Finance functions are under huge pressure. They need to adapt to new technologies, but are still grappling with traditional, manual processes. This puts an additional burden on the team, particularly during the closing period. Our new research reveals what’s going on. We asked over 300 UK finance leaders about their concerns with closing, at medium and large companies. The report is
independent and representative of mid-sized and large UK companies. (https://sixthfin.com/en/resource/sixthfin-report-on-accounting-transformation/)
● Only 15% of companies analyse their accounts without relying on Excel or collaborative tools
(Teams, emails etc.).
● The financial close is a major source of stress, creating chronic monthly pressure.
● As a result, 1 in 3 finance leaders questions the reliability of their own figures.
● AI is a widely endorsed lever for the future, but it needs reliable data.
● A new skillset is needed: combining analyst, AI pilot and human decision-maker.
Excel is still the software of choice.
This is perhaps a surprising reality in the age of AI. 67% of UK companies with more than 250 employees still use Excel for account analysis and reconciliation.
The flip side is that we found that only 15% have moved away from Excel to use dedicated software.
The closing process is still a largely manual process, which uses collaborative platforms such as
Teams or SharePoint. Tasks that are still mainly carried out using spreadsheets include: accruals
(57%), manual journal entries (54%), close calendar management (53%).
The gap between discourse and operational reality is striking. Particularly at a time when AI dominates digital transformation conversations, we would expect organisations to be moving away from manual analysis and reconciliation, and yet Excel still prevails.
The close places a heavy burden on teams.
The continued presence of manual processes is a significant source of stress for finance leaders and
their teams. 97% acknowledge its impact on workload, and 93% on employee motivation.
Sources of stress are multiple and cumulative. They include: deadlines (96%),lack of time for analysis
(86%), parallel projects (88%), tool quality (93%), data reliability (86%). A lack of time for analysis is
particularly significant as this is an area where finance leaders felt they needed more effort. As a
result, the close also weighs heavily on UK leadership: less than 1 in 2 finance departments consider
the close management to be ‘very satisfactory’.
So 1 in 3 finance leaders question the reliability of their own figures.
This is a startling finding. Confidence in figures remains a key sticking point. Finance leaders know
that insufficient reliability can expose organisations to very real risks: loss of credibility of the finance
function with senior management and investors, compliance failures potentially leading to audit
qualifications or sanctions, and late detection of fraud with lasting financial and reputational
consequences.
Finance leaders are looking for change. 67% of respondents rank improving the reliability of
accounts as their number-one priority, a clear sign that current tools and processes are not yet fully
meeting this critical challenge. The move out of the Excel trap is underway.
AI is widely endorsed as a lever for the future, but it needs reliable data.
AI is seen as a key driver. The expectation is that it will result in improvements across all close
activities. For example: 84% of respondents think it will help with automation of repetitive tasks,
80% expect improved reliability and anomaly detection, 77% hope for help with fraud identification
and 79% with financial planning. However, the study highlights an important nuance. Confidence
remains predominantly “fairly confident” rather than “fully confident”. Adoption is real, but deep-
rooted conviction still needs to be built.
Tomorrow’s accountant: analyst, AI pilot and human decision-maker.
To escape the Excel trap, finance leaders and their teams must develop a combined skillset.
According to the people we spoke to, the accountant of the future must master two complementary
skill sets: analytical and problem-solving capabilities (50%), and the ability to adapt to new
technologies and regulations (28%). The finance professional of the future needs to be capable of
understanding AI outputs, identifying their limitations and validating results. Where AI executes, the
accountant governs.
Our research found a sector stuck with manual processes, but looking to break out of the laboured,
intensive closing process. It is keen to find new solutions and remove the friction that comes during
the close. It is now vital that finance leaders structure and secure the analysis and reconciliation
phases, so that they can rely on the quality of their financial data. This in turn will reduce the burden
on teams and improve the reliability of the close figures. Then, the financial team will be able to
harness new technologies and escape the Excel Trap.
The post The Excel Trap. Why 1 in 3 Finance Leaders Still Don’t Trust Their Financial Close Data appeared first on The Fintech Times.
