Navigating Manual Journal Entry Challenges in SAP for a Streamlined Financial Close

⇨ Although SAP ERP offers extensive automation for various business tasks, many journal entries still require manual input.

⇨ This reliance on manual processes brings about challenges and inefficiencies, highlighting the need to examine the manual approach to journal entries in SAP and its impact on overall financial closing efficiency.

⇨ Many SAP partners provide solutions that can help manage and automate journal entries.

Preliminary findings from SAPinsider’s research on Financial Close Transformation reveal that organizations using SAP systems face growing complexities in the financial close process. Manual journal entries stand out, being identified by SAP finance experts as a primary source of inefficiency during the financial close.  

Although SAP ERP offers extensive automation for various business tasks, many journal entries still require manual input. This reliance on manual processes brings about challenges and inefficiencies, highlighting the need to examine the manual approach to journal entries in SAP and its impact on overall financial closing efficiency. 

Understanding Manual Journal Entries in SAP 

In SAP, every transaction is a journal entry. The system doesn’t differentiate between manual and automatic entries, making it hard to analyze them in the general ledger. Even though SAP ERP can create many journal entries automatically, manual corrections and inputs are still essential.  

Manual entries are often made for unique or irregular transactions that automated systems can’t handle. Adjustments, accruals, or corrections usually need manual input. Some company-specific rules or policies might also require manual entries. 

Manual journal entries can lead to data inconsistencies, increased error chances, and inefficiencies in audit readiness. The absence of standardization and transparency makes it hard to track, manage, and review these entries. 

Issues with Manual Journal Entries 

The efficiency of the financial close process is influenced by the nature and volume of manual journal entries. Here’s how: 

• Time Consumption: Manual journal entries, by their very nature, are time intensive. Each entry requires verification, validation, and sometimes multiple approvals, which can delay the closing process. 

• Increased Errors: Manual journal entries in SAP are susceptible to human errors. Mistakes in manual journal entries can lead to inaccuracies in financial statements, necessitating further time for corrections and adjustments. 
• Resource Allocation: Manual journal entries often require skilled finance professionals to handle them. This means that these professionals are diverted from other value-added tasks, affecting overall productivity. 
• Reconciliation Challenges: Manual entries in SAP can sometimes lead to mismatches with other financial records. Reconciling these differences can be a tedious process, further delaying the close. 
• Compliance and Reporting Risks: Inaccuracies from manual entries can pose risks during external audits or when complying with financial regulations. This can lead to potential financial penalties or reputational damage.

• Operational Bottlenecks: As the volume of transactions grows, the number of manual journal entries can increase proportionally, creating bottlenecks in the closing process. 

Even with SAP’s automated features, manual journal entry processing is a big challenge. This issue leads to inefficiencies in the financial close process, emphasizing the need for complimentary solutions offering more robust automation capabilities. This context explains why most respondents view automated journal entries as a critical requirement for supporting financial close transformation strategies. 

Improving Financial Close Efficiency 

The main goal of financial close transformation, according to SAP finance leaders, is to make the close process more efficient. Most companies choose to improve their finance operations gradually, using digital tools and advanced tech for better automation. 

Leading SAP partners provide robust solutions in this area: 

• SAP Financial Close Solution by BlackLine standardizes journal entries for companies managing accounting across different source systems outside of SAP. 
• insightsoftware’s Process Runner GLSU automates SAP financial data entry from spreadsheets, improving accuracy and saving time. 
• Precisely enterprise journal entry solution automates manual journal entry creation, approval, and posting, removing bottlenecks, and boosting efficiency. 
• Serrala recommends its FS² JournalEntry tool for automating manual entries in SAP. 
• Trintech’s Cadency offers SAP Tax Journal Automation, further improving financial close efficiency. 

• UiPath promotes using Robotic Process Automation (RPA) to speed up the monthly close process in SAP. 

By adopting the appropriate tools and methodologies, organizations can effectively tackle the issues associated with manual journal entries in SAP. Through the integration of automation and standardization techniques, organizations can significantly enhance the efficiency of their financial close process, paving the way for a more streamlined and agile financial operation. 

What this means for SAPinsiders 

Evaluate automation tools for journal entries. Consider tools that can automate the creation, approval, and posting of manual journal entries. Solutions like SAP Financial Close Solution by BlackLine, Precisely’s enterprise journal entry solution, or Serrala’s FS² JournalEntry, can significantly reduce the time and effort required for manual entries. 

Establish a standardized process for manual entries. Create a standardized format and procedure for all manual journal entries. This not only reduces errors but also makes tracking, managing, and reviewing these entries more straightforward. A consistent format ensures that all team members are on the same page, leading to fewer discrepancies and misunderstandings. 

Embrace Robotic Process Automation (RPA) in routine tasks. Organizations like UiPath offer RPA solutions that can expedite repetitive tasks within the monthly close process in SAP. By automating routine tasks, you can free up resources for more value-added activities, leading to a more efficient close process. 

Conduct regular audits of manual journal entries. Establish a periodic review process where manual journal entries are audited for accuracy and compliance. This not only ensures data integrity but also helps in identifying areas of improvement in the manual entry process. Feedback from these reviews can be used to refine and optimize the process further.