The Record to Report (R2R) process has traditionally involved a number of sequential manual processes — journal entries, the financial close, and account reconciliations — that a growing number of organizations hope to streamline and automate.
Because manual processes take time and are subject to human error,many companies are evaluating the potential benefits of Robotic Process Automation (RPA), which is defined as “the application of technology that allows employees to configure computer software to capture and interpret existing applications for processing a transaction, manipulating data, and triggering responses” by the Institute for Robotic Process Automation.
R2R is an important part of a company’s compliance framework, which Michael Ross, executive vice president of product management for financial reporting software provider Trintech described as the foundation of a company’s controls. R2R’s importance, and traditional reliance on manual processes, makes it a prime candidate for automation-based improvements.
“By automating its components, you can reduce risk and drive efficiency in the close process,” Ross said.
Ross, speaking at a meeting of FEI’s Committee on Finance & IT (CFIT), described how several components of the financial close can be managed within a compliance framework to get full visibility of R2R activities and participants. He then described potential benefits of automating these components:
Transaction matching: reducing the time spent on high volume matching and exception management;Account reconciliations: standardizing the process and enforcing policies while reducing workload through dynamic automation;Journal entries: using templates and dynamic approval routing to enforce policies while reducing oversight workload; andClose task action plan: integrating collaboration across the organization to auto complete tasks, gather supporting data and address issues.
Ross presented several case studies of financial transformation by automating some of the R2R activities:
A nationwide provider of alternative collision replacement parts and a leading provider of recycled and remanufactured engines had bank reconciliation challenges because its manual processes took up to six weeks to resolve reconciling items, as well as close challenges because it could not confirm that...