Alwyn Pretorius, General Manager at Infinitus Reporting Solutions (creators of Finnivo®) unpacks how corporate finance teams could better spend their time in the financial reporting process.
The value that a Chartered Accountant (CA) brings to the table in any company, with their extensive qualifications and expertise in financial matters, is rooted in their ability to effectively make sense of the financial data of the business.
Unfortunately, many corporate finance teams spend most of their time collecting and consolidating data, instead of focusing on the analysis and presentation of an organisation’s results and forecasts. To better understand this concept and visualise how finance teams in many corporate environments are currently spending their time, it’s necessary to first unpack and map out the four reporting phases.
The four reporting phases
Data collection is the first phase to tackle, which entails collating data, input and commentary from multiple systems, people, or locations. This is followed by the consolidation phase, in which intercompany transactions and balances are eliminated so that a group’s published results exclude the trade between the entities within the group, as required by relevant reporting standards.
Corporate finance teams would then analyse the consolidated results by drilling down into the financial data to better understand the numbers, input and commentary from various individuals in the business. They may want to question significant variances, evaluate which segments performed the best, or determine how much cash was generated by the different business units. This ensures finance teams are prepared to answer any questions that may be asked by relevant stakeholders, explain deductions that may be queried by SARS, or offer lenders peace of mind that covenant requirements are being met.
The final results would need to be presented in the form of reports and presentations published in various formats for different stakeholders, such as board packs, budget presentations in PowerPoint, annual financial statements, ESG reports, and many more.
Why (and how) time could be better spent.
Every business is different, and how finance teams approach these four phases will vary from organisation to organisation. Moreover, the amount of time allocated to each of these areas depends heavily on not just the nature of a business, but its approach to managing its financial data.
In corporate environments where a ‘manual’ approach to financial reporting is preferred through the use of Excel (by and large), finance teams are spending the bulk of their time collecting and consolidating data, instead of adding value where it truly counts – analysing financial data and reporting on these findings to the various stakeholders within and outside of the company. This leaves them with little time to problem-solve and contribute their value to the decision-making process where it needs to be.
Similarly, businesses that implement reporting software would undoubtedly expect that the time and resources of its employed finance professionals is being utilised as efficiently as possible – that is, with emphasis on the analysis and presentation phases.
“Any viable or growing business would at some point be forced to look at deploying technology to maintain or improve efficiency within every functional area of its business. The speed at which the demand for information increases, always outweighs the speed at which one can employ and train people in an efficient and cost-effective way,” said Alwyn Pretorius, General Manager at Infinitus Reporting Solutions. “You have no choice but to streamline systems of reporting and you will always need to automate.”
The challenge is that no two companies will ever extract the same amount of benefit from implementing the same technology in the same way and will never need the exact same functions and features the software offers. Users will likely navigate and use the software differently, because the processes, skillsets and risks within each business are always different.
To tailor a solution to the specific people, processes, circumstances, skillsets and risks of an organisations, and include the line items, calculations, branding, colours and flow that the stakeholders demand from the final output reports and presentations, the ability to customise financial reporting is a must.
When it comes to deploying technology to increase efficiency, the biggest challenge is striking the right balance between allowing for the customisation capabilities that Excel and other manual applications make possible, and the automation efficiencies that many reporting software solutions claim to bring to the table.
Use technology to your advantage
Employing technology is a surefire way to overcome the obstacles that many finance teams face in terms of how to better utilise their time. Implementing the right software is key, not only to fully automate the entire data collection process, but to seamlessly consolidate data to a group view.
Finance teams should be provided with extensive drill-down and analysis capabilities and the ability to design new reports in different formats for different stakeholders on an ongoing basis. This will ensure the finance professional’s time in a business is being used most efficiently.
Time is money, as they say, and the importance of how it is used within a business environment and by corporate finance teams cannot be understated. Giving careful consideration to how time is allocated within the four reporting phases in any business environment and implementing the right software to optimise and streamline these processes, is crucial. It’s not a matter of saving time, but what you do with the time you have that matters.
END
