility into working capital?
Key lead-to-cash benchmarks:
Higher lead conversion and customer retention rates
Lower days sales outstanding
Electronic billing and payments
Efficient collections and deductions management
Automated credit modeling
Success in lead-to-cash means you onboard and serve customers quickly and your cash inflows are smooth.
Featured client success story
Nationwide fuel delivery provider implemented technology to bring efficiency to their lead-to-cash function.
A nationwide fuel delivery provider struggled with inefficiency and inaccuracy in their Accounts Receivable processes stemming from unstructured data, nonintegrated legacy processes and manual analysis. Working with RSM, they implemented automation and integration solutions that freed up time and resources for value-added activities and strategic business priorities.
Key solution benefits include time saved and valuable resource redeployment:
Cash application team realized time savings of ~50% in first month
Team focus shifted to dispute resolution and clearing backlog of unapplied payments after automated banking feeds and remittance freed up time and resources
This process involves financial planning and analysis (FP&A) and refers to your teams’ ability to perform forward-thinking strategic planning to meet current and future goals, objectives and your strategic organizational vision.
A “no” answer to any of these questions about strategic planning capabilities means your organization may be performing sub-optimally in this area:
Is your team confident in their target setting and strategic planning abilities (i.e., long-range planning, annual operating plan, 5-year and 10-year plan)?
Is your process for budgeting and forecasting streamlined, accurate and reliable? Does it leverage technology solutions to aid in compilation and analysis?
Does your team have the time and expertise to produce sophisticated financial modeling and scenario planning?
Is your team viewed as a strategic partner to the business and key internal stakeholders?
Key plan-to-act benchmarks:
Shorter planning cycles
Greater data visibility and real-time analysis
Efficient budgeting and forecasting
Increased collaboration across the organization
Success in plan-to-act means your team is capable of sophisticated budgeting, forecasting and planning and routinely makes data-driven decisions.
Featured client success story
A non-profit organization overcame a heavy reliance on manual processes to modernize its FP&A processes to help achieve its strategic goals.
Working with RSM, this non-profit client implemented a fully integrated corporate performance management solution to automate and streamline budgeting, forecasting, consolidations and reporting processes and is now managing their FP&A processes in Adaptive Insights.
Key solution benefits include increased visibility, efficiency and accuracy across the organization:
ERP system harnessed for maximum value
To create a high-performing finance function, it’s important to focus on value-driven processes that enable the enterprise to effectively execute its strategic vision. The finance function plays a critical role in integrating finance, accounting, operations, reporting, performance measurement and risk management.
The key is to identify those areas within corporate financial management where there is room for improvement. An objective third-party advisor could prove beneficial in this assessment, and further help uncover where integration and automation initiatives would produce the greatest impact. Achieving finance transformation can be daunting—both where to start and how to pursue solutions. If going it alone feels overwhelming, consider bringing on an advisor.
Identifying the weak links in your financial processes is the first step in achieving finance transformation.
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This article was written by RSM US LLP and originally appeared on 2023-07-19.
2022 RSM US LLP. All rights reserved.
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