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Brad Baer, a Managing Director in the Management & Technology Consulting group at UHY Advisors, recently had the pleasure of leading UHY’s Cause & Affect radio program on the topic of continuous accounting. Along with my colleagues Andrew Borsuk from the UHY team, Matt Cagwin with First Data, and Tammie Coley with Cox Communications, we addressed transforming a company’s accounting department to become more automated, efficient and productive, ultimately making a real impact on company performance. 

During the show, Tammie shared that she’s automated 96 percent of her company’s journal entry processes and 84 percent of the company’s reconciliation processes. The real value of that accomplishment means 80 to 90 percent of her team is now focused on analysis and insights, rather than repetitious, mundane activities. This is the true distinction of a transformed accounting department. 

Continuous accounting means automating and optimizing the financial reporting process, eliminating waste and non-value-add activities, and working on activities throughout the month rather than at month-end. 

At the Starting Gate

While it may seem like a gargantuan leap to get to this improved state of financial reporting, there are several critical things a company can take on to start making some significant strides.

  • Automate as much as you can: take manual, recurring activities and automate them through software solutions. That will begin to free up your team to focus on more value-add activities. 
  • Increase visibility: give team members and leadership visibility into what’s going on throughout the department. A lack of visibility into financial transactions and operations is not only common, unfortunately, but very risky. Waste and errors abound when visibility is low.
  • Understand your current processes: what do the processes look like today? What are some of the challenges team members are having? Where do they spend a lot of time on non-value-add activities?

Obstacles in Your Path

The biggest roadblock to starting these changes is something you’ve probably heard before: “We’ve always done it this way, and it works.” As Andrew noted, an abacus was working at one time, too. 

From my background as a controller before UHY, I’ve seen firsthand and dealt with managing the reconciliation process in Excel and email. Back then, a lot of my time was spent on fixing things. Close to 90 percent of my team was fixing things because people didn’t do them right the first time. But we worked hard, and when you fix things you feel a sense of accomplishment. We didn’t know any differently. But we never got to the point of asking what the root causes of the errors were to eliminate them in the first place. Once I realized, “90 percent of my team and my time is waste,” I knew we weren’t adding real value. Things had to change.

Matt shared how to really look at end-to-end processes, and how to make them better. It’s a different way of thinking about it. It’s not about reducing or passing your work to somebody else, but rather about reducing the overall work for your organization.

Andrew added, when people are designing the processes up front, they have no idea what the impact is downstream. You have to look at the process from end-to-end. It’s critical to establish cross-functional teams and map out the processes together so everyone understands the full spectrum. 

Tammie shared it’s a change in mindset to look at things holistically, and it means the culture of the company needs to be open to it, too. Accounting has to prove the model’s worth to the rest of the company. The tools and solutions that support continuous accounting, like BlackLine, will help show the metrics. Tammie is a visionary and leader, and has led her company in embracing this new model.

The Ultimate Benefit of Automation

We don’t automate processes to replace humans doing the work. We automate with the primary goal of freeing up humans so they can analyze and improve other parts of the finance and accounting department. There are only a small percentage of companies who reach this level of analysis, and for those that do, the proof is indisputable. With metrics to show, accounting and finance executives bring these analyses to the C-suite to make their recommendations actionable and drive the business forward.   

I’ve seen continuous accounting truly elevate the accounting department. While traditional accounting is viewed as overhead and non-value-add, the principles of continuous accounting and the financial leadership that goes along with it get integrated into larger business plans and company direction. Accounting gets a seat at the table. And that’s truly transformative.     

Click here to listen to the full show on continuous accounting, and check back often for more insights from Cause & Affect.