Connecticut CPA Magazine Excerpt – Finance Transformation: How Technology Can Shorten the Financial Close

By Kelly Harper, CPA – Client Relationship Leader, CliftonLarsonAllen LLP (CLA)

This article appeared in the Summer 2025 issue of Connecticut CPA magazine.

In the winter edition of Connecticut CPA magazine, we explored finance transformation and how companies can kick off their journey to a shorter and more efficient financial close.

In the previous article, we explored how to improve close processes, including developing and monitoring close checklists and reducing balance sheet reconciliations and manual journal entries – all critical pieces to a trustworthy and timely close.

Completing the monthly or quarterly close activities can be lengthy and cumbersome. Many steps are repetitive and manual, which leads to inefficiencies making it difficult to close the books in a timely manner.

The good news is there have been significant technology advancements enabling organizations to shorten the financial close cycle while enhancing accuracy and efficiency. Various technological solutions can streamline financial close operations while maintaining financial information integrity.

Areas where technology can make a significant difference in finance organizations include:

• Financial close software,
• Automating routine tasks, 
• Business analytics,
• Management reporting, and 
• Collaboration technology.

Each area can be implemented separately for significant benefit. However, using multiple automation tools together can reduce the need for manual intervention.

This article examines the benefits, challenges, and considerations of investing in technological options.

Automation of Routine Activities

Robotic Process Automation (RPA)

RPA can automate repetitive tasks to perform a function quickly and remove the potential for human error. By using RPA, organizations can significantly reduce the time needed to complete these activities, reducing human error and freeing up staff to focus on more strategic tasks.

Any closing process such as opening an email, finding financial information, inputting information, and submitting information into the general ledger could be a potential candidate for RPA. RPA can also be useful for data entry requiring validation or balancing prior to being fed into the financial system.

RPA does not come without its challenges. When setting up RPA for the first time, it’s critical to provide simple steps the RPA system can perform without needing to apply judgement. Because many financial close processes do not follow step-by-step instruction, it can be difficult to know exactly how to document each step.

This can be especially tricky if the person whose function is being replaced by RPA has any emotion over “being replaced by robots,” as that individual will be heavily relied upon to create the steps needed to teach the RPA system.

RPA can also be costly to implement. While the business case is solid for RPA, getting approval to implement can often be a barrier. The cost of the software set up is generally in the $25,000-$30,000 range. Many organizations will also need to hire or pay an employee to boil down processes to a granular enough level for the technology to understand.

This can be especially costly for companies without good accounting processes documentation. There is also an ongoing subscription cost of approximately $15,000 annually, but when you consider RPA can work 24 hours/7 days per week, the ongoing cost is insignificant.

Another challenge with RPA is reprogramming system when there is a process change. RPA is only going to perform the activity exactly as taught. If a process changes and the RPA system is not retrained, processes will break down and the finance team will be frustrated.

Not updating the RPA program can also lead to inaccurate information being fed into the general ledger, which erodes the human error reduction benefit. Organizations using RPA find it difficult to update the programs and instead end up building workarounds to handle process changes. 
Evaluate the processes using RPA regularly to accommodate process changes and updates.

Purpose-Built Automation

Many companies prefer the simplicity and cost-effectiveness of using purpose-built automation instead of 
RPA. Tools managing the accounting close from end-to-end can provide considerable time savings and less human reliance.  

Purpose-built automation refers to accounting software packages designed to manage accounting close processes from end to end. Software companies developed tools for account reconciliations in the early 2000s in response to the Sarbanes-Oxley Act and have expanded to include other accounting close tasks such as matching transactions, close checklist management, and journal entry preparation and processing. These modules function independently or can be programmed to integrate, creating more efficiency gains.

For example, a simple bank reconciliation processed using purpose-built automation would interact as follows:

• A transaction matching module quickly matches bank statement transactions with ledger transactions.    
• Unmatched transactions, like bank maintenance fees, are sent to a journal entry module to create necessary entries.        
• The bank maintenance fee becomes part of the account balance, aligning the general ledger with the bank statement.        
• Finally, the bank reconciliation task is automatically checked off within the task management tool, and subsequent tasks can proceed.

System integration can create a smooth financial close. But any module can also provide benefit without integration. Organizations may choose to implement them all at once or in phases.

Software vendors are increasingly embedding artificial intelligence (AI) into their software to enhance functionality and improve user experience. By integrating AI, vendors can offer advanced features such as predictive analytics, automated decision-making, and personalized recommendations.

Additionally, AI-powered software can adapt to user behavior, providing a more intuitive and efficient interface. Benefits include increased productivity, reduced operational costs, and having data-driven insights for strategic planning. Incorporating AI into software is revolutionizing the way businesses work and interact with technology.

Purpose-built automation requires redesigning processes, unlike RPA that automates existing steps. Though initially costly and frustrating, it often leads to a more efficient and orderly close.

Another significant barrier to implementing purpose-built automation is cost. Although the benefits greatly outweigh the implementation expenses, many organizations may find it financially prohibitive. Companies must consider not only the software cost –typically provided as a Software as a Service (SaaS) with an annual license fee per user – but also the expenses associated with implementation and potentially redesigning processes to integrate effectively with the technology.

Business Analytics and Management Reporting

Big Data Analytics

Business analytic software enables organizations to analyze data and obtain actionable insights. It aggregates data from multiple sources, processes it, and presents it in formats like dashboards, reports, and visualizations.

This software employs algorithms and statistics to analyze data, finding trends, patterns, and anomalies. It provides real-time insights for managers, aiding in forecasting, performance monitoring, and recognizing improvement opportunities. Managers use it to enhance operations, plan strategically, and respond promptly to market changes with data-driven decisions. Additionally, executives can access data from various systems and make decisions based on real-time information.

Several software options are available, including low- or no-code programs. These tools allow employees to create visually pleasing dashboards to drill down into numbers for detailed analysis without needing to rely heavily on IT departments.

While data analytic packages can be initially expensive, their benefits – such as real-time data access for leaders – often outweigh the costs. Low-code programs have also reduced entry costs significantly in the past decade.

Another significant challenge in implementing business analytics is overcoming cultural resistance and reluctance to embrace new technologies. Many employees may be hesitant to learn new systems or tools, fearing it will disrupt their established workflows or require more effort. This resistance can stem from a lack of understanding or confidence in the accuracy and reliability of the data being presented.

Organizations should work to foster a culture of continuous learning and provide adequate training to help employees adapt to innovative technologies. Building trust in the data through transparency and showing the tangible benefits of business analytics can also help in gaining acceptance and encouraging a more data-driven approach to decision making.

Improved Collaboration

Collaboration Tools

Collaboration tools like Microsoft Teams have changed the way teams work together, especially during the financial close process. These tools enable seamless messaging, real-time file sharing, and simultaneous updates for all team members to be on the same page. With features like instant messaging and video conferencing, teams can quickly resolve issues and make decisions without the need for lengthy email threads or meetings.

Artificial Intelligence Considerations

No discussion on finance technology would be complete without addressing AI concerns. AI gained prominence with the advent of ChatGPT and other comparable web-based applications. AI is rapidly evolving, posing challenges for keeping abreast of developments. Organizations are recommended to maintain use of previously mentioned tools and improve their technological investments prior to contemplating AI integration.

Courts are considering laws to regulate AI and avoid misuse. Many tools mentioned use AI and machine learning, offering a starting point for companies. Despite AI’s power, it’s crucial to verify processes are organized and technology reliable before using AI in financial close processes.

The Benefits of Integrating Technology in Financial Processes

Integrating technology in finance organizations offers significant benefits, from automating routine tasks with RPA to using purpose-built automation for a more streamlined financial close.

Business analytics and management reporting tools offer valuable insights, enabling data-driven decision making and strategic planning. Collaboration tools like Microsoft Teams enhance communication and efficiency, particularly during the financial close process. 

While challenges such as cultural resistance and the initial costs of implementation exist, the long-term advantages of adopting these technologies far outweigh the obstacles.

By embracing these advancements, finance organizations can achieve greater accuracy, efficiency, and productivity, ultimately driving business success. This integration is a critical part of the finance transformation journey, as it enables organizations to modernize processes, adapt to changing market conditions, and stay competitive in an increasingly data-driven world.