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Virtual close

Virtual close refers to using technology and automation tools to accelerate and streamline the financial close process. This includes automating routine tasks, such as journal entries, account reconciliations, and financial reporting, to reduce manual effort and shorten the time required to complete the close process. Virtual close enables real-time visibility into financial performance, improves accuracy, and enhances decision-making by providing timely access to financial data and insights.

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Working capital

Working capital measures a company's liquidity and short-term financial health, calculated as the difference between its current assets and current liabilities. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, short-term debt, and accrued expenses. Working capital represents the amount of funds available to cover day-to-day operational expenses and short-term obligations. Positive working capital indicates that a company has sufficient liquidity to meet its short-term obligations, while negative working capital may indicate financial distress or liquidity problems.

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Transfer pricing

Transfer pricing refers to the pricing of goods, services, or intangible assets transferred between related entities within the same multinational company. This includes transactions between a company's subsidiaries, divisions, or branches located in different countries or jurisdictions. Transfer pricing aims to establish fair and arm's length prices for intercompany transactions to ensure compliance with tax regulations and avoid tax evasion or profit shifting. Transfer pricing practices are subject to scrutiny by tax authorities to prevent abuse and ensure compliance with international tax laws.

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Transaction reconciliation

Transaction reconciliation is the process of comparing and matching financial transactions recorded in different accounts or systems to ensure accuracy and consistency. This may involve reconciling bank statements with cash accounts, matching invoices with payments, or verifying inventory records with physical counts. Transaction reconciliation helps identify errors, discrepancies, or fraudulent activities and ensures financial data's integrity and financial reporting's reliability.

Discover how to automate currency difference calculations and post-system reconciliations to enhance accuracy in financial close.

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SOX compliance

SOX compliance refers to a company’s adherence to the requirements and provisions outlined in the Sarbanes-Oxley Act. This includes implementing and maintaining effective internal controls over financial reporting, ensuring the accuracy and integrity of financial statements, and disclosing material information to investors and regulatory authorities. SOX compliance is mandatory for publicly traded companies in the United States and is overseen by the Securities and Exchange Commission (SEC) and other regulatory bodies.

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SOX

SOX stands for the Sarbanes-Oxley Act, also known as the Public Company Accounting Reform and Investor Protection Act of 2002. This legislation was enacted in response to corporate accounting scandals to protect investors by improving the accuracy and reliability of corporate disclosures. SOX established new standards for corporate governance, internal controls, financial reporting, and auditor independence for publicly traded companies in the United States.

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Revenue recognition

Revenue recognition is the accounting principle that governs when revenue is recognized and recorded in the financial statements. According to generally accepted accounting principles (GAAP), revenue should be recognized when it is earned and realizable and when the amount can be reasonably measured. This typically occurs when goods or services are delivered to customers, who are likely to pay for them. Revenue recognition is crucial for accurately reporting a company's financial performance and ensuring compliance with accounting standards.

Discover 5 major revenue recognition risks and how finance automation can help.

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Record-to-report (R2R)

Record-to-report, or R2R, is the process of recording, summarizing, and reporting financial transactions and results within an organization. This process encompasses journal entry, general ledger maintenance, financial consolidation, and financial reporting. Record-to-report processes ensure financial data's accuracy, completeness, and integrity and support informed decision-making by management, investors, and other stakeholders.

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Reclassifications

Reclassifications refer to transferring amounts from one accounting category or account to another within an organization’s financial records. This may involve moving expenses from one expense account to another, reallocating revenues between different revenue streams, or reclassifying assets or liabilities into various categories. Reclassifications are typically made to correct errors, adjust for changes in accounting policies, or improve the presentation of financial information.

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Provisions

Provisions are liabilities recorded on the balance sheet to account for probable future expenses or losses that are not yet certain in amount or timing. Examples of provisions include warranty provisions, restructuring provisions, and legal provisions. Provisions are recorded based on estimates and adjusted over time as more information becomes available. Recording provisions help ensure that financial statements reflect the company's obligations accurately and fairly.

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Profit and loss

Profit and loss, also known as the income statement, is a financial statement that summarizes a company's revenues, expenses, and net income or loss for a specific period, such as a month, quarter, or year. The profit and loss statement shows the company's ability to generate profits from its operations by comparing revenue earned with expenses incurred during the period. It provides valuable insights into the company's financial performance and profitability.

Achieve a seamless financial close with financial month-end close checklist automation software.

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Month-end close

Month-end close is the process of finalizing the financial records and preparing financial statements at the end of each accounting period, typically every month. This process involves reconciling accounts, adjusting entries, and reviewing economic data to ensure accuracy and completeness. Month-end close is essential for timely financial reporting, analysis, decision-making, and compliance with regulatory requirements and internal policies.

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Modern accounting

Modern accounting uses advanced technologies, processes, and practices to effectively manage financial information and reporting. This includes adopting cloud-based accounting software, automation tools, data analytics, and artificial intelligence to streamline accounting processes, improve accuracy, and enhance decision-making. Modern accounting aims to provide real-time insights, increase efficiency, and adapt to changing business environments and regulatory requirements.

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Local entities

Local entities are business units, subsidiaries, or divisions operating within a specific geographic region or jurisdiction. They are typically distinct legal entities with management, operations, and financial reporting requirements. Local entities may operate independently or as part of a larger corporate structure, subject to local laws, regulations, and taxation policies. Managing local entities requires coordination, communication, and corporate policies and standards compliance.

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Journals

Journals, or "journal entries," are accounting records used to record financial transactions in a company's general ledger manually. Each journal entry includes a description of the transaction, the accounts affected, and the amount debited or credited to each account. Journals are typically organized by date and serve as the primary source of information for posting transactions to the general ledger. Common types of journals include sales journals, purchase journals, cash receipt journals, and cash disbursement journals.

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Invoice to cash

Invoice to cash, also known as "order to cash," manages the entire lifecycle of a customer order, from the initial order placement to the payment collection. This process typically includes order entry, credit approval, order fulfillment, invoicing, and payment collection. Invoice-to-cash processes aim to streamline and automate the order-to-payment cycle, reduce errors, minimize delays, and improve cash flow management.

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Invoice processing

Invoice processing refers to the systematic handling of invoices from receipt to payment within an organization. This process involves capturing, validating, approving, and reconciling invoices before they are paid. Automated invoice processing systems can streamline these tasks by extracting data from invoices, routing them for approval, and integrating them with accounting software for payment processing. Effective invoice processing helps organizations manage cash flow, optimize vendor relationships, and maintain accurate financial records.

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Invoice management

Invoice management refers to receiving, reviewing, processing, and tracking invoices from vendors or suppliers. This includes tasks such as verifying the accuracy of invoices, matching them to purchase orders or contracts, obtaining necessary approvals for payment, and recording them in the accounting system. Invoice management helps organizations ensure timely payment of obligations, avoid late fees or penalties, and maintain accurate financial records. It may also involve implementing automation tools or systems to streamline the invoice processing workflow and improve efficiency.

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Internal audit

An internal audit is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organization accomplish its objectives by taking a systematic, disciplined approach to evaluating and enhancing the effectiveness of risk management, control, and governance processes. Internal auditors are employees of the organization and report to its management.

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Intercompany transactions

Intercompany transactions are financial transactions that occur between different entities or subsidiaries within the same parent company. These transactions include selling goods or services, transferring assets or liabilities, loans, dividends, or payments for shared expenses. Intercompany transactions must be appropriately recorded, documented, and reconciled to ensure accurate financial reporting and compliance with internal policies and external regulations.

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Intercompany reconciliation

Intercompany reconciliation compares and reconciles financial transactions and account balances between different entities or subsidiaries within the same parent company. This process involves identifying and resolving discrepancies, errors, or inconsistencies in intercompany accounts, such as receivables, payables, and equity balances. Intercompany reconciliation ensures the accuracy and integrity of financial data and facilitates the preparation of consolidated financial statements.

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Intercompany journal entry

An intercompany journal entry is a financial transaction in the accounting records of two or more related entities or subsidiaries within the parent company. These entries are used to transfer funds, assets, or liabilities between entities, adjust intercompany account balances, or allocate expenses or revenues. Intercompany journal entries ensure financial transactions between related entities are correctly accounted for and reflected in the consolidated financial statements.

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Intercompany invoice

An intercompany invoice is a billing document that records and documents transactions between different entities or subsidiaries within the same parent company. This invoice typically includes details such as the description of goods or services provided, quantities, prices, and payment terms. Intercompany invoices facilitate the proper recording and reconciliation of intercompany transactions, ensuring accurate financial reporting and compliance with internal policies and external regulations.

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Intercompany financial management

Intercompany financial management encompasses the processes and practices used to manage financial relationships and transactions between entities or subsidiaries within a group. This includes establishing intercompany policies, procedures, and controls to ensure transparency, accuracy, and compliance with regulatory requirements. Intercompany financial management aims to optimize cash flow, minimize risks, and maximize value creation within the group.

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