What is a continuous accounting model?
A continuous accounting model is a method of accounting in which teams conduct period-end tasks on an ongoing basis. In a continuous accounting model, data is delivered continuously, providing real-time visibility into transactions and reconciliations.
A typical record-to-report period-end accounting process takes weeks to complete and comes with frustrating downsides, including delayed visibility and human error. This prevents finance teams and business leaders from performing the real-time analysis necessary to inform fast decision-making. You are either left waiting on new information or forced to rely on outdated data.
Conversely, when companies adopt a continuous accounting model, they achieve faster close periods, immediately identify errors and potential fraud, and make quick, intelligent decisions – not to mention the time saved on tedious manual reconciliation. Continuous accounting allows you to be efficient, agile, and strategic.
The benefit of continuous accounting
Today’s finance teams must adjust quickly as they grapple with tightened budgets, a distributed workforce, and new macroeconomic risks. Many will do that by leveraging digital tools that can expedite their processes. In a PwC Pulse CFO survey, 62% of respondents reported having accelerated use of automation and digital technologies, and 75% anticipated more resources going to digital tools and services in 2021.
Many companies have embraced digital transformation, leveraging technology to unite and empower their increasingly remote workforces. Individual employees are seizing their autonomy to purchase the things they need to do their jobs, without going through the traditional centralized channels that were built for the old way of doing business.
A recent survey found that 80% of non-C-suite employees now have a say in purchasing decisions — and that was before the explosion of remote work in 2020. With more business spend originating from more places than ever before, finance teams need real-time visibility into what’s happening across the company.
Traditional accounting cycles cannot offer the kind of transparency needed to update forecasts, reprioritize investments, or reallocate capital as conditions change — they just move too slowly. Today’s business landscape demands a modern, agile strategy, which only a continuous accounting cycle can facilitate.
Continuous accounting is the new way to work
According to a recent report from EY, finance leaders will play a critical role in businesses recovery from the COVID-19 crisis. They will need to move with agility as they work to safeguard revenue, reduce costs, and lay a solid foundation for future growth.
But traditional accounting cycles, characterized by long timelines and low levels of visibility, make agile operations challenging. Modern finance requires a more seamless and real-time workflow to get the data the team needs, when they need it. Only with a continuous accounting cycle can finance teams lead a truly agile finance department.
How to create a continuous accounting model
By following the below steps, you can build a continuous accounting model to inform smarter, faster decision-making.
1. Enable remote and distributed teams to work effectively from anywhere
With nearly half of companies allowing employees to work remotely full-time, finance departments must implement systems that enable their increasingly distributed teams to comply with policy no matter where they are.
The first step in that process? Moving finance operations to the cloud. Remote teams can be more agile when they’re not bound to outdated systems and processes, such as sharing physical corporate cards and submitting paper receipts.
Moreover, cloud-based operations allow you to review and analyze corporate spend in real time, continuously. Finance teams can immediately track every purchase as it happens and, as a result, make immediate adjustments to budgets and policies.
Achieve Continuous Accounting with Teampay
With the right processes and technologies, you can achieve a truly continuous accounting cycle
2. Increase visibility into spend
One of the biggest challenges with a traditional accounting cycle is that finance teams may not become aware of purchases until the corporate credit card statements come in at the end of the month. Maintaining real-time visibility eliminates this time delay, so they can respond in real time and make smart decisions, faster.
To ensure ongoing real-time spend insights, you need systems that allow you to track purchases—both completed transactions and funds that have been committed to a vendor but not yet spent—against the budget. Distributed spend management software allows you to see this information—as well as payment methods, receipts, and other purchase data—all in one place.
By correctly coding transactions upfront, finance teams can get visibility into purchases before they occur. This information is seamlessly transmitted to the company’s accounting software, granting you an unprecedented level of transparency.
3. Automate and unify your processes
Automation saves time for the accounting team and ensures all employees get what they need more quickly. By reducing disparate and time-consuming manual processes, your team is freed to focus on more strategic work that delivers on the company’s bottom line.
Automated reconciliation saves you time on month-end close by taking on the manual grunt work. Transaction data is seamlessly passed through to your accounting software – including QuickBooks, NetSuite, Intacct, and Xero – which helps you on your way to a continuous close. This reduces manual errors and allows employees in and out of finance to view accurate data at any given time, not just at month-end closing.
Enabling a system that automatically guides employees through the correct purchasing workflow ensures compliance without relying on employees to remember your expense policy and act accordingly. With distributed spend management software, a conversational interface notifies employees of the steps they need to take, and proactive controls guarantee that all spend is within policy and budget.
Set your team up for success
With the right processes and technologies, you can achieve a truly continuous accounting cycle. This will allow your team to make smarter, faster decisions, elevating your position in your organization and driving agility in an ever-changing market.