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Transcript of Hacket Trintech Intel Reconciliations Best Practices
www.trintech.comwww.trintech.com
TransformingTransformingthethe LAST MILELAST MILE ofof
FINANCEFINANCEReconciliationsBest Practice Measurable Benefits
22 February 2012Trintech | The Hackett Group | Intel
ReconciliationsBest Practice Measurable Benefits
22 February 2012Trintech | The Hackett Group | Intel
AGENDAAGENDAIntroductionsThe Hackett GroupGilles Bonelli – Director EPM & A2R Practice Leader – EMEAReconciliations Best Practice and Automation
TrintechDavid Taylor – Executive VPWhat could best practice look like?
IntelVicky EspiasseGlobal Accounting Close and Reporting ControllerInspired innovation improves processes
Page 3Best Practices in Account Reconciliations
© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
EPM TRANSFORMATION
RECONCILIATION BEST PRACTICES & AUTOMATION
Hackett Executive Advisory February 22, 2012
Gilles Bonelli – Director EPM & A2R Practice Leader – EMEATeus Verbree – Director EPM Transformation - EMEA
Statement of Confidentiality and Usage Restrictions
This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group.
Copyright © 2012 The Hackett Group, Inc. All rights reserved. World-Class Defined and Enabled.
| 5© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Hackett Group difference: empirical best practices to achieve measurable benefits
We are the global leader in operations improvement strategies, implementation experts & know-how, SG&A* agility
We address both efficiency and effectiveness improvements to enable strategic business objectives
Our Best Practices Intelligence Center™ is a significant differentiator and enabler. It contains:
– 20,000+ performance metrics updated annually– 1,500+ best practices across 8 functions and 95
business processes– 1,000+ best practice-based process maps,
requirements and configuration guides
We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset
Hackett Value Grid™
We know how the best do it,where they do it, and the benefit of doing it
We know how the best do it,where they do it, and the benefit of doing it
* SG&A = Sales, General & Administrative
| 6© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Executive Advisory is a subscription service to Hackett IP and Senior Advisors to drive continuous improvements in any G&A function
Un-metered inquiry Executive Briefing
Measurement Research Peer Interaction
Advisor Access
22
11
33 44
Hackett Book of NumbersResearch series
Hackett Research Papers Hackett Member Center
(Performance Metrics, Best Practices and Quick Wins)
Benchmarks available by Process in the taxonomy
Performance Studies
Topical Webcasts / Virtual Roundtable
Annual Hackett Best Practices Conference
Focused peer-to-peer meetings
Executive Advisory
| 7© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Reconciliation Burning Platform
Best Practices
Contents
Page 8Best Practices in Account Reconciliations
© 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Myth:
High educated finance personal is working on value added activities
Reality:
Many expensive controllers/FP&A professionals spending 2/3 of their time or more on low value information activities
| 9© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Fragmented processes & systems often drive complexity, & high cost in reconciliation (i.e. “The Evil necessary to demonstrate controls”)
Dashboard
Standard Reports
Drill Down
Custom Reports
Driver Models
LRP Modeling
M&A Scenarios
Personal
Models
InformationPresentation Layer
C-level &BU Mgmt.
VPs & Dept.Mgrs.
Analysts
User types
Transactional Layer
External Market Data
CRM Data
ERP Data(ledger /
sub-ledger)
Operational Data
Data Warehouse Layer
EPM Data Model & Repository
Reporting Tools• External
• Management
Planning & Budgeting Tools
Analytical Tools
Forecasting & Modeling Tools
Reporting and Process Automation Analytics and Modeling Tools
Reporting & Analytics
GLAPFAER
P
PRHRMS
App 1
Oper
atio
ns
App 2App 3App 4
Gov. DataInternetOtherMa
rket
MarketingCustomerServiceCR
M
*many (expensive) controllers/FP&A professionals spending 2/3 of their time or more on low value information activities
| 10© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
For many global businesses, reconciliations are everywhere
Dashboard
Standard Reports
Drill Down
Custom Reports
Driver Models
LRP Modeling
M&A Scenarios
Personal
Models
C-level &BU Mgmt.
VPs & Dept.Mgrs.
Analysts
User types
External Market Data
CRM Data
ERP Data(ledger /
sub-ledger)
Operational Data
EPM Data Model & Repository
Reporting Tools• External
• Management
Planning & Budgeting Tools
Analytical Tools
Forecasting & Modeling Tools
Reporting and Process Automation Analytics and Modeling Tools
GLAPFAER
P
PRHRMS
App 1
Oper
atio
ns
App 2App 3App 4
Gov. DataInternetOtherMa
rket
MarketingCustomerServiceCR
M
C2COrder TrackingEcommerceCash applicationsSL to GLPOS to GL to BankDiscountsCommissions
P2PPurchase ledger recsVendor issue mgmt.GRNIOrder TrackingSupplier StatementsInventory / StockSundry Payments
A2RGL ReconciliationsIntra Account nettingInter-CompanyPrepayment /AccrualVAT recs with GLBank & Treasury Suspense accounts
OtherGift / Pre-paid CardsCredit Card / ATMPayrollFixed AssetsSystem to SystemEmployee benefitsLeasing / Loans
InformationPresentation Layer
Transactional Layer
Data Warehouse Layer
Reporting & Analytics
| 11© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The implementation of process best practices in Reconciliation remains patchy ...
27%
29%
31%
39%
55%
61%
61%
76%
86%
A materiality limit is established for resolving discrepancies identified inaccount reconciliations
A materiality limit is established for resolving discrepancies identified inaccount reviews
All reconciliations are submitted for review; only a subset is selected for review
A time limit is established for resolving discrepancies identified in accountreviews
A time limit is established for resolving discrepancies identified
Standard formats are used for account reconciliations
Aging of open items on account reconciliations is performed
Account reviews are completed within a specified period of time
Account reviews are assigned to specific owners
Process of Review and Approval of Reconciliations
| 12© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
...& the business case for automating reconciliation is significant
$ Per Balance Sheet Reconciliation Percent of Balance Sheet Account reconciliations automated57
19
Median Q1
10%
25%
Median Q1
3 x 2.5 x
| 13© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Reconciliation Burning Platform
Best Practices
Contents
| 14© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Top 10 Empirical Best Practices in Reconciliation
1. Reduce the demand & complexity drivers of reconciliations
2. Establish clear ownership and accountability for each account reconciliation
3. Effective management of account reconciliation process
4. Peer interactions drive continuous improvements5. Workflow for reconciliation process management6. Balance and Transaction Matching7. Data capture validation and control8. Status Monitoring and Alerting9. Maintain Business Rules throughout
Reconciliation Operations10. Automatically Assign, Organize, and Prioritize
Research Incidents
| 15© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Contact Information
The Hackett GroupWorld HeadquartersSuite N5001117 Perimeter Center WestAtlanta, GA 30338, USAPhone: +1 770 225 3600
Martin House5 Martin LaneLondon EC4R 0DP, United KingdomPhone: +44 207 398 9100
Torhaus WesthafenSpeicherstrasse 5960327 Frankfurt am Main, GermanyPhone: +49 69 900217 0
8, rue de Port Mahon75002 Paris, FrancePhone: +33 1 53 43 0400
Camerastraat 25, 1322 BB AlmereAmsterdam, The NetherlandsPhone: +31 20 301 2210
Gilles BonelliPractice Leader
Phone: +44 (0) 7879 480 249
www.thehackettgroup.com
Teus VerbreeDirector EPM Transformation
Phone: +31 (0) 6433 797 64
www.thehackettgroup.com
www.trintech.comwww.trintech.com
Investment Drivers for Automating ReconciliationsLocal Close I Group Close I Reconcile I Report
David TaylorExecutive Vice President
Investment Drivers for Automating ReconciliationsLocal Close I Group Close I Reconcile I Report
David TaylorExecutive Vice President
Customers benefiting from last mile solutionsCustomers benefiting from last mile solutions
Commercial Financial
Delivering world-class results to customers for 20 years
Over 600 industry leaders - 26 of Fortune 50, 100+ of Fortune 500
17
Typical Corporate expectations of financeTypical Corporate expectations of finance
No Material Weaknesses or significant deficiencies at ANY Period End
Rapid response to remediate deficiencies
Sustainable Processes
Control Improvements = Process Improvements = ROI
Best of Breed Cost effective Programs: practice what you preach
Last mile of finance is the riskiest of all F&A Processes, the least automated, and the most likely single point of failure in meeting Corporate expectations
Last Mile of Finance Themes/ Investment DriversLast Mile of Finance Themes/ Investment Drivers
19
Drivers: Standardized,
consistent processes across entities
Productivity efficiencies gained through automation and effective collaboration
Single version of the truth through a single production platform encapsulating all sub-processes
Last Mile of Finance
Technologies
Drivers: Cost reductions leading to impressive Return on
Investment (ROI) Enhanced staff efficiencies allow for shifting focus
from transactional to analytical Enabling Specialization and production-based
performance through task consolidation within Centres of Excellence and Shared Services
Drivers: Inherent systematic
controls Quality improvement
due to reduced manual processes
Risk mitigation
Drivers: Unprecedented visibility into
key close activities across multiple management levels
Proactive monitoring capability to assist with identification of bottlenecks and control gaps
Last Mile of Finance Process Enabling Technologies focus on optimizing key financial processes.
Deployment of these tools focus primarily on transformation amongst four overarching themes:
• Transparency
• Process Unification
• Governance & Control
• Resource Optimization
Each theme is aligned to specific drivers that help guide successful implementation of sustainable and repeatable processes.
Transparency
Process Unification
Governance & Control
Resource Optimization
Why automate balance sheet reconciliation certification & reviewWhy automate balance sheet reconciliation certification & review
Procedural documentation
and policy
Total Account
Ownership
Reconciliation preparation
Balance Substantiation
Certification and review
Balance Sheet Review and
integrity assessment
Executive Oversight and transparency into NET unexplained differences and line item drilldown
Centralized and standardized procedures
and controls
100% control and validation of all balances signed off prior
to balance sheet sign-off
Workflow driven with dynamic scheduling and
risk rating accounts
100% assurance of account
ownership and account
assignment
$$ responsibility with right person at right time for historic and forecast
Balance Sheet Integrity through automation and enhanced process controls
Enhanced Control
Reduced risk in write-offs and exposures
Timely issue isolation and escalation
Balance Sheet visibility
Resource optimization
Faster cycle time
Reconciliations & Balance Sheet CertificationReconciliations & Balance Sheet Certification
• Efficient Central/ Decentralized Administration• Auto-identification of new accounts (100% coverage)• Local Autonomy with central visibility and control – empowering your business units
Account Assignment
• Complete Account description with supporting controls, policies and rules• Account and Reconciliation history, including attachments and supporting evidence repository• Documented approval and change management workflow
Procedural Documentation Exists
• Live Role based Dashboard• Account Grouping, Interactive Matching, high volume trx matching and search and filtering criteria• Bulk- reconciliations - zero balance, no activity and threshold, Dynamic Risk Rating
Timely Reconciliations and substantiation
• Highlighted past dues and auto-notifications to User and Management!• Commentary and notes for audit trail• High Risk Accounts flagged for continuous monitoring
Issue Isolation
• Escalation workflow and collaboration capabilities• Intelligent based reporting capturing ALL the facts• Item aging and carry-forward rules, Lock-down on completed work
Issue Escalation and documented resolution
• Adjustment workflow, creation, review and approval• Reconciliation re-perform when balances change• Controlled closure of open items
Adjust with Integrity
• Standardized reconciliation templates with Built-in account certification and confirmation• Easily accessible reference information for best practice reconciliations• Continuous and inclusive audit trail
Personnel Enablement
Resource Optimization in ReconciliationsResource Optimization in Reconciliations
WorkLoad
100%
February March
80%
1Cost
Reduction
1 ‐ Eliminate manual worka) Right first time – reduction of corrections
performed during peak loadb) Automation ‐ cost reduction if the targeted
activity is performed during the peak load
2 – Evenly distribute the work loadMoving activities away from the peak load enables cost reduction and reallocate time for quality
2 2
Address bottlenecks to Improve Quality and Increase Efficiency
Sprint
Run
Crawl
Walk
Last Mile of Finance Maturity ModelLast Mile of Finance Maturity Model
Manual Process Improvements
• (Manual) detective controls & procedures
• Manual process improvements
• Legacy apps• Heavy spreadsheet use
• Email, Word, shared drives
Semi‐Automated Process
• Semi‐automated controls
• Point solutions for collaboration (e.g. SharePoint), process management and compliance
• Lack of controls across data streams
• No single view into close and reporting process
Manual Processes
• Disjointed processes• Legacy apps• Heavy spreadsheet use
• Email, Word, shared drives
Fully‐Automated& Optimized
• Best practices• (Automated) preventive controls embedded into business process
• Consolidated view into close & reporting process
• Fully integrated with XBRL, close, exception mgt, reconciliations, and compliance
• Automated and collaborative global workflow
• Real‐time process optimization
Efficiency, Transpa
rency, Qua
lity
Cost of Finance, Risk
www.trintech.comwww.trintech.com
David TaylorExecutive Vice [email protected]
David TaylorExecutive Vice [email protected]
Q & AQ & AThank you for participating.
For further information please contact:
[email protected] (USA)+1 800 416 0075
Or
[email protected] (EMEA)+44 (0) 207 628 5235
Please register for the first in our new webinar series
Part I: Closing the Performance Gap within “The Last Mile”When: Tuesday, February 28, 2012Time: 10:30 am Central Standard Time (Chicago, GMT-06:00)
4:30 pm GMT Time (London, GMT)
http://www2.trintech.com/l/3242/2012-02-01/b3nb8