The evolution of financial reporting
Financial reporting cycles are under greater pressure than ever before. New compliance standards, increased transparency expectations and heightened traceability levels have all contributed towards a sizeable shift in the way in which organisations report performance information. As a result, Corporate Performance Management (CPM) is now becoming widely embraced as it allows organisations to be more efficient monitoring and managing their performance.
What are the benefits?
A consolidated approach to critical business data, not just financial information, provides a wider context through detailed budget comparisons and future forecasting that combines data from all key departments. Under this model, the financial reporting process includes forward-looking indicators including sales pipelines, competitor analysis, product launches and customer satisfaction levels.
With the primary objective of reporting being to reveal what is going on in the business at any given time, this evolution is now essential to meet the fast pace of today’s corporate landscape – with financial reports that are accessible to multiple teams helping to engender collaboration.
Cross-departmental dialogue allows finance to work strategically with colleagues across the business in order to facilitate and improve the decision-making process.
CPM systems allow key stakeholders to access the latest view of business performance against internal budget and competitors, as well as the big picture of a company’s financial health.
Accuracy of data is key
The accuracy of this, however, is largely dependent on data quality. While spreadsheets have traditionally been used for reporting, they can be both cumbersome and prone to costly errors. CPM software marks a change in approach.
Extremely complex processes, such as Reporting and Consolidation, Budgeting and Forecasting, are not best supported by spreadsheets with high probability for errors. Rather, best practice sees data held in a single repository that incorporates powerful analytical tools as well as controls to ensure validity, security and quality.
Traditional ‘row and column’ financial data reporting must be taken to a new level by adding context. Finance professionals that do not do so will be unable to fulfil the primary objective of financial reporting: reaching the right people at the right time with accurate and usable information.