Accruals-based accounting—when revenue is recorded when it is earned rather than received—is often more complex and employed by larger organizations. Expenses are often recorded in the period they are incurred, while indirect are expenses that happen in the period you are accounting for.
Stress and Turmoil Are Bad
For many teams, it is a time of stress and turmoil. Team members may be chasing internal and external stakeholders who don't reply with the information needed for open invoices and incurred expenses.
Many accounts payables teams lack visibility into how accruals estimates were compiled and are concerned over the completeness of inputs created. Hours might be spent reviewing paper documents and piecing together various sources of information to get a clearer picture of how the monthly close was coming together.
And because much of the work is manual, a good amount of time is spent on compliance, preparing tedious audit documentation for external and internal auditors to review.
Because much of the work is manual, a good amount of time is spent on compliance, preparing tedious audit documentation for external and internal auditors to review.
The Struggle Is Real for Controllers
Imagine you are the controller at WoW Corp, a large software company. Your company uses many suppliers. Some of those suppliers are law firms and consulting firms with different monthly invoice amounts. The AP team does its best to input invoices as quickly as possible, but the invoices don’t always come to the AP team before month's end.
Your external auditors expect all unbilled supplier expenses to be accrued at month's end and perform a thorough scan for unrecorded liabilities. The GL accounting and FP&A teams try setting budgets and tracking accruals inputs. They struggle with the short time window for month-end close, and data may reside in different systems making it difficult to collect the right information or get new team members up to speed.
This makes it difficult for you, the controller, to feel comfortable about the monthly supplier accruals. Getting the accruals wrong could have an audit impact—even worse—you might need to restate.
It seems everyone has their spreadsheets with offline calculations and entries. All this disparate data needs to be collected, consolidated, and reviewed to create the workbooks that will close the books.
Help Arrives for Suffering Finance Teams
What could be done to help alleviate the burdens of closing the books? Enter advanced technology. Automation infused with machine learning would take the first step in collecting necessary data from internal and external key stakeholders.
Imagine if the mundane task of communication and outreach to determine the status and inputs from suppliers and vendors were to be handed over to a colleague who does not get tired, who does not need to eat or sleep, who could continuously process emails and take over email conversation management?
Automation could take over these tasks so accounting teams don't have to think about sending, receiving, and reviewing all the emails. Solutions today deliver the ability to read, understand, label, and take action on emails, which are then centrally tracked and managed. Data for the close is gathered in a single place to improve quality and accuracy.
Imagine if the mundane task of communication and outreach to determine the status and inputs from suppliers and vendors were to be handed over to a colleague who does not get tired, who does not need to eat or sleep, who could continuously process emails and take over email conversation management?
Outreach becomes standardized by a single entity—the technology—that injects consistency in gathering and verifying the information needed to close the books.
For publicly traded, US-based companies that struggle with manual monthly supplier expense accruals that lack transparency, Auditoria created Advanced Accruals for Suppliers to deliver end-to-end Supplier Expense Accrual automation. Hence, companies close their books more quickly, meet compliance requirements, and report accurate supplier expenses.
In six steps, accounting teams that automate their month-end supplier accruals process with Auditoria’s award-winning AI-based NLP / NPU solutions would reduce risk, improve accuracy, and simplify close.
Finance teams benefit from complete and accurate supplier expense accruals, real-time audit reporting, and an accelerated month-end close—all thanks to advanced accrual automation.