The RPA-driven Month End Close Process

This article is co-written by Ashwini Vartak and Anders Liu-Lindberg

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Raise your hand if you love the month-end process? No, we did not think so. Why? Because the month-end process is simply a means to an end. It is the production of numbers that must take place before anyone in Finance or our business stakeholders can use the numbers. This is where the value is added – not in the month-end itself. It is no wonder why the month-end process gives most people a headache. Just consider the full process for a moment… 

A typical closing process in an organization involves various manual, tedious repetitive tasks of transaction processing including balancing the ledger/subledger, reconciliations- payables, receivables, banks, fixed assets, open item management, inventory management. 

It also involves the analysis of certain ledgers or categories e.g. receivables, inventory, payables, fixed assets, forex transaction for disclosure or evaluation. Further reporting process involves downloading the trial balance or financial statements from the existing ERP or their accounting software into Excel updating with the reporting formats / statutory or regulatory disclosures, updating prior period comparatives. 

In case of consolidation of accounts, the financials are required to be translated in reporting currency using rates as per the accounting regulation (IFRS, US GAAP as applicable) and consolidated after inter-company balance confirmations, passing inter-company elimination entries, and so on. All of which require data from various entities' ERPs. 

Further, many times data need to be downloaded and reconciled multiple times before the entire closing activity is completed. All this involves a lot of human efforts and the use of qualified accounting professionals for downloading and compilation of data. In some cases, the amount of time is very short, and it constrains organization resources for further review and analysis of the data. 

Does your head hurt yet? Ours do for sure. The good news? It does not need to be like this because the month-end process is ripe for use of RPA (Robotics Process Automation). 

How robots turn your month-end process upside down 

With robotic process automation, a considerable amount of time can be saved with bots downloading and compiling the data in a very short time, freeing considerable time for the professional. Further, bots can work 24*7, the data download can be scheduled at a nonpeak time thus helping the finance professional focus their time and energy in the analysis and review of data. 

The bot can compile the data including prior period comparatives, download ledger data, create pivots, summaries in a predefined format. Any exceptions observed would be presented in an exception report for human intervention. Also due to automation, the dependencies on various teams within the finance department will be consolidated in the RPA process with improved efficiency and quality of data. It will also reduce delays. The final reports and statutory statements would be available as per the defined timelines. 

Sure, for the bots to be effective this necessitates structured data requirements or reports which may not be a case in all organizations. However, the same can be done at the stage of implementation while drafting the RPA documentation like AS-IS – TO-BE process in ERP implementation. Further bots can also be triggered manually, leaving the option of execution to the managers for certain dependent activities, e.g. receipt of the bank statement from banks. 

With the manual activities done by bots, the time usage and efficiency of data will greatly improve thereby enabling the accounting department to focus on data analysis and review. Overall RPA will improve the quality of data, bring time efficiencies, reduce data errors, lower human time for manual tasks, reduce costs, and reduce the closing cycle time. 

Below is a brief overview of some of the current closing activities that can be optimized with RPA.

Are you ready to welcome the bots? 

Many companies have already started using RPA in their month-end closing process as well as many other tedious manual finance and accounting processes. If you have a high volume and low complexity task you should hand it over to the robot. That should be the simple principle for your finance function to follow. 

The RPA industry has matured considerably in the past five-ten years and RPA is now easy to both implement and use. We have highlighted many of the benefits in this article by taking the outset in a process that all companies go through. The potential is massive so imagine what it is like if you look at robots across your company? Have you already started working with RPA and what are your experiences? If you have not, why not and what would it take for you to consider using RPA?

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This was the fifth article in the series "Tech in Finance" and you can read previous articles in the series below.

How Technology Enables The Future Of Finance And Accounting

The Proper Way To Do A Tech Implementation In Finance

Taking An Experimental Approach To Discover The Impact Of Tech In Finance

Meet Your New AI-Powered Auditor

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Anders Liu-Lindberg is the co-founder, COO (Chief Operating Officer), and CMO (Chief Marketing Officer) at the Business Partnering Institute and owner of the largest group dedicated to Finance Business Partnering on LinkedIn with close to 9,000 members. I have ten years of experience as a business partner at the global transport and logistics company Maersk. I am the co-author of the book “Create Value as a Finance Business Partner” and a long-time Finance Blogger on LinkedIn with 50.000+ followers.