A favorite motion picture line of mine is, “I want that report on my desk tomorrow morning!” I constantly felt it was a phrase stolen from the Finance business office at the conclusion of the 20th century!
In a usual Finance function, this reporting ask for would entail a crew of economic pros (pretty probably all experienced accountants) extracting information from Finance units, correcting the knowledge they’ve extracted, gathering extra data that wasn’t
in the Finance systems and then collating all of this details together in a spreadsheet to then existing in a completely manicured A4 report. And at last, if time authorized, there possibly a couple of minutes available to insert some commentary or perception.
Rapid forward to 2022, and what has really modified? Is the production of regular studies nonetheless the “raison d’être” of a Finance professional, and with an at any time-increasing require for knowledge and insights, how is the reporting landscape evolving?
Who is now inquiring for people experiences?
For a long time, CFOs and their teams have been serving a static set of stakeholders with a certain preference about how they want to see data introduced. But the stakeholder group for the Finance perform is developing, and the wants of each individual group are evolving.
Traditionally, Finance was all about reporting precisely on what experienced occurred in the past reporting period of time, stating the points of what contributed to the Earnings Statement or the Balance Sheet. This stays a core purpose of Finance reporting and fulfills the
needs of a substantial team of predominantly exterior stakeholders – especially clients, statutory and regulatory bodies, and the investor community. As firms embrace Electronic Finance transformation, the Digital CFO has a distinct mandate to enhance expert services to
these external stakeholders.
Nevertheless, together with this, the Electronic CFO have to also deliver to a new established of inside stakeholders who are in look for of a ton extra than the specifics on the past reporting period. The Board, Small business CEOs, and Operational Leaders count on Finance to deliver forward
searching insights and additional in-depth analytics offered at their fingertips. The Finance functionality need to for that reason continue on to give the normal reporting, whilst also giving business enterprise insights and foresight – centered on information analytics, modelling, and predictive
So regular reviews aren’t dead?
Regular stories are not useless. Finance proceeds to be the custodian of Statutory Reporting and
Regulatory Reporting – experiences that are hugely predictable, are produced at set frequency with crystal clear specificity. And whilst these exterior stakeholders are necessitating more granular studies, and in some circumstances a go in the direction of knowledge submissions instead than
report submissions, they proceed to be main foundations of Finance. These studies are critical to help industry and business comparisons, competitor benchmarking, and minimize the burden of regulatory reporting. As new reporting locations are identified (ESG
remaining a great example), regulators, investors and markets locate comfort and ease in quick-to-digest and comprehensible regular experiences.
Administration reporting straddles the line between normal studies and the on-desire reporting they are relocating to. Management studies need to be customized to the particular organisations’ demands and be made continually with close to genuine-time details. In a recent
CFO roundtable discussion quite a few members discovered a fantastic portion of Administration reports also will need to be predictable, with very clear specificity. With the rising require for data, it’s crucial that this is shipped via self-assistance reporting
and analytics capabilities, fairly than Finance Functions serving up a large quantity of common experiences.
Last but not least, as the concentrate of a Finance functionality moves in the direction of Money Preparing, Analytics, and Perception, the require for dynamic and on-desire reporting is coming to the fore. This involves a various way of thinking, skillset, and thoughtful know-how alternatives
to truly assist a Digital Finance purpose. Continuing to aim perception and analytical capabilities on conventional reports or aggregated info will keep back again the transformation of a Finance operate and just consequence in upset stakeholders as their expectations
are not achieved.
A critical objective for the economical functions of a Finance operate is therefore guaranteeing that all regular reporting is carried out easily with a superior stage of automation –
far better, speedier, and less expensive. Traditionally Finance features can spend up to 70% of their time on developing regular reporting, and only 30% on adding price by means of dynamic reporting and insights – a critical overall performance metric for a prosperous finance transformation
programme would be to limit regular reporting to < 30% of the Finance effort.
So how does a Finance Function shift to Dynamic on-demand reporting?
Evolving to a dynamic reporting culture requires a wholesale culture change in Finance – this can’t be achieved through simply implementing data exploitation and business intelligence software solutions on top of existing processes and datasets. It starts
with re-imagining end-to-end Finance processes and considering how real-time data and dashboards can support ongoing reporting and support a move away from point-in-time reporting.
And let’s not forget the fundamentals of a Finance function. Every output produced – whether it’s a standard report, a dynamic dashboard, or a business insight finding from a data scientist – must be sourced from a reconciled, controlled and accurate financial
accounting dataset. The worst outcome for Finance is a proliferation of data and reports that can’t be authenticated or reconciled back to the Finance books and records – a perfect storm for eroding all confidence in a Finance function.
Consider using the rich granular data available in subledgers as the starting point for dynamic reporting and then enriching this controlled Finance dataset with other non-Finance golden sources (integrated through a data fabric) to drive business insights.
The growth in data demand has been exponential, and continues to grow as new regulatory standards such as IFRS17 and ESG disclosures drive the need for rich granular data in Finance. Attempting to bring this level of non-financial data through the Finance
general ledger will just constrain the Finance functions’ reporting ability by limiting them to aggregated standard reports, and lead to an explosion in offline, end-user computing (EUC) solutions as people try to get the analysis they need. Furthermore, this
risks misinterpretation or inaccurate insights being derived through the creation of “shadow” Finance reporting that lacks the required controls and consistency.
This also requires a re-think around the people, skillsets and culture required to support dynamic reporting. Insights and analytics require individuals who can identify trends and analytics, and aren’t solely focussed on compliance, accuracy, and reconciliations.
You need the ability to be able to ask the right questions and direct the data and analytics teams – this requires a thirst for curiosity as well as a business outlook. This doesn’t mean you no longer need Accountants, and it doesn’t mean everyone should
be a Data Scientist – but the two must co-exist.
Once you are clear on the data foundations and people & skillsets, the technology choices become easier. Data exploitation and business intelligence solutions are available in their plenty, however supplementing these capabilities with scenario modelling
and machine learning capabilities will lift the analytics capabilities to another level. The ability to explore and implement chatbots, natural language recognition, or blockchain will come more naturally once the foundations are laid for dynamic reporting
Dynamic reporting presents a cultural shift in the Finance function, with considerable difference from the Finance standard reporting role we started with. Rather than a Finance stakeholder demanding that standard report on last month’s Financials by tomorrow
morning, the best-in-class Finance functions will be offering up dynamic reporting and critical business insights in real-time, helping to shape the future direction of the business.