Hacket Trintech Intel Reconciliations Best Practices

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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

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.

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


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


The Reconciliation Burning Platform

Best Practices

Contents

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.

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


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


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


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


...& 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


The Reconciliation Burning Platform

Best Practices

Contents


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


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

[email protected]

www.thehackettgroup.com

Teus VerbreeDirector EPM Transformation

Phone: +31 (0) 6433 797 64

[email protected]

www.thehackettgroup.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


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

Hacket Trintech Intel Reconciliations Best Practices

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