The Top 10 Financial Red Flags

SECURING YOUR RECORD TO REPORT PROCESS

CONTENTS

03 Introduction 12 Red Flag #6:

Lengthy Close Process
04 Red Flag #1:
No Real-time Visibility into Processes 13 Red Flag #7:
High Costs
06 Red Flag #2:
Spreadsheets Are Error Prone 14 Red Flag #8:
Changing Workforce
07 Red Flag #3:
Lack of Control Framework for Compliance 16 Red Flag #9:
Lack of Confidence in the Integrity
of Period End Numbers
09 Red Flag #4:
Inefficiency and Decreased Productivity
17 Red Flag #10:
Distracting Technologies
11 Red Flag #5:
Lack of Scalability
18 Conclusion/Continue Learning

2
INTRODUCTION
Often used as an early warning sign, red flags can proactively
assess the risk of re-work, financial restatements and fraud
throughout your financial close process.

And these red flags often occur throughout your financial

close due to the utilization of desktop applications that lack
automation, audit trails and integration, forcing increased
manual interaction throughout your processes.

!
Unfortunately, this increases the complexity and makes it
dfficult for companies to have clear visibility into their financial
close. The following eBook is designed to identify the top 10
financial red flags you need to know to proactively assess risk
in your financial close and how other finance and accounting
organizations have addressed these risks by investing in
automation.

“The level and pace of change that organizations

experience today is unprecedented. Organizations need
to embrace disruptive technologies and new business
models. Innovation and speed of execution has become
the basic requirement to remain in business.”

3
RED FLAG #1
Overreliance on Spreadsheets
Spreadsheets have been the backbone of finance and
accounting for decades even as technology has evolved
over the years.
Businesses have come to rely upon spreadsheets so heavily
that they lose sight of the original purpose of the spreadsheet
and begin to make decisions based on erroneous data. Hoping
for organized, coherent information, many in finance develop
complicated, multi-level spreadsheet systems for their Record
to Report process. Organizations quickly find themselves
buried in a mountain of spreadsheets and investing an
inordinate amount of human resources to maintain the
highly manual process.

Automation delivers scalable, calculable technology

Through automation, your organization gains scalable,
calculable technology that eliminates those manual,
spreadsheet-driven processes.

4
“Organizations must turn data
into knowledge in time efficient,
accurate and insightful ways.
The massive growth in available
information is forcing finance
to move beyond simple
spreadsheets and rewarding
those organizations that
employ advanced visualization.”

5
RED FLAG #2
Lack of Standardization
The second red flag your organization needs to be aware of is
a lack of standardization and consistency across the financial “We now have full visibility into the close in real-time
close process. and have driven standardization across our 40 countries
A lack of standardization and consistency creates excess work and 225 entities. So, a close or reconciliation process
for reviewers and approvers, as they are forced to waste time being done in Peru is the same process being done in
figuring out how an individual performer has set-up their Germany or the United States.”
documentation. It also becomes difficult and time-consuming for
colleagues to fill-in during an absence, as they are unfamiliar
with the performer’s layout. Unfortunately, this bottleneck gets Since deploying Trintech’s Record to Report solution, Ingram
even more complex to rectify when multiple users, departments Micro now has full visibility in real-time on a daily basis, and
and/or entities rely on different processes and templates, and has driven harmonization and standardization across 40
can significantly affect both the accuracy and timeliness of the countries and 225 entities. Furthermore, since the process was
financial close. already standardized from Trintech’s solution, this aided their
move to their Shared Services Center significantly. The overall
Automation allows for a regimented workflow visibility gives them the consistency that they want to see at the
and process top level but also allows them to dive in and perform process
Automation delivers standardized process templates that improvement where they find issues.
enforce compliance with company policies and procedures, and
saves a significant amount of review time for approvers when
Watch this short video to find out how Ingram Micro was
signing off on activities.
able to gain visibility into thier financial processes:

Learn More

6
RED FLAG #3
Multiple Late Adjustments
Does your team encounter frequent surprises at
month end? If so, you’re not alone. For many accounting and
finance professionals, manual journal entries continue to be
a bottleneck in the financial close process. Too much time
is required to create, review and approve journal entries
with loosely governed processes and limited controls that
increase the risk of error. In addition, the process is made
even more cumbersome as supporting documents are
stored in shared drives and binders, and approvals are
mostly paper-driven.
Three processes that slow down the month end close are
creating, reviewing and approving:
Create: Creating journal entries with different processes
and possible paper-driven supportive documents slows
down the process.
Review: Reviewing journal entries with loosely governed
processes increases the risk of error.
Approve: With most approvals being paper driven,
confusion and wasted time are common problems in the
closing process.

7
Automation allows organizations to gain visibility and
control of their manual journal entry process
Automation delivers a fully integrated workflow solution
that provides governance and management oversight,
allowing organizations to finally take control of their manual
journal entry process. It enforces policies and procedures
while delivering real-time visibility into the status of journal
entry preparation, approvals and posting.

“Trintech’s solution enables us to automate and

standardize our Manual Journal Entry process by
using customized templates that improve our visibility,
financial controls and overall risk management.”

Since implementing Trintech’s solution, Siemens has been

able to reduce their overall cost to deliver by some 20%,
while also dramatically improving the quality.

Read the Siemens Case Study:

Read More

8
 ! ! ! ! !
RED FLAG #4
Inaccurate Data
Multiple studies have shown that nearly 90% of all
! ! ! ! !
spreadsheets contain some sort of material mistake, and

! ! ! !
most often, organizations are not even aware of these
errors until it is too late. Primarily, this is due to the
overconfidence in re-purposed or recycled spreadsheets.
!
Many errors can be attributed to faulty macros, which have
not been thoroughly tested or documented. It’s far too easy
to make fundamental data entry/version/file name errors in
! ! ! ! !
Excel that goes unnoticed.

Automation delivers visibility to data with evidence and

validation status
With automation, you gain visibility into the data with
! ! ! !! !
! ! ! ! !
evidence and validation status in real-time.

Download the full ROI Whitepaper to learn more:

Learn More
! ! ! ! !
! ! ! ! !

9
“We now know if our teams
are meeting policies and can
identify risk and improve the
quality of data. It takes us 300
hours less for monitoring, but
the data is 100 times better. ”

– AVP Assistant Global Controller,

Regional Financial Services Company

10
RED FLAG #5
Lack of Visibility into the Status of the Close Automation provides full visibility and transparency
into the Close
The fifth red flag is a lack of visibility into the status of the
close. In many organizations, team members, especially With automation, your organization can effectively manage
management, have difficulty determining and/or quickly the entire financial close process in one place with one
viewing the status of tasks, risk factors, bottlenecks single view. The newfound visibility allows you to answer
and more. the question, “Where do I have risk on my balance sheet?”

With no real-time dashboard view into all the close

activities occurring across different sites, business units
or teams, those responsible for the final results (including
the CFO, auditors, individual users and stakeholders) are
“We now have greater visibility and control over
unable to track the workflow, exceptions, KPIs, tasks and
the business processes across all companies and
issues that might be slowing down the process. Most
geographies. This enhances our ability to ensure
importantly, this lack of visibility delays the entire financial
consistency and data quality, while reducing our
close process and generates excess work for your team.
operating costs.”

Through automation Ahold Delhaize now has greater

visibility and control over the business processes across all
VISIBILITY

companies and geographies which has enhanced the ability

to ensure consistency and data quality, while reducing
VISIBILITY

operating costs.
K OF

MORE DELAYS FASTER PROCESSES Read the Ahold Delhaize Case Study:
LAC

MORE WORK LESS WORK

HIGHER COSTS REDUCED COSTS
Read More

11
RED FLAG #6
Lengthy Close Process Automation delivers a reduction in the time to close
The sixth red flag is a lengthy closing cycle. Automation enables a company to have a single view,
For example, in terms of the reconciliation process, a key remove white spaces between processes and deliver
function in the financial close process, you tend to spend metrics for the overall close process that tells you what
most of your time simply gathering data before you can even you need to know. Ultimately, this helps to identify potential
begin to think about reconciling it. Once the data is finally in bottlenecks or higher risk areas in the context of the overall
the right format, most of your time is then spent manually reporting for the organization.
going through the matching process, rather than spending
that time focused on the areas that are most critical to you.
All of these manual, menial tasks lengthen the close cycle
significantly and add no value to the business.
“Time required for reconciliation has gone from four
weeks and dozens of laborious processes to daily
reconciliation by a single employee.”
CHECK DATA

B GATHER R
E DATA E
G CHECK DATA TIME
C
I O
T
N Since implementing automation, Ralph Lauren’s monthly
N I
C
M
E T closing time has been reduced through the automated
P
I
I
M
E L exporting and subsequent GL uploading of O&S, NSF and
R
O MATCH I bank fee information directly into Trintech’s solution.
THE TIME REVISIONS A
C DATA T
E I
S Read the Ralph Lauren Case Study:
O
S AUTOMATION N
Read More

12
RED FLAG #7
High Costs Automation reduces costs for labor and audit fees
The seventh red flag is high costs. These costs can stem By deploying automation you can significantly cut your
from several things but most often are attributed to costs. According to a recent report by The Hackett Group,
increased labor costs and audit fees due to the high volume organizations that automate their Record to Report process
of manual processes. In addition, some organizations have achieved 49% lower audit fees and a 65% reduction
even experience something as serious as a misstatement, in FTEs.
increasing their cost significantly.

“We have reduced the value of write-offs by $1.5 million

through timely exception item identification.”

Since deploying Trintech’s solution, G6 Hospitality has

lowered their bank fees by reducing the number of banks
from 30 to 17, and has reduced fraudulent activity by 50%
with nearly $200,000 in first-year savings.

Read the G6 Hospitality Case Study:

Read More

13
RED FLAG #8
Changing Workforce
The eighth red flag you should be aware of is a changing
workforce.
Transaction volumes and account numbers are constantly
growing as revenues increase and organizations become
larger and more complex. M&A activity often brings in
more sources of data, often from different countries in
new currencies, and in new formats. Manual processes
cannot efficiently or effectively handle the growth of
an organization whether that’s organically or through
M&A activity.
In addition, it’s no secret that the “millennial” generation

!
is very different than any other generation coming into the
workforce. We have to ask ourselves what does this mean
within our own organizations. Technology was “born”
into this generation versus “learned.” The technology
solutions we utilize today and over the next 1-3 years must
be holistic. With this shift in the workforce, we can start to
see why just purchasing technology solutions for the sake
of technology does not lead us to a sustained effort and
thus minimizes the likelihood of “transformation.”

14
Automation allows for centralized data with standardized,
documented processes
Standardized workflows further grant you more agility and
scalability in times of organizational change, like upcoming
mergers, acquisitions or a department reorganization.
With a well-defined set of templates for period end close
tasks, you can accelerate the transition period of the new
acquisition or department into your process without major
IT or training delays impacting the integration.

“When we implemented the closing management

tool, we defined common management rules
and processes to follow for each module: close,
accounts reconciliation, and manual journal entries.
This becomes the enabler for the standardization,
harmonization, and common ways of working
across the different regions in all our countries.”

Read the Sanofi Case Study:

Read More

15
RED FLAG #9
Lack of Confidence in the Integrity of Period End Numbers Automation gives you real-time reporting capabilities to
highlight potential risk
According to a recent report by EY, “Almost half of CFOs are
not even confident/somewhat confident in their financial According to a recent Trintech survey, the financial
compliance.” And this leads us to our ninth red flag – a lack professionals interviewed reported up to a 20% reduction
of confidence in the integrity of the period end numbers. in time documenting control testing and in time testing
compliance controls.
Manual processes lack key functionality for managing all
SOX and GRC compliance initiatives across an enterprise.
For companies with subsidiaries, global operations and
multiple legal entities, the problem becomes hugely
complex with a lack of standardization and traceability.
“Trintech’s solution delivers real-time reporting
In addition to a lack of an automated audit trail, the ability that highlights potential bottlenecks, offering a
to track and attach supporting documentation, as well snapshot of the company’s exposure to risk.”
as defining automatic workflows for sign-offs becomes
impossible. Ultimately, this contributes to audit issues,
assessments that note the risk of non-compliance, and risk Since implementing Trintech’s solution, 70% of Western &
of delays in reporting. Southern Financial Group’s high-volume transactions are
matching automatically and 80% of their general ledger
reconciliation are automatically reconciled, freeing up time
MANUAL AUTOMATED for the research and resolution of exceptions.
20% REDUCTION IN Read the Western & Southern Financial Group Case Study:
AUDIT ISSUES
CONFIDENCE TIME DOCUMENTING
NON-COMPLIANCE IN CONTROLS + TESTING
Read More
COMPLIANCE
DELAYS IN REPORTING INTERGRITY CONTROLS

16
RED FLAG #10
Distracting Technologies One, comprehensive Record to Report
Our 10th and final red flag you should be aware of are
governance solution
distracting technologies. With buzz words like AI, Machine By leveraging technology coupled with a risk intelligent
Learning, Cloud ERP and RPA, to name a few, it’s natural to approach, a company can effectively manage the entire R2R
want to implement the next big technology trend. However, cycle in one place with one single view of all the relevant
the issue most organization’s face is that these technologies controls. Not only does this provide you with the means
are not built to lay as the foundation of your technology of collating all this data in a single view, but can help to
landscape. All of these technologies are great additions eliminate bottlenecks between key control components and
to the R2R process, but without the right governance enable you to standardize across your business.
solution as the foundation, you end up just automating a With this standardization, you can now start to establish
bad process. metrics that are comparable across your business, whether
According to a recent Trintech survey, the financial by corporate entity, location shared services. Additionally,
professionals interviewed reported up to a 20% reduction this also enables you to benchmark and gain insights
in time documenting control testing and in time testing on the key actions to take. The end game, as mentioned
compliance controls. before, is to improve efficiencies and effectiveness while
simultaneously reducing cost and risk.

17
CONCLUSION WANT TO FIND OUT MORE?
Take control of your processes with a solution that is well If you’d like to learn more about how to handle this topic,
integrated, automated and accessible via the cloud, with including the many benefits of automating, the following
real-time access to assess performance metrics. To that end, resources are available:
Deloitte neatly sums up the utopian close that organizations
should strive to achieve1:
The Top 10 Financial Red Flags You Need
• Risk-based: Efficient allocation of resources is based on
to Know to Proactively Assess Risk In Your
the risk of misstatements of the underlying balance

WEBINAR Financial Close Process
• Automated: Technology is leveraged to allow full
automation of elements of the close and to accelerate
other dependencies such as data collection How to Transform Your Office of Finance in
4 Steps
• Transparent: Dashboard reporting provides management eBOOK
with visibility into the status of the close while
highlighting areas of potential error
• Consistent: Accounting procedures are applied in a Enabling Financial Transformation
uniform manner, across divisions and locations through Technology
eBOOK
• Segregated: There is a clear chain of command to allow
effective review and oversight
• Auditable: Results of the close may be audited by external
and internal auditors in a highly effective manner
• Platform Agnostic: Data can be pulled from various
systems in different formats
TRINTECH.COM/CADENCY
• Timely and Efficient: Results are published in a timely
manner with a low cost
1
Deloitte “Balance Sheet Integrity – The Utopian Close: Creating a low risk, highly effective financial close”

18
ABOUT TRINTECH
Trintech Inc., a pioneer of Financial Corporate Performance
Management (FCPM) software, combines unmatched
technical and financial expertise to create innovative,
cloud-based software solutions that deliver world-class
financial operations and insights. From high volume
transaction matching and streamlining daily operational
reconciliations, to automating and managing balance sheet trintech.com
reconciliations, intercompany accounting, journal entries, 15851 Dallas Pkwy, Suite 900, Addison, TX 75001
disclosure reporting and bank fee analysis, to governance, +1 (800) 416-0075 +1 (972) 701-9802
risk and compliance – Trintech’s portfolio of financial
solutions, including Cadency® Platform, Adra® Suite, and
targeted tools, ReconNET™, T-Recs®, and UPCS®, help
manage all aspects of the financial close process. Over
3,500 clients worldwide – including the majority of the
Fortune 100 – rely on the company’s cloud-based software
to continuously improve the efficiency, reliability, and
strategic insights of their financial operations.
Headquartered in Dallas, Texas, Trintech has offices located
across the United States, United Kingdom, Australia,
Singapore, France, Germany, Ireland, the Netherlands
and the Nordics, as well as strategic partners in South
Africa, Latin America and Asia Pacific. To learn more about
Trintech, visit www.trintech.com.
The information contained within the document is given in good faith and is believed to be
accurate, appropriate and reliable at the time it is given, but is provided without any warranty
of accuracy, appropriateness or reliability.

Copyright © Trintech Inc. 2019. All rights reserved

19