A favorite movie line of mine is, “I want that report on my desk tomorrow early morning!” I usually felt it was a phrase stolen from the Finance office environment at the end of the 20th century!
In a normal Finance operate, this reporting request would entail a group of monetary gurus (really maybe all skilled accountants) extracting information from Finance programs, correcting the information they’ve extracted, amassing extra details that wasn’t
in the Finance units and then collating all of this information and facts alongside one another in a spreadsheet to then present in a flawlessly manicured A4 report. And finally, if time authorized, there possibly a number of minutes offered to insert some commentary or perception.
Quickly ahead to 2022, and what has genuinely altered? Is the output of regular studies even now the “raison d’être” of a Finance skilled, and with an at any time-rising will need for data and insights, how is the reporting landscape evolving?
Who is now inquiring for individuals reports?
For a long time, CFOs and their groups have been serving a static established of stakeholders with a certain preference about how they want to see information and facts offered. But the stakeholder group for the Finance purpose is rising, and the needs of every single group are evolving.
Historically, Finance was all about reporting correctly on what experienced happened in the very last reporting interval, stating the info of what contributed to the Profits Assertion or the Balance Sheet. This remains a main goal of Finance reporting and fulfills the
wants of a huge team of predominantly exterior stakeholders – specifically prospects, statutory and regulatory bodies, and the trader group. As firms embrace Electronic Finance transformation, the Electronic CFO has a very clear mandate to strengthen products and services to
these external stakeholders.
Nonetheless, alongside this, the Electronic CFO must also produce to a new set of inside stakeholders who are in research of a large amount more than the information on the previous reporting period. The Board, Enterprise CEOs, and Operational Leaders hope Finance to deliver forward
hunting insights and extra in-depth analytics readily available at their fingertips. The Finance perform must consequently keep on to offer the standard reporting, though also delivering enterprise insights and foresight – primarily based on information analytics, modelling, and predictive
So typical experiences are not useless?
Normal reports are not lifeless. Finance proceeds to be the custodian of Statutory Reporting and
Regulatory Reporting – reports that are very predictable, are produced at established frequency with obvious specificity. And whilst these exterior stakeholders are necessitating extra granular reports, and in some instances a go to facts submissions relatively than
report submissions, they continue to be main foundations of Finance. These studies are necessary to assist current market and industry comparisons, competitor benchmarking, and lower the load of regulatory reporting. As new reporting spots are recognized (ESG
staying a good illustration), regulators, traders and markets find consolation in uncomplicated-to-digest and easy to understand normal stories.
Management reporting straddles the line involving normal stories and the on-need reporting they are shifting to. Management reviews ought to be tailored to the specific organisations’ desires and be produced constantly with around serious-time facts. In a latest
CFO roundtable discussion several contributors determined a good portion of Administration studies also require to be predictable, with very clear specificity. With the raising need to have for information and facts, it’s essential that this is shipped through self-assistance reporting
and analytics abilities, fairly than Finance Features serving up a significant amount of common studies.
Ultimately, as the concentrate of a Finance function moves in the direction of Monetary Organizing, Analytics, and Insight, the want for dynamic and on-desire reporting is coming to the fore. This demands a distinctive attitude, skillset, and thoughtful engineering selections
to seriously help a Electronic Finance purpose. Continuing to target perception and analytical capabilities on standard reviews or aggregated facts will keep again the transformation of a Finance perform and only consequence in unhappy stakeholders as their expectations
are not satisfied.
A vital goal for the successful operations of a Finance function is for that reason making certain that all normal reporting is done easily with a high level of automation –
greater, faster, and more affordable. Traditionally Finance functions can devote up to 70% of their time on developing conventional reporting, and only 30% on incorporating worth by way of dynamic reporting and insights – a vital general performance metric for a thriving finance transformation
programme would be to restrict 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.