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Advice and Information for Finance Professionals

The one-day financial close and the value of quarterly updates

Guest Author

By Paul Doyle, Senior Finance Director, Finance Transformation and Automation, Oracle and Anna Clare, Senior Manager, Record-to-Report Cash & Systems, Oracle

One of our more ambitious goals here at Oracle is to fully automate our monthly financial close. We want to achieve instant updates to financial accounts and data for immediate reporting. Quarter after quarter, we’ve significantly accelerated the close process, helping our leaders to respond rapidly to changing business and economic conditions, and giving our finance team more time to focus on strategic activities.

The quarterly updates in Oracle Cloud Applications have been a huge advantage. Every quarter, we can take advantage of new enhancements, adopting and benefiting from the latest product innovations—bringing us closer to a fully-automated close. In November 2019, one of Oracle’s subsidiaries (which itself has 20+ subsidiaries globally) closed its books in a single day for the first time. We are now using this major achievement as a benchmark to automate the close in all Oracle subsidiaries. Most recently, we closed our corporate books and reported Q1FY21 earnings on September 10, 2020 in just 10 days, all while everyone was working remotely due to the COVID-19 pandemic.  

Here are some of the features in the latest quarterly update that are powering new efficiencies.

Automatic reconciliation of rejected payments

Since migrating our finance systems to Oracle Fusion Cloud ERP, we’ve used standard functionality to automatically process and reconcile bank statements, minimizing manual intervention from our finance team and streamlining financial close activities. This is no small achievement. Oracle works with a large number of banks, and we process about 720 daily bank statements and 200 additional monthly statements. But up until recently, if a payment was rejected, the rejected line would remain unreconciled, and the team would have to do the work manually. This quarter, using new updates in Oracle Cloud ERP, we’ve adopted a new feature that automatically reconciles payment rejections on bank statements, saving valuable employee time.

Bank statement un-reconciliation of one transaction from a group

As a large organization, Oracle processes a lot of payments. In some cases, we issue one accounts payable (AP) batch payment per day, which can include 100–400 individual payment documents.

Historically, if just one of these payment documents were rejected or returned, Oracle’s cash management team would have to manually un-reconcile and re-reconcile all of the line items in the batch for AP to process the payment correctly.

Now, we’ve adopted an update that helps our finance team identify and un-reconcile a single returned payment, without adjusting the other hundreds of payments in a batch—creating significant efficiencies and time savings throughout the quarter leading up to close.

Reconcile journal lines for multiple cash account combinations

Thanks to another Oracle Cloud ERP update, employees can now view and reconcile journal entries even if the CCID (the bank account identifier) doesn’t match the intercompany codes used in the original bank account setup. Previously, the cash management team could only view journal entries that exactly matched the original CCID bank account setup. This caused other inefficiencies because users could not clear these bank lines in the system. Now, employees can view and reconcile all journal entries in the system, and can set up rules to auto-reconcile. We anticipate that this update will bring us closer to a 1-day close.

Assign user exchange rates for external cash transactions

We process a large number of external transactions: transactions that need to be accounted for as they originate from the bank, such as bank charges, interest, or sweeps. In the past, our system automatically assigned treasury exchange rates to any external transaction made in a foreign currency. This caused inefficiencies during reconciliation when bank statement transactions were recorded in a different exchange rate (for example the corporate rate).

When this happened, employees had to manually create another transaction and calculate the difference in exchange rates to reconcile the external transaction to the original bank statement. Now, with a new feature in Oracle’s quarterly cloud updates, employees save valuable time by choosing which currency rate to use in each external transaction, so they can reconcile with the bank statement more efficiently.

Save and reuse search criteria in account balance inquiries

A new update in Oracle Cloud ERP makes it easy to save and re-apply frequently-used search criteria on the “Inquire on Detail Balances” page (see figure 1). This helps employees retrieve account balances faster and more efficiently. With this enhanced user experience, the finance team can access the information they need, when it’s needed, without having to re-create common queries.

When aiming for a fully automated, 1-day close, every minute helps

With Oracle Cloud ERP, we implement useful enhancements like these every 90 days, improving the financial close process and generating significant efficiencies. We can:

  • Automatically reconcile 92% of global bank transactions
  • Reconcile intercompany balances for ~400 entities globally in 1.5 hours per month
  • Reduce expense allocations by 98%
  • Complete accounting for open purchase order accruals globally in 3 hours
  • Reduce manual accounting by 35% with multi-ledger, multi-currency journals

In the months following the work-from-home mandate, Oracle executive vice president Corey West said it best: “The pandemic has highlighted the importance of a cloud-based platform that supports business continuity and resiliency. For finance, this means taking advantage of quarterly innovation so we can close the books faster while working from home and deliver real-time information to management for immediate decision making. Our goal is to reach a one-day close, and we’ve been able to shave more than a day off our close since the pandemic began. We’re also embracing automation relentlessly, driving towards what I call infinite scale, eliminating human intervention when possible, to free up more time to focus on making smarter decisions and delighting our internal and external customers.”

As we continue to automate manual processes across the organization, Oracle’s finance team will be able to spend more time partnering with the business to ensure success.

Learn about the new features released this quarter in Oracle Cloud ERP and EPM.

Join the discussion

Comments ( 2 )
  • Sachin K Mistry, CFA Wednesday, October 21, 2020
    Interested in knowing how do you complete accounting for open purchase order accruals globally in 3 hours?
  • Lynne Sampson Tuesday, November 17, 2020
    Hi Sachin, I checked with Paul Doyle, the co-author of this article. He responded:

    "In Oracle we prepare Open Purchase Order accruals for indirect procurement. Prior to our cloud migration we ran a custom report at entity level, downloaded the file to excel and made modifications to the data to comply with our process for booking the accrual. This usually required many lines to be removed for different expense categories. This was performed monthly by entity taking many hours across multiple teams, approx. 100 hours.

    "Since migrating to the cloud we developed a OTBI [Oracle Transactional Business Intelligence] report in ERP which delivers the accrual finalised, not requiring any manual intervention. When we moved to the cloud we implemented a Global Chart of Accounts, this in addition to the BI reporting capabilities has allowed us run the reporting monthly by entity for the entire globe within 3 hours, including the transferring the data to a Journal and posting into GL."

    I hope this helps! Please let us know if you have more questions.

    Lynne Sampson, Managing Editor
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