A favorite film line of mine is, “I want that report on my desk tomorrow morning!” I constantly felt it was a phrase stolen from the Finance workplace at the close of the 20th century!
In a typical Finance function, this reporting ask for would entail a workforce of monetary pros (quite quite possibly all competent accountants) extracting details from Finance programs, correcting the information they’ve extracted, accumulating further data that was not
in the Finance programs and then collating all of this data together in a spreadsheet to then current in a flawlessly manicured A4 report. And finally, if time allowed, there it’s possible a few minutes out there to include some commentary or insight.
Quickly ahead to 2022, and what has seriously changed? Is the output of normal experiences still the “raison d’être” of a Finance experienced, and with an at any time-raising have to have for details and insights, how is the reporting landscape evolving?
Who is now asking for all those reports?
For a long time, CFOs and their teams have been serving a static set of stakeholders with a specific desire about how they want to see facts introduced. But the stakeholder team for the Finance operate is rising, and the demands of every single team are evolving.
Traditionally, Finance was all about reporting correctly on what experienced transpired in the last reporting interval, stating the specifics of what contributed to the Earnings Assertion or the Balance Sheet. This remains a core goal of Finance reporting and satisfies the
desires of a huge team of predominantly external stakeholders – especially consumers, statutory and regulatory bodies, and the investor neighborhood. As companies embrace Digital Finance transformation, the Digital CFO has a clear mandate to strengthen providers to
these exterior stakeholders.
However, along with this, the Electronic CFO have to also deliver to a new established of interior stakeholders who are in research of a good deal far more than the info on the previous reporting period. The Board, Company CEOs, and Operational Leaders assume Finance to produce ahead
hunting insights and much more in-depth analytics readily available at their fingertips. The Finance purpose need to for that reason proceed to give the common reporting, even though also giving business insights and foresight – dependent on knowledge analytics, modelling, and predictive
So typical reports aren’t useless?
Normal experiences are not useless. Finance continues to be the custodian of Statutory Reporting and
Regulatory Reporting – reports that are remarkably predictable, are created at set frequency with obvious specificity. And while these external stakeholders are necessitating more granular reviews, and in some conditions a shift in direction of information submissions alternatively than
report submissions, they go on to be main foundations of Finance. These studies are necessary to aid market place and sector comparisons, competitor benchmarking, and reduce the load of regulatory reporting. As new reporting locations are discovered (ESG
remaining a good illustration), regulators, investors and marketplaces obtain consolation in simple-to-digest and easy to understand standard studies.
Administration reporting straddles the line amongst normal reviews and the on-need reporting they are going to. Management reviews ought to be tailored to the certain organisations’ requirements and be manufactured persistently with near genuine-time information. In a recent
CFO roundtable discussion numerous contributors discovered a excellent part of Administration experiences also need to have to be predictable, with obvious specificity. With the raising have to have for details, it is essential that this is sent by means of self-assistance reporting
and analytics capabilities, fairly than Finance Capabilities serving up a substantial quantity of regular stories.
Eventually, as the focus of a Finance function moves toward Fiscal Setting up, Analytics, and Perception, the require for dynamic and on-demand reporting is coming to the fore. This needs a diverse mindset, skillset, and thoughtful technology possibilities
to really help a Digital Finance functionality. Continuing to concentrate insight and analytical capabilities on regular stories or aggregated data will hold again the transformation of a Finance operate and simply just outcome in let down stakeholders as their expectations
are not fulfilled.
A critical objective for the productive functions of a Finance purpose is thus ensuring that all standard reporting is carried out easily with a substantial amount of automation –
superior, quicker, and less costly. Historically Finance features can shell out up to 70% of their time on producing typical reporting, and only 30% on incorporating worth by means of dynamic reporting and insights – a essential effectiveness metric for a prosperous finance transformation
programme would be to restrict conventional 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.