A virtual crystal ball for CFOs

Go from the last to know to a forecaster with the insights of an accounting hub

Achinta Khairom

Achinta Khairom

Principal, Advisory, Finance Transformation, KPMG LLP

+1 206-794-3416

To get its financial house in order for an initial public offering, a hospitality company centralized its books by implementing an accounting hub. The company, a KPMG LLP client, realized a significant benefit along the way: Predictability.

Unfortunately, like the majority of the economy, COVID-19 had an impact on the business. Bookings took a hit and the effect was very apparent to the business due to the data and real-time information generated from the newly implemented accounting hub solution.

Come early summer, however, the tide began to turn. On an hourly basis, the business saw little spikes. Finance business leaders could predict the company’s revenue rebounding from the previous month. The accounting hub was almost like a crystal ball, with the ability to project and provide a precision-based forecast of the revenue and bookings to the nth detail on a daily basis. This gave the controllers and the business leaders a unique ability to consider critical decisions stemming from the real-time revenue projections that would impact their business on a day-to-day basis.

An accounting hub solution frees a finance organization from some of the challenges of a data-reporting ERP. It leverages concepts of advanced technologies, such as automation, digitization, and cloud computing to make sense of large data sources. Data from disparate sources can be aligned into accurate, detailed, and auditable accounting journal entries with automated reporting. Most of all, accounting hubs simplify analysis, which leads to sharper insight.

For any finance person, real-time information about cost or revenue and other accounting information is critical to decision-making. An accounting hub makes this type of information more accessible and available. Executives are no longer at the mercy of the capabilities provided by ERPs, general ledgers, and traditional applications such as Excel.

Finance, as an organization, is often the last to know about a new product the company is selling and how that impacts the balance sheet. Finance executives cannot shut down sales just because the system has no process to book a new type of transaction.

But in an accounting hub, rules can be configured in a controlled environment. This enables the system to be flexible for currencies, calendars, and charts of account. Multiple accounting representations for a single business event can be linked and reconciled with integrated programs that hook into transactions from legacy source systems.


If accounting hubs are so wonderful, why aren’t they more widespread? Many accountants and controllers are overconfident in their systems. They have a traditional accounting mindset: “We know our numbers pretty well, so we don't need an application to show us how to book a particular transaction as a credit or debit.”

Despite some tribal resistance, many large organizations—including some Fortune 500 companies—are turning to accounting hubs. The catalyst is often a major business event, such as:

  • An impending IPO to signal that the company’s accounting is transparent for investors and regulators
  • A planned merger or acquisition to integrate legacy systems, manage complex tax positions, and use an accounting hub as an intermediary general ledger
  • A transition to a cloud-based, software as a service platform, where transactions can be fluid, yet need to be recognized accurately for U.S. GAAP or the 606 standard.

Truth be told, accounting hubs are nothing new. Financial services, especially insurance companies, have been using them for a long time. But we hear more about them now because big software vendors like Oracle, SAP, Workday, and Aptitude, which each handle components of the back office, have started investing and building solutions that cater to rules-based accounting capabilities.

Return on investment will be realized in efficiency. Headcount may be reduced and operational improvement gained without all the spreadsheet work needed, the late nights, and overtime. Not so easily measured is the quality of controls, SOX compliance, and prevention of material defects. That’s almost priceless to a company, since a company trying to go public with material defects on the balance sheet would immediately erode investors' confidence.

As the traditional roles of a CFO and finance organization transform, they’re expected to provide more advanced thinking than just making sure the numbers foot. They need to add value with insight about where the business is heading. An accounting hub is a powerful tool for that job. Evidently, our hospitality client invested in the right technology.

To learn more about accounting hubs, access our on-demand webcast.