Part 6 in the “Continuous Accounting Action Plan” series
In last week’s blog, we explored the concept of “real-time” and the whole idea of speeding up financial reporting and analysis processes. Another area to consider, besides statutory reporting, is accelerating internal financial and operational management reporting. CFOs are increasingly shifting to business partnering and strategy. Getting a clear perspective of the key drivers for the business as they happen is increasingly important, from classical finance measures around income, expenses, days sales outstanding, and profitability to operational measures like customer satisfaction or sales pipeline health. Providing real-time access for operational departments, rather than expecting them to wait for period-end, can be extremely useful.
Best-in-class = real-time updates to financial metrics
Harnessing internal financial and operational data, providing it to stakeholders in self-service dashboards, and using it to game out scenarios in rolling forecasts have all become essential for business success. However, moving the dial to get a real-time view of financial metrics alone is challenging—with data sources and accounting process standing in the way of a real-time perspective. Aberdeen Group recently found that 57% of organizations they defined as best-in-class have real-time updates to financial metrics. Getting to real-time for management reporting means moving analytics closer to the transaction, automating data integration, and shifting analytics to self-service rather than traditional report distribution. And it means doing so while ensuring strong data governance and avoiding silos of inconsistent data popping up.
But whether building internal financial reporting, creating board packages, or assembling external reports, a common factor is that accounting data and process often stands in the way. Simply getting an accurate perspective on financials requires many close tasks to happen, and those are typically reserved for period-end. And making decisions on data without applying tasks like reconciliations, or intercompany reconciliations and elimination first, can lead to data that isn’t reflective of the final results.
Aligning and data and process to elevate reporting
It’s one of the reasons that continuous accounting has become foundational to faster reporting, without compromising consistency. Simply, it’s about providing a single always-current repository of financial data that has the latest close tasks applied as they happen. This way, reports are always generated after as many closing tasks that could be applied have been applied – rather than waiting for the end of the period (delaying reporting), or creating reports before pending close tasks have been applied (incomplete and inconsistent reporting). The good news is that moving to continuous accounting not only provides a better way to achieve real-time and point-in-time reporting. It can also accelerate the time to close by avoiding bundling so many tasks into month-end.
Clearly, aligning data and process is an enabler for improving reporting. But how do you get there? The answer is automation, standardization, and centralization. Consider identifying high-volume repetitive accounting tasks that often needlessly happen manually at period-end, and using data connectors, matching, and workflow engines to automate more as soon as the transactions happen. It’s a combination of rethinking process and using automation and orchestration—ultimately, to provide the most current, consistent picture of the business, at a point in time.
In my next post, we’ll tackle how continuous accounting can be applied reduce risk exposure and strengthen controls—a vital foundation for reporting and trust.