MYTH BUSTING COMMON BELIEFS: Part 4

Like “I Don’t Need Real-Time Reporting. Month-End is Fine.”

We are getting close to that time of the month again.

No, not that. Month end.

And that has most of the company in a tumult.

Month end has all departments running around the office like headless chickens – making sure all the billable hours are captured, making sure all file notes are captured, making sure all i’s are dotted and t’s are crossed. Making sure that by the time the invoices go out, you can report in full to your clients on what’s going on in their matters.

It feels like you’re walking on a tightrope, and you are never quite sure if your net is secured or not. And that gives you a very uncomfortable feeling as you ease yourself back into your ergonomic office chair, once again double clicking on the AJS icon to ensure that you have captured all you have needed to – a small drop of perspiration dripping down your forehead (for effect).

You see the thing is, month-end reporting is no longer enough. Having real-time info is where your firm needs to be.

Move Over to Real-Time Data

Taken from an accounting practice “continuous close or continuous accounting” which refers to a situation where financial records are constantly updated and reconciled daily using automation and integrated systems, allowing for real-time financial visibility and faster decision-making.

The same can be said for the practice of continuous reporting which can be thought of as a more general concept of consistently providing ongoing information, which can include the output of a continuous close (so accounting information), but also involves identifying risks and tracking trends over time to inform improvements or for faster decision-making.

The aim of continuous close is fairly self-explanatory but it is to make sure (as far as reasonably possible that is) that the books of a company stay up to date on any given day of the month. Not just at month-end.

Now we acknowledge that all businesses run differently and what may work for one business wouldn’t work for another. But – generally speaking – under a traditional system, a system would need to be “closed” before month end balances could be reported. But with continuous reporting these balances are known instantaneously – because they are known in real time.

Automation is used to tackle regular tasks i.e. Robotic Process Automation can monitor an inbox (as an example) and then process invoices for accounts payable as and when they come in. That way at any moment, you could – as an example – run a Profit and Loss and it should be a rather accurate picture of what the company’s financial position looks like.

And that is the whole aim here – be able to report to your clients on exactly what is going on with their matter on any given day and be able to report to managing partners what the financial position of the firm is.

All at the click of a button and all on any given day.

Not just at that time of the month. The time of the month everyone dreads.

The 3 key characteristics of continuous reporting –

1.   Automation – it leverages software and technology to process transactions instantly. 

2.   Real-time Data – financial books and reporting on progress of matters are always up to date, providing immediate insights. 

3.   Proactive Reconciliation – issues are identified and resolved as they happen, reducing errors and the need for end-of-period cleanup.

What are the Benefits of Continuous Reporting?

Besides the access to real-time data and being able to report on the what’s what of your firm on any given day, knowing that your safety net is well and truly secure…. And this adds credibility because it means that matters (and accounts) look pretty much the way they expect it to come month end because they already had all the info during the course of the month. This also looks more like the business – as a whole – is working more closely together, resembling a well-oiled machine.

Need more benefits? Well, here they are –

1.   Time saving – let’s be honest, how many times have you come to month-end and suddenly realised that there was a call you forgot to bill for, or a visit to court that turned out to be a full day affair that you forgot to bill for? It happens (especially when you can’t update your accounts while on the go with AJS Mobile). Investigating and unwinding entries can be the most time-consuming exercises when it comes to month-end. An already stressful affair made even more so. But if you reconcile your accounts as and when something happens it makes month-end that much easier. Also, by automating some of the more repetitive work, some tasks can be done within seconds, which means more time is freed up to concentrate on the more important stuff;

2.   Enhanced compliance – in certain industries – legal for instance – it’s a requirement that accounts and reports are accurate, kept up to date and maintained. Using automated systems and updating reports as and when ensures that there are fewer errors come month end;

3.   Employee satisfaction – it stands to reason that by eliminating the tumult that comes around every month-end and splitting it into a daily process, general employee satisfaction would be on the up. No more stressing about that time of the month ever again;

4.   Better decision making – yet again it stands to reason that if all up-to-date information is readily available at your fingertips and you know that your safety net is secured, that you would be able to make more informed decisions knowing that you are doing what’s best for the company. In a survey done by FSN in 2020, it showed that only 86% of companies were confident enough in their analytics to use it to inform their decision making. Now, we have come along way since then, and analytics these days, with machine learning, automation, data mining and the like, real-time data is much more readily available and can be a vital and valuable resource when it’s real-time;

5.   Increased company agility – companies that get their data quicker, can make their decisions faster. And that means that as a company, you’re building in agility. And that’s a powerful thing. Up-to-date accounts and information on matters means any ad hoc reporting needed for business decision making can be done almost instantaneously, allowing those in decision-making positions to act on favourable opportunities as they present themselves.

6.   Customer satisfaction – any client that can get an up-to-date report on their matter as of that day that they ask, with you knowing everything truly is all there, will make any client the happiest in the world. Be able to tell them where they’re standing cost wise – and they’ll be putty in your hands. Again, it builds credibility. But it’s more than that, it builds trust. Because at any given time of any day you can tell them what’s going on. And that’s a valuable thing;

7.   Fewer errors – by automating a lot of the grunt work and updating the accounts and info on each matter on an as-and-when basis you are significantly cutting down on substantial errors because you’re not rushing to make sure you get everything “accounted for”. Also, if you have made a mistake, it’s much easier to correct it if you’re undertaking this exercise daily rather than just monthly. This helps to keep things simple. And easy. Just like you should want it.

With all the benefits of a continuous close or continuous reporting one might think that the onerous month-end has come to an end. Not needed anymore. But that’s not the case. In accounting there will always be a “month-end”. There will always be a need to do a financial year end. It will always be an important aspect of doing business. But the angst will no longer be there. And you will have the option of being able to report any given day of the year.

Continuous close and continuous reporting adds value to the business. It provides options and supports strategic decision making. And we think that is more than just a tick in the positive column for continuous reporting, in fact, we are sure you will agree that the answer is plain for all to see – the myth is BUSTED! Month-end alone is not fine.

If you are in need of a service provider who has a proven track record or if you want to find out how to incorporate a new tool into your existing practice management suite – or if you simply want to get started with legal tech – feel free to get in touch with AJS. We have the right combination of systems, resources, and business partnerships to assist you with incorporating supportive legal technology into your practice. Effortlessly.

AJS is always here to help you, wherever and whenever possible!

– Written by Alicia Koch on behalf of AJS

(Sources used and to whom we owe thanks – Kiteview and Numeric)