This is a blog post from our partner Workday, highlighting common financial reporting challenges and explaining how to solve them.
Stakeholders want self-service: Reporting runs the gamut, from presenting department managers with data on how their actuals compare to budget, to showing board members how expansions or changes in the product mix are impacting margins.
Why it matters: Businesses largely run on accurate, timely financial reports, as they are home to critical financial and operational key performance indicators.
Most organizations know that their financial reporting is not as good as it should be. The reasons are many—chief among them is the perception that process improvements are too difficult and take too much time to implement.
But when you put better reporting on the back burner, you put your business at risk. Instead of looking in the rear-view mirror—a static approach to planning that reports on what happened in the past—it’s far more effective for finance teams to look out the windshield and anticipate what’s ahead.
Let’s take a look at four common financial reporting challenges and how to tackle them:
Challenge 1: Verifying Accuracy
Excel is a great tool. But the static nature of spreadsheets makes it difficult to quickly and consistently produce up-to-date financial reports, which compromises speed and accuracy. Spreadsheets can also create version-control issues when they’re routed for review or verification, hindering efficiency and security.
Even with single-user spreadsheets, lack of a centralized reporting system introduces more inconsistencies in metrics, data, and calculations, forcing finance teams to spend valuable time verifying and validating data. In this situation, it’s especially difficult to conduct variance and comparative reporting—a step that can reveal necessary course corrections. CFOs who automate data gathering can instill a greater level of trust in the data while making it easier to reveal valuable insights.
Excel is a great tool. But the static nature of spreadsheets makes it difficult to quickly and consistently produce up-to-date financial reports, which compromises speed and accuracy.
Challenge 2: Wrestling Data from Multiple Systems
As a finance professional, you’re responsible for generating clear and actionable financial data. Your company’s decision-makers must be able to understand not only the analysis behind the data, but also the actions to consider as a result of that analysis.
But one missing piece of data can prevent stakeholders from getting the insights they need. And with more organizations tracking nonfinancial metrics, corporate reports are including increasing amounts of operational data. Using traditional reporting methods to access and incorporate such information—usually housed outside of finance—creates an additional burden.
Challenge 3: Lack of Collaboration
Financial reporting should be a collaborative process, with finance and nonfinance managers working together to not only report the numbers, but to also use them to drive insights and take action. But all too often, operating managers don’t have sufficient input or buy-in to the financial planning process, and they aren’t educated about how their decisions can influence overall profitability. For its part, finance isn’t able to offer real performance insights that might truly help managers improve their results because legacy reporting tools don’t enable stakeholder collaboration.
Challenge 4: Data Interpretation
You’ve gathered the data—now you need to analyze and interpret it so you can clearly articulate financial and operational insights. The more the organization understands the story behind the numbers, the greater the chance it has to be data-driven—and the more effective you can be in getting your message across to key stakeholders.
That’s because those outside of finance tend to consume data visually. They seek more than just numbers; they want to understand the impact and implications of the data you present. For those wanting to make good on good intentions, intuitive dashboards and data visualization are a great way to build a story that clearly shows current performance, future trends, and possible scenarios. Ideally, you should choose a dashboard offering that gives finance staff the flexibility to quickly and easily deliver data in a range of formats desired by stakeholders.
What’s the Answer?
To overcome these traditional reporting challenges, you need to go beyond yesterday’s inadequate access to information and limited financial reporting. You need a system that is more sophisticated than a spreadsheet, but not so overly engineered that it takes six months to deploy and requires significant IT involvement.
The solution you choose should deliver financial intelligence that drives improved business performance and accelerates growth. And it should enable an active planning approach to finance—a process that allows finance to shift into a leadership and guiding role, instead of having to focus on static, transactional back-office tasks.
This blog post was originally published on the Workday blog.
More from our FP&A Done Right Series:
The Role of Generative AI in Forecasting
The Future of FP&A: Intelligent Forecasting
