Continuous Accounting: Just a Trend or the Future of Finance?

For decades, finance teams have been plagued by frustrating and stressful month-end close processes. Every month, accounting and finance teams have to rush to gather all the data for the previous period, record all the transactions, review reports, and publish them—and all in a matter of just a few days (and in some cases, weeks). These closing periods are a dreaded time for all involved, and often cause undue stress and frustration.

Considering the Shortcomings of Traditional Accounting

With traditional accounting processes, the bulk of an accountant’s work is performed after the end of each accounting period. But this method is fundamentally flawed. Here’s why:

• Time-consuming manual processes: Manually entering large batches of transactional data after the end of the period puts is cumbersome to the accounting team, and takes time away from more valuable activities.
• Errors: The resulting stress and time constraints placed on accounting teams lead to a higher risk of errors and inaccuracies.
• Workload: Accounting and finance teams are often short-staffed. If they’re under extra pressure to prepare reports on time, motivation and productivity suffer—and the likelihood of burnout increases.
• Limited insights: Accurate real-time insights are simply not possible when transaction data isn’t complete or available throughout the accounting period.
• Historical data: Management and other decision-makers only get a historical view of the company’s position, and reports don’t reflect the current balances.

Enter Continuous Accounting

Continuous accounting incorporates the tasks traditionally reserved for month-end close into day-to-day activities. This approach to managing accounting cycles embraces technological advances and combines automation with daily business activities.

The roles and responsibilities of accounting and finance teams are redefined under continuous accounting. It gives team members the opportunity to focus on the accuracy of transactional data and real-time analysis of the organization’s financial performance.

The traditionally rigid accounting calendar is transformed to reflect the business’s operations more clearly. This allows the accounting and finance teams to make month-end close more efficient, and to prepare more accurate financial statements. These improvements can help make the entire organization more successful.

Continuous Close

An important part of the continuous accounting process is continuous close: the ability to continually close your accounts throughout the accounting cycle. The term is often used synonymously with continuous accounting. However, continuous close refers more specifically to the ability to perform a soft close at any time during the period.

Principles of Continuous Accounting

1. Integrated technology: Continuous accounting involves using integrated technology to automate repetitive tasks and accounting procedures.
2. Workload distribution: Workloads are more balanced when teams distribute and perform tasks throughout the whole accounting period rather than all at once.
3. Accounting Culture: To enjoy the full benefits of continuous accounting, the accounting team and management have to be open to changing how they work.

Noteworthy Benefits

• Automation considerably improves the integrity of financial data.
• Real-time visibility allows for more informed decision-making.
• Employees are more engaged when they can perform value-added tasks.
• More manageable workloads help to reduce staff burnout.
• Compliance and auditing processes are streamlined thanks to greater transparency.

Is Continuous Accounting the Future of Modern Accounting?

In short, absolutely. Not only is continuous accounting the future of modern accounting—it’s already here. If you use cloud accounting technology and you’ve connected your bank account, you’re already practicing continuous accounting.

The core tenet of this practice is integrating automation processes, especially for large sources of data like bank transactions, sales data, and payroll. Technology sets a precedent for timely, cost-effective, and high-quality business improvements.

Most organizations have already begun the transformation, and those that haven’t will quickly lose their competitive edge. If you’re considering transitioning from traditional accounting practices to more modern methods, the time is now.

Try Continuous Accounting for a Stress-Free Month-End

Consider the integrated technology or automated solutions you could use to start the transition to continuous accounting. Implementing innovative technology like spend management software can be the first step to modernizing your accounting process.

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Mesh Content Team