Journal entries are the first step in the financial close process. All too often, the quality and accuracy of financial closings are compromised by manual processes and fragmented data sources. From a process standpoint, both are time-consuming and prone to errors. Without a standardized approach or solution in place, coordinating finance-related processes is nearly impossible. It is also imperative to gain visibility and transparency for reporting and compliance requirements. All these are significant challenges for organizations that operate with intricate operating structures, manual transactions, and fragmented data sources that prohibit data integrity and higher efficiency levels, especially during the financial close process.

Zurich North America is part of Zurich Insurance Group, one of the largest providers of insurance solutions and services for businesses and individuals. It has over 9,000 employees, and increasing efficiency in accounting for a faster and more secure financial close was crucial. The company needed a solution that automated and connected financial close and enabled accurate and transparent reporting while streamlining the accounting process. Zurich North America implemented FS² JournalEntry, an SAP-integrated solution from Serrala, SAP’s consulting partner, to speed up its continuous financial close and gain efficiencies without compromising accuracy and compliance. We will see in this article how this leading insurer used SAP’s integrated solution to automate the process for efficiency and transparency.

Manual Journal Entry Processing at Zurich—A Dated Approach

Although Zurich North America used SAP workflows for its financial close process, it still required monthly manual journal entries for over 100 journal entries and accruals. Other transactions that required journal entries, including premiums, claims, reserves, and actuarial entries, were automated but generated in multiple non-SAP systems, which increased the overall complexity of integration. Although most of the finance team could upload journal entries, the company restricted them to select team members for more control and governance. In addition, Zurich faced challenges related to disjunct workflows or audit trails, a lack of processing details or history, and cumbersome manual approvals.

All this created a need for Zurich North America to automate the processing, review, and approval of all manual journal entries (recurring, intercompany, FX, etc.); validate accounting information (e.g., cost centers) at initial upload/creation; move off the existing P2P solution to automate the processing of non-PO invoices and expenses; enable touchless payment processing and enable visibility of invoices across shared services locations.

The Solution: FS² JournalEntry

Zurich engaged Serrala to automate the journal entry process through FS² JournalEntry, an SAP-embedded solution that digitizes the manual and uncontrolled journal entry process and intelligently automates the recording, coding, approving, and posting of journal entries.

Prior to implementing the solution, Zurich lacked the ability to post and process large journal entries automatically with real-time monitoring. With the FS² solution, Zurich North America could automate manual processes and ensure quick and accurate journal entries, which resulted in a faster, more controlled financial close and continuity among systems. The solution offered Zurich the following capabilities:

• Upload journal entries directly from spreadsheets
• Validate journal entry data before processing
• Track and monitor journal status and substatus codes in real-time
• Achieve an enterprise-wide view of all journal entries
• Eliminate out-of-balance errors, saving hours investigating, correcting, and reprocessing

FS²JournalEntry Capabilities

Serrala’s FS² JournalEntry capabilities make manual journal entry effortless and more accurate. The solution validates any manually entered journal entry and ensures that there are no data entry errors or missing information. Journal entries can also be rejected at this stage, thus preventing unnecessary work routes for approval based on the defined accounting rules. Supporting documentation can be archived and stored in a compliant repository where it can be linked to any related transactions. Users can easily review and approve journals in an email or by using a web browser for convenience and anytime-anywhere approval. Throughout the process, there is complete visibility from the moment a journal entry is created until it is approved and ready to be posted. Prebuild reports and analytics allow organizations to track open items and overdue approvals, measure cycle time, and more.

• Journal entries from Excel Spreadsheet or EDI/iDocs: An FS² JournalEntry draft record can be created through predefined MS Excel templates and uploaded using the central upload transaction.

• Seamless approval/rejection process:
  • Routes journal entries for approval according to approval hierarchies
  • Notifies and escalates approvals to ensure timely close
  • Enforces supporting audit documentation requirements
• Journal entry process cycle time detail report: Track and view time spent at each step of the process by company code, source, and task

• Centralized and real-time view of the process: View supporting documents, document history, and search, including filtering and sorting journal entries by user, date, and status

Conclusion

The systemic pace of change in the business ecosystem is fast, reflected in the way finance operations deliver. A faster pace of change causes adopting of intelligent solutions that reduce manual, repetitive work often seen in processes such as financial close. This process continues to grow in complexity and requires transparency and control that only automation and digitization can address. With 58 percent of organizations finding that financial close is the greatest pain point in financial processing, compounded by time-consuming, manual journal entries that often lead to error-prone accounting processes and closing delays, automated solutions such as FS² JournalEntry accelerate the processes. By applying technology to its financial close process, Zurich North America could look beyond the transactional activities, reduce time in closing the books and gain visibility across operations.