As highlighted by a recent article from EY, the benefits of an accounting subledger include the ability to more efficiently address core Finance processing responsibilities and building agility to manage new requirements.
Today’s environment places many new demands on enterprise finance teams - interpreting and adopting new accounting policies, integrating or divesting businesses, acquiring real estate or ensuring new legal entity compliance.
How do we reconcile this workload with Finance's desire to be more strategic? What are some specific ways that an accounting subledger help Finance get ahead in an environment characterized by constant change and ever new reporting requirements?
How does an accounting subledger make Finance more efficient ?
An accounting subledger helps Finance to more efficiently address ‘standard’ responsibilities in a number of ways, namely by:
- Enabling Finance to centrally support diversified reporting needs
- Increasing confidence in calculated results
- Reducing the burden of audit cycles
Centralising finance operations on a single platform is not achievable for many large and growing enterprises. General Ledgers and ERP systems are often not designed to accommodate new businesses, products or reporting requirements. In this way, an accounting subledger can isolate the GL, and be used to implement multi-GAAP, multi-entity, multi-currency calculations at a single point in one’s architecture
At the same time, an accounting subledger substantiates General Ledger balances with transaction-level detail. The subledger is now becoming an essential finance transformation software because it enables Finance teams to drill down from the GL to see detailed balances without needing to go back to individual business teams or source systems. This improves finance’s confidence in reported results and reduces time spent on reconciliation and audit.
Agility to improve strategic capabilities
As EY hints, an accounting subledger also improves Finance’s strategic capabilities.
An accounting subledger supports enriched management reporting and improves performance management capabilities. Importantly, by linking the GL to underlying transactional detail, an accounting subledger gives Finance the ability to deliver analytics that reconcile with financial reporting. By contrast, many business intelligence or data warehouse-driven analytics initiatives often fail Finance because they produce inconsistent results.
Enterprises with an accounting subledger gain the ability to analyse account balances and financial results by different attributes, such as sales rep, profitability by customer, cost of goods by vendor/channel, etc.
Conclusion: The components of a best practice Finance architecture
There are many benefits to an accounting subledger. Enterprise Finance teams increasingly look to use accounting subledgers to create detailed accounting, support different reporting requirements and build a data foundation for next-generation financial analytics.
For more information on these components, check out our ebook on Finance Architectures or let us know your questions by email to firstname.lastname@example.org.
Read more on using the Accounting Hub as a subledger.