A favourite movie line of mine is, “I want that report on my desk tomorrow morning!” I generally felt it was a phrase stolen from the Finance office environment at the end of the 20th century!
In a typical Finance function, this reporting ask for would entail a workforce of financial gurus (rather potentially all skilled accountants) extracting facts from Finance programs, correcting the info they’ve extracted, amassing additional information that was not
in the Finance systems and then collating all of this details alongside one another in a spreadsheet to then existing in a properly manicured A4 report. And finally, if time permitted, there it’s possible a few minutes offered to add some commentary or perception.
Quickly ahead to 2022, and what has truly improved? Is the output of conventional studies continue to the “raison d’être” of a Finance qualified, and with an ever-rising will need for knowledge and insights, how is the reporting landscape evolving?
Who is now inquiring for those people reports?
For decades, CFOs and their groups have been serving a static set of stakeholders with a particular preference about how they want to see information and facts presented. But the stakeholder team for the Finance operate is developing, and the requires of just about every group are evolving.
Traditionally, Finance was all about reporting accurately on what had happened in the last reporting period of time, stating the facts of what contributed to the Cash flow Statement or the Stability Sheet. This stays a core reason of Finance reporting and meets the
demands of a significant team of predominantly exterior stakeholders – particularly clients, statutory and regulatory bodies, and the investor neighborhood. As corporations embrace Electronic Finance transformation, the Digital CFO has a very clear mandate to enhance companies to
these external stakeholders.
Even so, together with this, the Digital CFO ought to also provide to a new set of internal stakeholders who are in lookup of a ton additional than the details on the earlier reporting time period. The Board, Company CEOs, and Operational Leaders anticipate Finance to produce forward
wanting insights and more in-depth analytics out there at their fingertips. The Finance purpose have to for that reason go on to provide the conventional reporting, when also supplying organization insights and foresight – centered on details analytics, modelling, and predictive
So common stories aren’t useless?
Conventional experiences are not dead. Finance continues to be the custodian of Statutory Reporting and
Regulatory Reporting – studies that are very predictable, are created at established frequency with very clear specificity. And even though these external stakeholders are requiring a lot more granular stories, and in some instances a move to info submissions relatively than
report submissions, they keep on to be core foundations of Finance. These studies are crucial to support market and industry comparisons, competitor benchmarking, and cut down the load of regulatory reporting. As new reporting areas are discovered (ESG
getting a terrific illustration), regulators, investors and marketplaces find ease and comfort in uncomplicated-to-digest and comprehensible conventional reviews.
Management reporting straddles the line in between common stories and the on-need reporting they are transferring to. Management studies have to be personalized to the unique organisations’ needs and be generated continually with around true-time details. In a new
CFO roundtable discussion various participants discovered a superior portion of Management reports also will need to be predictable, with crystal clear specificity. With the expanding need to have for details, it’s vital that this is sent as a result of self-assistance reporting
and analytics capabilities, alternatively than Finance Features serving up a massive amount of regular experiences.
Ultimately, as the emphasis of a Finance functionality moves towards Financial Setting up, Analytics, and Insight, the will need for dynamic and on-need reporting is coming to the fore. This needs a unique mentality, skillset, and thoughtful engineering alternatives
to seriously support a Digital Finance functionality. Continuing to emphasis insight and analytical abilities on regular studies or aggregated info will hold back again the transformation of a Finance purpose and just result in unhappy stakeholders as their anticipations
are not satisfied.
A important goal for the efficient functions of a Finance operate is hence making certain that all normal reporting is done very easily with a superior level of automation –
much better, more rapidly, and much less expensive. Historically Finance functions can commit up to 70% of their time on making conventional reporting, and only 30% on incorporating value by means of dynamic reporting and insights – a important general performance metric for a productive finance transformation
programme would be to restrict standard 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.