Journal entry automation software can reduce a lot of manual and time-consuming work that goes into creating and posting accounting journal entries.
The challenge of the journal entry process
Most of the journal entries occur within a few days during the financial close. Often it leads to overtime work and stressful conditions for accountants and controllers. The feeling of rush makes companies cut corners with the journal audit, internal controls and approval requirements.
In small companies, these challenges are manageable because only a few people are involved. For enterprises, however, the challenge is much more significant. With large accounting teams across several legal entities in different locations, the journal entry process becomes challenging. The most complex scenario is when a company also operates in multiple ERP systems.
7 signs you need to implement a journal entry automation software
The following signs are typical for companies that would benefit from the intelligent journal process automation the most:
1. Average monthly number of journals exceeds 500
The first and most obvious reason for implementing purpose-built journal entry automation software is the volume. If your accounting team has to create and post at least 500 journal entries per month, your potential time saving with automation is 50%. Time-saving will be even more considerable if your journal entries mostly contain a single general ledger (GL) document number with multiple lines.
2. Hard copies of journal entries are kept in binders
Consider implementing journal entry automation software if you are still printing and archiving your journals and supporting evidence in binders. A purpose-built journal entry software like Aico allows you to create, post and approve all your journal postings digitally. Once the journal entry is posted, the software will archive it with supporting evidence for fast and easy access.
3. Little to no means to validate journal entries
There are no or very few means to validate journal entry data before posting journals into the general ledger. With journal entry automation software you can’t utilise active values from your ERP system’s value sets when posting and you don’t know if the values in the previous month’s Excel file are valid anymore. If there is something wrong with the posting, the accountant will find it out when trying to upload the journal through the Excel interface or enter it manually.
4. You are posting journals to GL manually or using Excel
This is an error-prone and slow way to enter data. User interfaces of ERP systems are often not very useful either. The Excel upload interface provides a way to get data in, but if there are validation errors, manual work is required to fix postings (and in the worst case, the Excel file must be sent back to the creator) and all file handling is manual. If a journal recurs monthly, you must manually create a journal for every month and then upload it.
5. Multiple ERP systems in use
You have multiple ERP systems or multiple instances of an ERP system (most commonly SAP, Oracle, Microsoft, Agresso, Visma, and IFS). You must know by heart which ERP system various companies work, what the segments are in each system, and where to send the journal when it is ready. Journal entry automation software like Aico can hide the system complexity and retrieve some of the input data directly from your ERP systems.
6. You are managing journals via emails
You have no or very little means of keeping track of the overall journal process. Emails are being sent back and forth within the team to check the status or to speed up the process. The roles for creating, approving, and handling journals might be agreed upon, but there is no real control of the process or real-time monitoring.
7. You have already an RPA solution in place
Your company already utilises RPA (Robotic Process Automation) solutions for specific tasks, but you lack control and knowledge of how they work. In some cases, if the data is not valid, the RPA process stops and you must roll up your sleeves and dig into it yourself to keep the process going.
If you can identify these signs in your journal entry process, your company is probably losing a lot of time and resources on processing and managing a large number of tasks manually. By applying intelligent automation, your company can create, manage, and process journals accurately and fast.
At Aico, we have designed an intelligent automation tool that optimises every step of the journal process. Here is a summary of how Aico solves journal entry-related problems.
FURTHER READING:
Roadmap to manual journal entry process excellence
