The close cycle is a stressful time for accounting professionals – they face compounding pressure to complete the process with unwavering accuracy within a limited timeframe. This fact is well known since in nearly every accountant interview, the key question, “how well do you work under pressure?” is asked.
To add to the close cycle stress, the market is continually tightening timelines and demanding more details to back up results. This degree of pressure can rob employees of a work/life balance and job satisfaction. A recent online report found that most accounting and finance professionals are negatively impacted by the close cycle; almost half of those surveyed reported difficulties scheduling regular life events and that personal relationships suffered because of the need to focus on work during the stressful close period.
The challenges facing finance and accounting teams are compounded by the fact that there continue to be serious gaps in the technology infrastructure supporting banking functions especially around accounting for loan portfolios. All too often – whether it is because of organizational or budgetary constraints – significant systemic gaps exist between loan servicing systems and the general ledger. Servicing systems cover the operational life cycle of a loan, but they do not address every aspect of loan accounting. The “cash view” of the servicing system is crucial to lending institutions, but the differences between this view and the accounting results continues to diverge. Examples of this include non-performing loan guidance or income recognition of fees and costs. The financial crisis accelerated much of the cash and accounting view divergence with a series of new regulations that address the increasing number of non-performing loans in the market. As a result, no bank or lending institution could escape from the ever-escalating accounting challenges . The only options for many were to push servicing system functionality to its limits or default to a complex web of end user solutions using Microsoft’s Excel and Access applications. The web of manual processes built around Excel are risky, cumbersome and expensive to maintain and once again add to the pressures involved in the accounting close cycle. In a previous blog post, Move over, Excel, Finance is evolving, I referenced how Microsoft Excel is no longer the right solution for loan accounting; this is one of the key reasons why I feel this way.
Finance teams can significantly reduce these pressures and shorten the close cycle by implementing a loan accounting close solution. One such solution is SS&C Primatics’ EVOLV accounting software. EVOLV enables accounting teams to create a truly automated, controlled and repeatable close process.
Accounting close software is built on the foundation that the Trial Balance view and Activity Reporting are important but inherently different. An accounting close software must seamlessly handle both views as well as various accounting policies with multiple elections and automatically create journal entries. This awareness is what separates EVOLV Accounting from other rule based systems; it is a loan accounting solution designed by accountants, implemented by accountants and used by accountants to enable a repeatable, accurate, controlled, and efficient close process. As an example, one of our customers saw a 50% reduction in their month-end close window. They went from 8 days to less than 4 days closing by replacing a manual, spreadsheet-based accounting production cycle with EVOLV Accounting. The time and productivity gained through such a solution can be invaluable to organizations as accountants are increasingly being called upon to be a strategic partner in business decision making instead of just crunching numbers. All of this, on top of the reduced strain and stress on your organization will drastically improve work/life balance for employees.
To learn more, download our case study about how EVOLV helped a large Midwest bank meet compliance requirements and eliminate the need to maintain multiple internal systems and spreadsheet-based processes.
Asset Management, Commercial Lending