Revolutionising your balance sheet recon

Top finance professionals share ideas on how to automate balance sheet reconciliation.

Automation can help to revolutionise balance sheet reconciliation, said two top finance experts during a webinar hosted by CFO South Africa on 11 February. BlackLine director for Africa Mike Hibbert discussed automation trends and the importance of aligning human resources with technology.

“People drive effective finances, and people are key, so it’s important to align people and processes,” said Mike, who trained as an accountant.

As companies grow, automation of financial functions is critical, especially in the era of remote working. Mike explained that when countries began entering the lockdown during the pandemic, there was a considerable shift towards automation, since manual accounting has become increasingly unstable, tedious, and time-consuming.

He described traditional accounting as chaos on deadline. “There are so many lines of communication, workflows, areas where we can drop the ball; it’s impossible to keep on top of all these elements,” he said.

“I, for one, didn’t train as an accountant 20 years ago to do balance sheets and make sure people get reports on time. We also want to be able to finish work at a decent hour and get home to our families.”

At least 69 percent of accountants say manual accounting causes bottlenecking during the financial process. There is also more risk in manual accounting, with 55 percent of financial professionals admitting they are not entirely confident that they could identify errors. Mike also highlighted problems that arise with traditional accounting tools like spreadsheets:

  • Hardcoding formulas: Where you cannot see where the numbers came from and how they were generated.
  • White font: Avoiding people changing the numbers and changing the font to white, thinking it’s become invisible. “Back in 2008, this practice brought entire companies to their knees,” said Mike. Research by Blackline and Frost and Sullivan shows that accounting mistakes total a whopping $5-trillion globally.
  • The cost of traditional accounting is exceptionally high, especially in today’s competitive markets. “Normally companies will hire more bodies, and throwing more employees at the problems won't resolve modern accounting problems,” Mike explained.
  • The pressures of headcount costs events lead to low staff morale. Accountants, who often get told that they have boring jobs in the first place, don’t want to perform the same functions for years, and they’re always stressed about whether technology will replace their roles.

Mike encouraged all financial professionals to upskill themselves for the future, where they can perform deep-dive analysis with their freed-up time.

Rumbi Jokonya, senior manager of southern African reporting at Deloitte, said the auditing giant moved to Blackline systems in 2018. Deloitte has a presence in 11 African countries, each operating on different systems. Moving to a seamless, automated environment was a prudent decision, especially when the world entered the pandemic’s peak early last year.

“We then embarked on a pioneering project of merging 11 countries’ software to a single system, “said Rumbi. Blackline accounting technology is compatible with many existing ERPs, so it could align Deloitte’s systems across multiple countries seamlessly.

“We have such high volumes in recons which are sitting at the business unit level. Imagine trying to get these files from 11 countries, getting sign-offs done at the accounting level; it’s next to impossible,” said Rumbi. They began training a small team on the new system and migrated their functions in phases. Training took place via Skype, which reduced costs and helped with upskilling staff.

Mike says many companies have reservations about moving to the cloud because of cybersecurity concerns. However, with the world moving faster towards this technology, security operations are more enhanced, and it’s proving to be a vital cost-saver across departments. There is no longer a need for onsite installations or big IT departments on the payroll to supervise system updates.

Rumbi says Deloitte is continually building new efficiencies into the system as more functions are automated. “One of the biggest advantages is that CFOs can now access balance sheets instantly and look at them more holistically,” said Rumbi. CFOs can now also add action items and queries directly on the balance sheet, informing staff of the changes and queries via email. “Users can resolve these queries or action items in real-time, making year-end reconciliation easier,” said Rumbi.