“Regulatory agencies don’t care if an organization is short on staff or if its financial management system amounts to a collection of spreadsheets. Schedules must be met and accurate information provided – period.” –CFO.com
There’s a growing burden being placed on finance teams with regards to financial reporting. Requirements are getting stricter, and accurate and timely data is not just recommended but mandatory. C-level executives and even the federal government’s regulatory requirements show no mercy for short staffs or behind-the-times technology. No matter your company’s resources, financial reporting must be submitted timely and accurately.
I’d like to think these increasing demands and added pressures of the finance team, specifically the controller and other finance leadership, are good reason to step back and reflect on the bigger picture. Why not use the time to look at the processes and procedures within the finance and IT functions, and the overall practices of the company? It could help reduce compliance risks and even help build a competitive advantage down the road.
Whether you utilize the time to improve other areas or not, it’s important to remember that your company is not alone. Many companies of all sizes are struggling to get their financial reporting right.
A recent CFO.com whitepaper outlines some of the struggles being felt by finance teams across the country. Yours and mine are no different. Below are a few of the common obstacles that organizations can experience.
Studies show that most finance leaders need several days for their teams to collect the appropriate data for financial reporting, and then several days after that to perform the actual analysis. During these periods, other projects tend to get halted, often putting productivity as a whole on hold.
With today’s advanced technology, many companies are doing themselves a disservice by not stepping up their game to catch up with the times. Human error, various skill levels and out-of-date technology are all poor, yet common challenges. There are plenty of available modernized resources that can help alleviate the negative effects of manual methods.
We all know that spreadsheets are important for the finance function, however, as the data piles up so does the chance for errors. I’ve seen version discrepancies, disagreements on data input and thousands of unmanageable formulas when companies rely solely, or too highly, on spreadsheets.
Legacy Software Applications
Modern financial reporting demands require modern technology. I’ve seen all too often companies with antiquated software systems including dated dashboards and interfaces that do more harm than good. In many companies, financial reporting can stand to benefit from business processes and systems that integrate with up-to-date technology.
Whether software systems are outdated or modernized, they benefit the company and its financial reporting, most effectively when they integrate cross-functionally. I’ve seen businesses with more than four ERP software solutions that understandably have a hard time integrating, subsequently making it difficult to report the data occurring among each of the systems. Further, the impact of this might not even be completely understood – hence the need for more of an enterprise transformation to catch up with today’s ever changing corporate world.
What are some other obstacles the finance team faces with regards to financial reporting; and how can those hurdles be overcome? Comment below and let us know!