How to improve your financial reporting process

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Many companies wish to improve their financial reporting process and solve their challenges. However, their most frequently used coping strategies solve only part of the problem. As the playing field becomes more complex and reporting becomes more demanding every day, the need arises to find a centralized solution. A structured system that makes their daily job easier and adds value to their financial strategy. In such cases, a CPM solution might be worth considering.

In our last two blogs, we addressed the challenges many companies encounter in their financial budgeting, forecasting, consolidation and reporting processes. Common struggles for companies from mid-size to corporate, caused by their increasingly complex playing field:

  • external factors such as regulators, competition, prices and macroeconomic developments.
  • internal factors such as acquisitions, growth, more systems, more integrations, and different definitions.
  • Silo mentality of people and operations: as a symptom of a growing organization, teams or team members share less valuable information. This leads to poor decision-making, as every team decides for themselves instead of openly creating, share and discussing information.

Frequently used coping strategies

To cope with the challenges in their financial reporting process, most companies tend to use one or more of the following strategies:

  1. Hire more people, work more hours and/or raise productivity targets

Higher demands on the reporting side are often solved by working harder, hiring more people, and focusing more on data delivery than on data analysis. Although this might get the job done, it severely impacts job satisfaction and the attractiveness of a company for future employees.

  1. Centralising and updating ERP systems

As a good and important step in making their financial processes more efficient, many organizations invest in centralizing and updating their ERP systems. This creates a solid base for efficient documentation and reporting of financial figures.

  1. Centralising and integrating accounting and reporting processes

A bigger step towards a more advanced financial reporting process is centralizing and integrating accounting and reporting processes. For example, by implementing shared service centers organisation wide. This increases the efficiency of financial operations, especially in a multinational context.

  1. Investing in data warehouses and BI tools

Combining data warehouses and BI tools – for example, Azure Data Lake connected with PowerBI – creates more analysis possibilities. Moreover, the analyzing process becomes faster and easier because of the structured data and reports.

Still, some pain points remain

Without a doubt, each of these strategies helps enhance your financial operations, create more accurate reports and enable better analysis of your financial and operational KPIs. However, despite all time, effort and money spent, these solutions only solve part of the problem. Both on the input and output side, it still takes a lot of manual work to get all financial data in the systems and generate the required management reports. The following pain points often remain:

  • Most planning, forecasting and reporting tasks will still have to be done manually in Excel based solutions.
  • This makes the financial consolidation and reporting process complex and inefficient for large and international organizations (more than 25 entities worldwide).
  • There still is no stable and structured way for reporting acquisitions and companies that are not included in your central processes. Acquiring companies and embedding them into your organization remain time-consuming activities.
  • A full workflow and audit trail of the main reporting processes are not available, although these are mandatory to meet audit requirements. Analyzing numbers and variances from a business control perspective is a time-consuming challenge.

The added value of a CPM solution

For smooth and smart financial reporting, the ideal solution could be one central system where actuals, budgets and forecasts come together, where variance analyses can be made, and corporate performance management (CPM) can take place. A CPM solution is worth considering if your company is operating in an increasingly complex and competitive playing field and you take performance management very seriously.

In our next blog, we will look into the various types of CPM solutions available on the market, their features, advantages and disadvantages, and best practices. And in a few easy steps, we will help you determine which solution adds the most value to your organization.