june2021 - 25

FEATURE
STUCK IN THE MIDDLE
unavailable or came too late to pivot the organization
to moderate the impact on revenue and pursue
alternative growth opportunities.
Without real-time data, CFOs at mid-sized
companies risked making uninformed business
decisions, making the ramifications of disruption
even worse. Alternatively, CFOs at many large and
even small companies experienced less difficulty
in operationalizing accounting and finance despite
changing environments.
The reason, according to a global survey commissioned
by Capstone Insights, is that large organizations
generally have the resources and headcount
to invest in robust finance and accounting processes
and automation solutions. And small organizations,
by virtue of their size, have better visibility into and
understanding of their data at all levels.
According to the survey of more than 1,500
professionals working in finance, accounting, and
executive management, mid-sized organizations
(with revenues between $100 million and $749
million) lacked smaller companies' clear line of
sight and larger companies' scale and established
processes, making it harder to address the increasing
complexity brought on by the pandemic.
GROWING PAINS
The survey findings emphasize what has long been
a challenge for mid-sized companies. Such organizations
are strategically driven to invest heavily in
market growth opportunities, and much less so
in the processes and technology needed to attain
operational excellence and dexterity.
Nearly two in three (63 percent) of
the Capstone survey respondents
said that they rely on spreadsheets
and manual processes to perform
the month-end close.
By Chris Kiehn
ACROSS THE WORLD last year, CFOs at many mid-sized companies realized
that the traditional manual accounting processes that they relied on to provide
visibility into business performance and customer demand were not effective.
Manual processes and disparate systems impaired their ability to quickly revise
strategy and operations to account for disruption.
In many instances, real-time financial data was
Instead of allocating more of the budget to back
office technology, money is earmarked to enter new
geographic regions and hire sales and marketing
professionals to generate fast revenue.
While one can understand the logic in this
decision, insufficient investments in operations can
undermine the strategic goal of scaling the business.
A case in point is that many mid-sized companies
struggled to adjust to a virtual close because they
were dependent on spreadsheets, institutional
knowledge, and in-person communication.
Nearly two in three (63 percent) of the Capstone
survey respondents said that they rely on
spreadsheets and manual processes to perform the
month-end close. For example, collecting important
financial data and continually sharing this information
back and forth with colleagues via email or
through a shared drive. According to the survey,
manual processes resulted in version control and
accuracy issues during the month-end close.
" Finance and accounting professionals find
themselves stuck chasing down errors, reconciling
data, and trying to make decisions based on an
assortment of often incomplete and/or inaccurate
data, " the survey stated. " Continued reliance on
manual processes puts organizations at a competitive
disadvantage. ...Deploying tools to automate the
finance function should be high on the to-do list. "
NAVIGATING UNCHARTED TERRAIN
CFOs at many mid-sized companies acutely felt this
disadvantage when the pandemic hit. Hampered by
manual processes and spreadsheets, finance chiefs
were unable to access real-time financial data to
interpret complex demand fluctuations, as the board
of directors ramped up the pressure to provide an
accurate picture of company performance.
In 2021, this pressure has not subsided, according
to a January 2021 survey by BlackLine of 1,300
C-level executives and finance and accounting
professionals in the U.S., Canada, United Kingdom,
Germany, France, Australia and Singapore. More
than one-quarter (28 percent) of the respondents
remain worried that the finance function will be
unable to provide accurate data quickly enough to
respond to continuing market volatility, with four
in ten (39 percent) respondents expressing concerns
over their collaborations with external auditors.
The irony is that most CEOs believe their organization's
financial data is accurate, whereas those
closest to the numbers in the finance and accounting
function express skepticism. Only 35 percent
of finance and accounting professionals completely
trust the accuracy of their organization's financial
data, compared to 81 percent of C-level executives,
according to the BlackLine survey.
When asked why they distrusted the data, the
finance and accounting professionals said the main
reasons were " clunky spreadsheets " and " outdated
processes. "
The Capstone Insights survey came to a similar
conclusion. " Manual processes increase the risk of
inaccurate or incomplete data on which important
decisions are made. Spreadsheets and manual data
reconciliation take up too much time and are more
prone to error and lack of control, given the human
element. "
A MORE STREAMLINED CLOSE
Ultimately, the responsibility is on CFOs to elevate
the importance of accurate data and related access
to effectively respond to a business crisis. Relying on
manual processes and spreadsheets increases the
risk of imprecise and delayed data, slowing down a
decisive response when disruption occurs.
Leading practices for ERP integration, workflow
management, automated reconciliations, close
task tracking, reporting, and more, allow CFOs
to dramatically reduce time-consuming manual
workloads that delay reporting, and shift their focus
to strategic business initiatives.
Companies of all sizes must adapt to the business
realities imposed by continued disruption.
As CFOs lead their organizations to become more
data-driven and analytical, the companies will be
positioned to make effective use of scenario planning
and other forecasting exercises, strengthening
their strategic growth plans, operational excellence
and financial statement integrity. ■
Chris Kiehn is Senior Global Vice President at BlackLine,
a provider of automation solutions for finance and accounting.
JUNE
2021 ■ www.CPAPracticeAdvisor.com
25
http://www.CPAPracticeAdvisor.com
june2021

Table of Contents for the Digital Edition of june2021
