Is cloud financial reporting a key component for you and your finance team?
Reporting is crucial in any finance department. And CFOs have always focused a lot of their attention on analysing these reports. This is a critical part of any modern business and an important measure to understand the business performance of a company.
Whether CFOs are compiling these reporting statements themselves or assigning others to create them, their role doesn’t stop with the handing over the numbers. CFOs are charged with producing reporting that is useful to leadership and key stakeholders.
They will understand the performance metrics, indicators and targets that need to be hit for the organisation to move forward.
Traditionally, CFOs have been limited to looking backwards through a rear-view mirror. They would be reviewing financial reports and balance sheets that will create the state of the business at the end of a period.
The world has changed.
Financial reporting is still highly important. However, technology and the availability of data has made it possible for businesses to get real-time information about company performance – and even how the business can perform in the future.
There is a huge amount of untapped power and potential in what is a legal requirement in most countries.
What’s been the problem with financial reporting?
Financial reporting has always been challenging and time-consuming.
In the modern finance function, end-to-end reporting means carrying out a number of complex tasks, which have to be done to supreme accuracy. Mistakes in the process could make the entire effort invalid.
Your business might be reliant on multiple spreadsheets for financial reporting. But there’s a good chance that errors could creep in, while hours of effort are likely to be spent on maintaining and keeping spreadsheet reports up to date.
However, it’s not just a spreadsheet issue, though.
With legacy IT on-premise infrastructure, the increasing complexity of the business can put pressure on systems. This can slow down processes and cause performance to suffer. The IT team might have to do a lot of firefighting, leaving a lengthy backlog.
Financial reporting is crucial to a business.
As well as performance, it is needed for areas such as regulatory compliance and investor relations. As a result, there are pressures that CFOs and their departments could be feeling from the business when it comes to getting better financial data.
- A corporate mandate to improve the quality of financial and accounting data
- A management focus on improving the productivity of financial/accounting staff
- Stakeholder demand for financial data access and the need for more regular disclosure (monthly instead of quarterly or annually, for instance)
- A need to augment financial reporting with non-financial performance data.
According to CFO 3.0: Digital transformation beyond financial management, a research report by Sage that looks at how CFOs can move from historians to visionaries within their companies, decision-makers are still spending as much time collecting and preparing data as they are analysing it, due to unwieldy legacy systems.
As a result, 70% of CFOs said administration has a significant impact on team productivity.
Why cloud computing can help
The benefits of financial cloud solutions are already well documented. Research and advisory firm Gartner describes the major benefits as:
- The ability to keep up to date with new releases
- More consumer-like features
- Improved analytics
- Improved agility through faster introduction of new functionality
- More emphasis on finance staff managing applications, with less reliance on technical staff
And with the cloud, you have the opportunity to make financial reporting a much more streamlined, accurate and less time-consuming process. It offers error-free reporting, a single version of the truth, and tools that don’t need constant watching and manual maintenance.
How working in the cloud can make finance teams more effective
The role of a CFO and the finance department has changed. Instead of simply being thought of as financial leader, the CFO now needs to actively drive business change through finance.
Thanks to cloud technologies, they have access to a variety of tools focused on predictive analytics and intelligence, with machine learning and artificial intelligence potentially changing the game even further.
Cloud technologies help to create a nimbler and more cost-effective finance function. It minimises the need for hardware and storage, providing more scalable and easily automated processes. You can enable a connected operating environment that provides greater automation and advances in real-time insights.
Automation is a reliable way to improve the quality of financial data and increase the productivity of financial/accounting staff.
Instead of being tied up in time-consuming transactional tasks and gathering data, automation offers an alternative.
Automation can allow businesses to:
- Minimise the manual intervention needed in financial and accounting-related tasks, such as ledger entries and reconciliations
- Reduce the potential for human error
- Improve the use of staff time through a reduction in manual processes
- Increase and expedite turn-around.
Through automation and the use of integrated business systems that serve as an auditable system of record, CFOs and their departments can make use of technical capabilities to make them more effective and useful for the business.
This includes automated financial reporting with narrative analysis. Financial data with context and a clear story can be very useful. In addition, you have access to:
Real-time updates to financial metrics
Real-time metrics improve the quality of related data and the efficiency of prepared reports. Having inputs uploaded in real time rather than batch processes reduces reporting turnaround time and helps to avoid financial data gaps.
This allows multiple codes to be used to generate models and charts from compounded sets of data. It allows data and analytics from various transactions to be aggregated.
Future-proofing the finance function means more automation. More than nine in 10 (94%) businesses agree that financial management technology will play a crucial role in tomorrow’s finance function.
Conclusion on using cloud financial reporting
According to the CFO 3.0 research, 55% of financial decision-makers are responsible for data privacy, digitisation and technology investment. It might be down to you to add value and shape the future strategy of your finance function.
You could well be central to making sure your business makes the significant investments it needs on tools and systems to expand your capabilities, which may need you to move to financial cloud management software.
Moving to cloud-based financial management software can help break down data silos and accelerate the way you do business.
The right technology platform can provide a consolidated view of your financial data from across the business. It can also provide the integrated business analytics functionality to deliver the data-driven insights that a new breed of CFO needs to drive broader business transformation beyond financial management.
By monitoring and understanding this data, you can make better decisions and uncover more opportunities in areas such as cost reductions, process waste removal, customer cross/up-selling, and the delivery of new products.
Not only can analytics find you ways to cut budgets in the right areas, it can help you find suitable ways to expand.
Editor’s note: This article was first published in November 2019 and has been updated for relevance.
CFO 3.0: Digital transformation beyond financial management
Discover how CFOs are playing a key role in leading the digitalisation of medium-sized businesses and learn how to move from a 'historian' to a 'visionary' within your business.