Qinthara Fasya, DigitalCFO Asia | 14 April 2022
When it comes to month-end reporting, CFOs & finance leaders often have to worry about all manners of reporting obligations. They have to clamber to collect all the data, ensure inputs are accurate, and handle the close and consolidation process by the deadline. Some problems CFOs face is not knowing where the data is, and dealing with overshared spreadsheets that have a high likelihood of inaccuracy.
DigitalCFO Asia had the opportunity to hear from 3 CFOs in organizations across various industries at different stages of finance transformation. They shared some of the main challenges and difficulties they faced in month-end consolidation and how they tried to overcome them. As finance leaders are increasingly expected to act as strategic advisors for the business, here are 3 key learning points on financial consolidation based on the insights gathered.
1 – Understand the Source of the problem
According to Celestine See, Regional Pre Sales from Board International, Business mergers and acquisitions to unlock an organization’s business value is a common business activity. Yet, it brings along certain challenges in digital transformation. We often come across legacy systems and processes that lead to poor data quality with new entities onboard.
Manual data entry results in poor quality or erroneous data. One of our company’s most prevalent roadblocks is unreliable data. The utilization of several divergent sources can lead to inaccuracies. Information is frequently manually entered into various sources, a time-consuming procedure that leads to human error. Introducing methods that assure data accuracy from input through normalization is the best approach. Otherwise, you’ll run into problems across the board, including data entry mistakes and cross-checking transaction delays.CFO in the Supply Chain Management Industry
Building blocks of a single source of truth
We often hear this buzzword in the industry – a single source of truth. In the industry, this entails ETL or, ELT processes to extract, convert, and load historical data from numerous sources into a single data warehouse. In this case, you may have some data sources in the cloud and/or on-premises, so having a solution to connect and read data from both on-premises and cloud-based data sources is critical.
Another benefit of direct data integration is eliminating manual preparation or upload of data. The goal is to get data right from the source system, usually within a few clicks of a button in modern solutions, ensuring accuracy.
For example, Board’s native solution allows connection to most data sources, be it relational databases (Usually utilized by ERPs) or Data lakes. Further, both on-premise and cloud-based data sources are supported.
2 – Stay relevant with cloud solutions
From our conversations with CFOs, there is a strong direction toward cloud-based technology, especially with work-from-home situations globally where data accessibility becomes a priority.
One of the main benefits of a cloud-based solution is information accessibility – multi-locations, highly scalable for today’s data-driven world, and more secure than on-premise deployment as you are tapping into the wealth of resources that organizations like Microsoft are dedicating to ensuring world-class security.
Failure to automate time-consuming activities is one of the most typical financial consolidation issues – especially when we worked from home 2 years ago. As you can see, manual data input consumes a lot of time and resources. It has the potential to cause more issues than it solves. Investing in automation to decrease mistakes and free up time and resources may help create a successful consolidation process.CFO in the Logistics Industry
Beyond accessibility – Cloud solution with collaboration capabilities
In a work-from-home environment, a cloud-based solution that promotes collaboration is critical while maintaining a single source of truth platform. To gather financial data for statutory consolidation and perform intercompany reconciliation, you’ll need to collaborate with finance teams from various subsidiaries, associates, joint ventures, and joint operations in order to drive process control and transparency of data securely.
There is a need to gather and consolidate information across departments for financial planning and analytics to produce the required analysis. Board cloud solution allows you to access all the functionalities and features across computers, tablets, or mobiles, basically devices with web browsers. It promotes a single source of truth platform where you can keep track of communications, verify data sources, attach supporting documents, and invoke workflow capabilities such as approval, rejection, and validation of reports/data to drive seamless collaboration.
3 – Update your strategy – Move away from fragmented or point solutions
While some organisations have identified pain points/challenges, they often look at one part of the process/objective. Some firms, for example, examine specialized solutions for financial consolidation and planning, and various operational divisions will discover their solutions to meet their demands. Finally, management will look to procure data visualisation tools to address reporting challenges where they will use it to harmonise information from all these different sources.
When we just started, we made the mistake of implementing many systems without first ensuring that they were adequately integrated. As you can expect, this causes difficulty for those in charge of combining all of this data into a single system. It’s fairly unusual for a company’s many branches to utilize separate reporting tools, which is inefficient. It’s good to think about appropriate tools and systems designed expressly for your industry.CFO in the Corporate Travel Industry
Look into an integrated platform for break-through ROI
Different historical data sources (e.g., ERP systems) impede the move towards a single source of truth as these data have to be further muscled for financial consolidation, planning, budgeting, and forecasting before being loaded into reports or dashboards for analysis.
Take a broader view of your transformation roadmap and consider an integrated solution, in addition to discovering solutions for your function (I.e. Financial consolidation, planning, analytics, workflow for collaboration, business intelligence, reporting).
There are also solutions that can be implemented across industries to help drive towards a single source of truth within organisations with multiple business verticals. This can helps organisations save tremendously on software licenses.
Solutions such as Board’s unified platform enable finance professionals to create plans, budgets, and forecasts with ease; report on performance and profitability; accomplish simulations and scenario analysis; keep internal control over closing and consolidation activities; and release and disclose statutory financial reports.