New Research Shows Companies Could Save US$6.48 Million Every Year in the Financial Close

Global 1000 companies waste millions on repetitive manual work and undocumented processes

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Apr 02, 2014, 09:00 ET

MORRISVILLE, North Carolina, April 2, 2014 /PRNewswire/ --

Redwood Software Inc., the leader in Enterprise Process Automation™, analyzed the financial close procedures of 56^[1] companies from the Global 1000 that use SAP^® applications and found high volumes of undocumented processes and manual activities. The assessment of these large organizations highlights a significant gap between current perception of the financial close process, its reality, and the best practices that can be achieved through process automation.

Risky Manual Effort

The research reveals that Global 1000 enterprises have an average of 83 separate legal entities and expend 142 full-time equivalents (FTEs) to complete the close. With the financial close typically taking seven days to complete for each individual legal entity, companies dedicate more than 8,300 full personnel days to the close every year. Digging deeper, research also shows that the close is highly dependent on manual tasks, application customization and undocumented processes.

82% of financial close activities are completely manual.
17% of the transactions required to complete the close rely on custom-built code outside of main SAP applications.
Up to 23% of financial close transactions that are formally documented are never actually executed.

According to KMPG^[2]: "For years, CFOs have been struggling with their processes and models in an effort to deliver faster, more accurate and more insightful analysis and reporting while - at the same time - appropriately managing risk and reducing cost."

Save Millions

Further research reveals that by automating processes involved with the financial close, manual activities could be reduced by 70%. This translates into an annual tangible savings of US$3.86 million for the average Global 1000 company. Companies with more than 80 legal entities could save as much as US$6.48 million every year. Beyond the cost benefits of reducing the effort to perform and maintain the close, automation also mitigates risk. Automation eliminates much of the risk from human error and undocumented processes which improves compliance and auditability.

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1. The assessment breakdown by geography included 34 companies in EMEA (59%), 20 companies in North America (37%) and 2 companies in Asia-Pacific (4%).

2. Transforming Finance - KPMG, 2011. http://www.kpmg.no/arch/_img/9702924.pdf

One of the'Big Four' accounting firms says: "When companies apply automation to repeatable financial processes that support the close, CFOs get better quality information, faster. Automated close processes require less effort and costs less to execute."

Peter Minck, Vice President, Business Solutions at Redwood says: "The repetitive nature of the financial close makes it the ideal activity to automate. Whether a business completes its close in-house, uses a shared service center or outsources, financial process automation reduces unnecessary manual labor, while it also improves data integrity and close consistency. Reliable standardized processes guarantee compliance and audibility. Automation eliminates both the high risk, and cost of the manual close."

About Redwood Software:

Redwood is the world leader of Enterprise Process Automation™. Over the last 20 years we have helped more than 3,000 customers automate their mission-critical IT and business processes. Our customers remove the costs, risks and wasted time of manual tasks and achieve greater reliability, consistency and accuracy across diverse processes, such as the financial close, supply chain and business intelligence (BI).

We are SAP^® AG's only strategic automation partner because we connect applications from any vendor and source. With the industry's widest range of deployment options we offer software, cloud or appliance. Our Automated Process Packages (APPs) help customers achieve success in the shortest possible time and with minimum effort.

For more information on Redwood products and solutions, please visit http://www.redwood.com

SOURCE Redwood Software