A favourite film 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 conclude of the 20th century!
In a standard Finance operate, this reporting ask for would entail a group of fiscal gurus (pretty perhaps all skilled accountants) extracting details from Finance methods, correcting the data they’ve extracted, collecting supplemental facts that was not
in the Finance devices and then collating all of this information and facts together in a spreadsheet to then present in a properly manicured A4 report. And lastly, if time allowed, there possibly a several minutes accessible to incorporate some commentary or perception.
Quickly forward to 2022, and what has truly modified? Is the manufacturing of standard stories continue to the “raison d’être” of a Finance specialist, and with an ever-rising want for facts and insights, how is the reporting landscape evolving?
Who is now inquiring for people stories?
For many years, CFOs and their groups have been serving a static set of stakeholders with a distinct preference about how they want to see data introduced. But the stakeholder team for the Finance purpose is developing, and the wants of just about every team are evolving.
Historically, Finance was all about reporting properly on what experienced happened in the last reporting time period, stating the specifics of what contributed to the Profits Assertion or the Stability Sheet. This continues to be a main intent of Finance reporting and meets the
requires of a large team of predominantly exterior stakeholders – specially buyers, statutory and regulatory bodies, and the trader community. As corporations embrace Electronic Finance transformation, the Electronic CFO has a distinct mandate to strengthen providers to
these exterior stakeholders.
Nonetheless, alongside this, the Electronic CFO ought to also supply to a new set of inside stakeholders who are in look for of a lot much more than the details on the past reporting interval. The Board, Organization CEOs, and Operational Leaders count on Finance to provide ahead
on the lookout insights and additional in-depth analytics available at their fingertips. The Finance operate must therefore proceed to deliver the normal reporting, even though also supplying business enterprise insights and foresight – based mostly on data analytics, modelling, and predictive
So standard reports aren’t useless?
Conventional studies are not dead. Finance continues to be the custodian of Statutory Reporting and
Regulatory Reporting – experiences that are very predictable, are produced at set frequency with apparent specificity. And while these exterior stakeholders are requiring additional granular stories, and in some cases a move in direction of knowledge submissions somewhat than
report submissions, they carry on to be core foundations of Finance. These experiences are crucial to guidance marketplace and business comparisons, competitor benchmarking, and lower the stress of regulatory reporting. As new reporting locations are recognized (ESG
getting a wonderful case in point), regulators, buyers and markets come across comfort in easy-to-digest and comprehensible normal experiences.
Administration reporting straddles the line among standard stories and the on-demand from customers reporting they are shifting to. Administration reviews have to be tailor-made to the precise organisations’ demands and be created regularly with close to true-time facts. In a new
CFO roundtable discussion several members recognized a excellent portion of Administration reports also will need to be predictable, with clear specificity. With the growing have to have for data, it’s vital that this is delivered by self-assistance reporting
and analytics capabilities, fairly than Finance Capabilities serving up a massive quantity of standard studies.
Eventually, as the aim of a Finance operate moves in the direction of Money Planning, Analytics, and Insight, the need to have for dynamic and on-demand from customers reporting is coming to the fore. This requires a various attitude, skillset, and thoughtful engineering choices
to seriously assistance a Digital Finance perform. Continuing to emphasis perception and analytical abilities on common stories or aggregated data will maintain again the transformation of a Finance functionality and simply just end result in let down stakeholders as their expectations
are not achieved.
A critical aim for the efficient functions of a Finance purpose is consequently making sure that all typical reporting is done simply with a high amount of automation –
better, more quickly, and less costly. Traditionally Finance functions can spend up to 70% of their time on creating regular reporting, and only 30% on introducing price by dynamic reporting and insights – a crucial efficiency metric for a effective finance transformation
programme would be to restrict typical 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.