Hacket Trintech Intel Reconciliations Best Practices

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Measurable differences in utilizing best practices for reconciliations

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Hacket Trintech Intel Reconciliations Best Practices

  1. 1. Transforming the LAST MILE of FINANCEReconciliationsBest PracticeMeasurable Benefits22 February 2012Trintech | The Hackett Group | Intel www.trintech.com
  2. 2. AGENDA Introductions The Hackett Group Gilles Bonelli – Director EPM & A2R Practice Leader – EMEA Reconciliations Best Practice and Automation Trintech David Taylor – Executive VP What could best practice look like? Intel Vicky Espiasse Global Accounting Close and Reporting Controller Inspired innovation improves processes
  3. 3. EPM TRANSFORMATIONRECONCILIATION BEST PRACTICES & AUTOMATION Gilles Bonelli – Director EPM & A2R Practice Leader – EMEA Teus Verbree – Director EPM Transformation - EMEA Page 3Hackett Executive Advisory Best Practices in Account ReconciliationsFebruary 22, 2012 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is © 2012 prohibited.
  4. 4. Statement of Confidentiality and Usage RestrictionsThis document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which wouldprovide 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. 5. The Hackett Group difference: empirical best practices to achieve measurable benefits  We are the global leader in operations Hackett Value Grid™ 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 We know how the best do it, – 1,000+ best practice-based process maps, where they do it, and the benefit of doing it requirements and configuration guides  We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset * SG&A = Sales, General & Administrative© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. |5
  6. 6. Executive Advisory is a subscription service to Hackett IP and Senior Advisors to drive continuous improvements in any G&A function Executive Advisory  Un-metered inquiry  Executive Briefing 1 Advisor Access 2 3 4 Measurement Research Peer Interaction  Benchmarks available  Hackett Book of Numbers  Topical Webcasts / by Process in the Research series Virtual Roundtable taxonomy  Hackett Research Papers  Annual Hackett Best  Performance Studies  Hackett Member Center Practices Conference (Performance Metrics, Best  Focused peer-to-peer Practices and Quick Wins) meetings© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. |6
  7. 7. Contents  The Reconciliation Burning Platform  Best Practices© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. |7
  8. 8. Myth: Reality:High educated finance Many expensivepersonal is working on value controllers/FP&A professionalsadded activities spending 2/3 of their time or more on low value information activities Page 8 Best 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.
  9. 9. Fragmented processes & systems often drive complexity, &high cost in reconciliation (i.e. “The Evil necessary to demonstrate controls”) Transactional Data Warehouse Reporting & Analytics Information User Layer Layer Presentation Layer types Gov. Data Dashboard Market Internet External Reporting Tools C-level & Other Market Data • External Standard BU Mgmt. • Management Reports Marketing CRM CRM Data Drill Down Customer Service Planning & Budgeting Tools Custom Reports VPs & Dept. GL Mgrs. Personal AP ERP Data EPM Data Model & Models ERP FA (ledger / Repository PR sub-ledger) Analytical Tools Driver Models HRMS LRP App 1 Modeling Analysts Operations Operational Forecasting & App 2 M&A Data Modeling Tools Scenarios App 3 App 4 Reporting and Process Automation Analytics and Modeling Tools *many (expensive) controllers/FP&A professionals spending 2/3 of their time or more on low value information activities © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. |9
  10. 10. For many global businesses, reconciliations are everywhere Transactional Data Warehouse Reporting & Analytics Information User Layer Layer Presentation Layer types Gov. Data C2C A2R Dashboard Market Internet External Order Tracking Reporting Tools GL Reconciliations C-level & Ecommerce Data Other Market • External Intra Account netting Standard BU Mgmt. • Management Reports Cash applications Inter-Company Marketing GL SL to Prepayment /Accrual CRM CRM Data Drill Down Customer to GL to Bank POS VAT recs with GL Service Planning & Discounts Bank & Treasury Custom Budgeting Tools Commissions Suspense accounts Reports VPs & Dept. GL Mgrs. Personal AP ERPP2P Data EPM Data Model & Other Models ERP FA Purchase (ledger / recs ledger Repository / Pre-paid Cards Gift sub-ledger) PR Vendor issue mgmt. Analytical Tools Credit Card / ATM Driver Models GRNI HRMS Payroll Order Tracking Fixed Assets LRP AppSupplier Statements 1 System to System Modeling Analysts Operations Forecasting & AppInventory / Stock 2 Operational Employee benefits M&A Sundry Payments Data Leasing / LoansModeling Tools Scenarios App 3 App 4 Reporting and Process Automation Analytics and Modeling Tools© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 10
  11. 11. The implementation of process best practices in Reconciliationremains patchy ... Process of Review and Approval of Reconciliations Account reviews are assigned to specific owners 86% Account reviews are completed within a specified period of time 76% Aging of open items on account reconciliations is performed 61% Standard formats are used for account reconciliations 61% A time limit is established for resolving discrepancies identified 55% A time limit is established for resolving discrepancies identified in account 39% reviewsAll reconciliations are submitted for review; only a subset is selected for review 31% A materiality limit is established for resolving discrepancies identified in 29% account reviews A materiality limit is established for resolving discrepancies identified in 27% account reconciliations © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 11
  12. 12. ...& the business case for automating reconciliation is significant $ Per Balance Sheet Reconciliation Percent of Balance Sheet Account 57 reconciliations automated 25% 3x 2.5 x 10% 19 Median Q1 Median Q1 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 12
  13. 13. Contents  The Reconciliation Burning Platform  Best Practices © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 13
  14. 14. Top 10 Empirical Best Practices in Reconciliation1. Reduce the demand & complexity drivers of reconciliations2. Establish clear ownership and accountability for each account reconciliation3. Effective management of account reconciliation process4. 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 © 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 14
  15. 15. Contact Information The Hackett Group Gilles Bonelli World Headquarters Practice Leader Suite N500 1117 Perimeter Center West Phone: +44 (0) 7879 480 249 Atlanta, GA 30338, USA Phone: +1 770 225 3600 gbonelli@thehackettgroup.com Martin House www.thehackettgroup.com 5 Martin Lane London EC4R 0DP, United Kingdom Phone: +44 207 398 9100 Teus Verbree Torhaus Westhafen Speicherstrasse 59 Director EPM Transformation 60327 Frankfurt am Main, Germany Phone: +49 69 900217 0 Phone: +31 (0) 6433 797 64 8, rue de Port Mahon tverbree@thehackettgroup.com 75002 Paris, France Phone: +33 1 53 43 0400 www.thehackettgroup.com Camerastraat 25, 1322 BB Almere Amsterdam, The Netherlands Phone: +31 20 301 2210© 2012 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. | 15
  16. 16. Investment Drivers forAutomating ReconciliationsLocal Close I Group Close I Reconcile I ReportDavid TaylorExecutive Vice President www.trintech.com
  17. 17. Customers benefiting from last mile solutions Delivering world-class results to customers for 20 years Over 600 industry leaders - 26 of Fortune 50, 100+ of Fortune 500 Commercial Financial17
  18. 18. Typical 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 preachLast 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
  19. 19. Last Mile of Finance Themes/ Investment Drivers Drivers:Last Mile of Finance Process  Unprecedented visibility intoEnabling Technologies focus key close activities across multiple management levelson optimizing key financial Transparency  Proactive monitoringprocesses. capability to assist with identification of bottlenecks and control gapsDeployment of these tools Drivers:focus primarily on Last Mile of  Standardized, Process consistent processestransformation amongst four across entitiesoverarching themes: Finance Unification  Productivity Technologies efficiencies gained• Transparency through automation and effective collaboration  Single version of the• Process Unification truth through a single production platform• Governance & Control encapsulating all sub- processes• Resource Optimization Governance & Control Drivers: Resource  Inherent systematicEach theme is aligned to Optimization controls  Quality improvementspecific drivers that help guide due to reduced manualsuccessful implementation of Drivers: processes  Risk mitigationsustainable and repeatable  Cost reductions leading to impressive Return on Investment (ROI)processes.  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 19
  20. 20. Why automate balance sheet reconciliation certification & review Executive Oversight and Centralized and transparency into NET Balance Sheet Procedural standardized procedures unexplained differences Review and integrity documentation and controls and line item drilldown and policy assessment Enhanced Control Reduced risk in write- offs and exposures 100% control 100% assuranceand validation Timely issue isolation Total of accountof all balances Certificationsigned off prior and escalation Account ownership and and review account to balance Ownership Balance Sheet visibility assignment sheet sign-off Resource optimization Faster cycle time $$ responsibility with right Workflow driven with person at right time for Balance Reconciliation dynamic scheduling and Substantiation preparation historic and forecast risk rating accounts Balance Sheet Integrity through automation and enhanced process controls
  21. 21. Reconciliations & Balance Sheet Certification • Efficient Central/ Decentralized Administration Account Assignment • Auto-identification of new accounts (100% coverage) • Local Autonomy with central visibility and control – empowering your business units Procedural • Complete Account description with supporting controls, policies and rules • Account and Reconciliation history, including attachments and supporting evidence repositoryDocumentation Exists • Documented approval and change management workflowTimely Reconciliations • Live Role based Dashboard • Account Grouping, Interactive Matching, high volume trx matching and search and filtering criteria and substantiation • Bulk- reconciliations - zero balance, no activity and threshold, Dynamic Risk Rating • Highlighted past dues and auto-notifications to User and Management! Issue Isolation • Commentary and notes for audit trail • High Risk Accounts flagged for continuous monitoring Issue Escalation and • Escalation workflow and collaboration capabilities • Intelligent based reporting capturing ALL the factsdocumented resolution • Item aging and carry-forward rules, Lock-down on completed work • Adjustment workflow, creation, review and approval Adjust with Integrity • Reconciliation re-perform when balances change • Controlled closure of open items • Standardized reconciliation templates with Built-in account certification and confirmationPersonnel Enablement • Easily accessible reference information for best practice reconciliations • Continuous and inclusive audit trail
  22. 22. Resource Optimization in Reconciliations 1 ‐ Eliminate manual work 2 – Evenly distribute the work load a) Right first time – reduction of corrections  Moving activities away from the  performed during peak load peak load enables cost reduction  b) Automation ‐ cost reduction if the targeted  and reallocate time for quality activity is performed during the peak loadWorkLoad 2 1 2100% Cost 80% Reduction February March Address bottlenecks to Improve Quality and Increase Efficiency
  23. 23. Last Mile of Finance Maturity Model Efficiency, Transparency, Quality Sprint Run Fully‐Automated & Optimized • Best practices • (Automated)  Walk Semi‐Automated  preventive controls  Process embedded into  • Semi‐automated  business process Manual Process  • Consolidated view into  controls Crawl Improvements • Point solutions for  close & reporting  • (Manual) detective  collaboration (e.g.  process controls & procedures SharePoint), process  • Fully integrated with  • Manual process  XBRL, close, exception  Manual  Cost of Finance, Risk management and  improvements compliance mgt, reconciliations,  Processes • Legacy apps and compliance • Lack of controls across • Disjointed processes • Heavy spreadsheet  • Automated and  data streams• Legacy apps use collaborative global  • No single view into • Heavy spreadsheet  • Email, Word, shared  workflow close and reporting  use drives • Real‐time process  process• Email, Word, shared  optimization drives
  24. 24. David TaylorExecutive Vice Presidentdavid.taylor@trintech.com www.trintech.com
  25. 25. Q&A Thank you for participating. For further information please contact: Hilliary.Opseth@trintech.com (USA) +1 800 416 0075 Or Carol.orr@trintech.com (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, 2012 Time: 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

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