Record to report / R2R – General Accounting – Accruals
We shared some reader’s feedback on accruals.
https://faoblog.com/processes-record-report-r2r-general-accounting-accruals-4/
For large organizations, there would be a lot of transactions falling into the category of accruals. Every month there would be new contracts, which may lead to accruals.
An example, the business gives a contract for multiple sites for maintenance of coffee machines. Each contract is executed in a different month. Also, the payouts are quarterly, however for accounting, these need to be accrued each month.
There would be a lot of such contracts. So, it will not be prudent to spend on accounting resources onsite to handle these. It will make sense to move this work to a shared service center, onshore, near-shore or off-shore.
The benefit of this will accrue from consolidation to a low cost resource, comparison of contracts, attempting to provide data for negotiation, sharing of best practices.
Thus in a back office process for accruals, it is not just updating, scheduling and correcting accrual entries, but also analytics and best practice deployment which come into play.
So what will be the steps of this back office process? Next post…..
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