The end of every month and year is the most stressful time for financial controllers and accountants, as they need not only prepare the close in a timely matter but also must ensure a high level of quality. Collecting data, reconciling, assuring data quality and finally consolidating and creating reports on that data is not only frustrating but also time-consuming.
A Financial Performance Management (FPM) software can provide a solution to create timelier and more efficient processes. And that is where the question arises: how can we automate financial processes and speed them up?
This post serves as part two of our Why FPM? series. Have you already read the first blog post, which talks about the advantages of integrating your financial processes? If not, then take a look here:
What are financial processes?
Let us have a look at the financial closing and reporting processes. The process chart below displays in detail how financial processes in companies can look like. These workflows usually start at the local accounting department of every entity of a group. They need to provide their financial data to the group. Once the data has been sent, it needs to be reconciled and validated. In case of inconsistencies the previous process steps are reiterated until the minimum level of data quality requirements is met.
As soon as the data quality is at a satisfying level, the financial statements are finalised, and statistical ledgers are set up. Consolidation will then be kicked off with the IC reconciliation. If any IC differences occur, they need to be solved with the local accountants and the process starts over again. Once the consolidation is through, reports can be generated and presentation for reporting purposes will be created.
What are the benefits of an FPM software to speed up financial processes?
An FPM software supports accountants and controllers to shape this process more efficiently, improve data quality and in general helps with automating financial processes.
In the following, we will give you an overview on the top 4 benefits an FPM software provides if you plan on speeding up your financial processes.
Benefit 1: Single source of truth
By integrating local ERP systems to a centralised FPM solution, a single source of truth is established. Therefore, the need for exporting data to Excel or any other software no longer exists. Manual labour is decreased and sources for formatting errors are minimised. As the financial data can be loaded to the FPM solution overnight, there is no additional effort and financial reporting processes at the local accounting level are being optimised.
Having fully integrated ERP systems to your FPM solution will allow you to drill into any value onto transaction level in real time. This supports you when reconciling or explaining data to executive management or third parties. In general, it increases the transparency of your data and automates data flows.
In case any issues occur in the data reconciliation or validation, local accountants can make changes directly in their ERP system and immediately reload the data.
Benefit 2: Decentralised data collection and reconciliation
Even though the collection of data is more efficient by connecting ERP systems to an FPM software, the data still needs to be reconciled. By decentralising the reconciliation, inefficiencies can be prevented. Some FPM systems deliver a tool to support the decentralized data collection (i.e. LucaNet.GroupReport)
Local accountants are now able to provide additional comments, such as schedule information and statistical figures, e.g. headcount within the FPM system. Collecting all this information within one tool helps automatise validation checks which now do not need to be calculated manually. This gives the local accountants immediate feedback on the quality and validity of the data entered. It ensures an improved data quality and lower struggles at a later stage of financial processes. If the data quality increases, less complications will occur throughout the financial process. Also, calculation such as cashflows can be automatised as they use the data from the balance sheet and P&L.
Benefit 3: Automated consolidation processes
Once all data has been reconciled and validated, consolidation processes such as elimination of income and expenses or elimination of intercompany debt can be automatised. Having a clear and transparent data flow will let you explain consolidated figures faster and easier. Separate reports on a management view and statutory view can be created simultaneously as well.
Benefit 4: Standardised reporting
The whole financial close process usually ends in setting up reports for executive management and third parties. Since all data is within one single source of truth, reports can be standardised and automated as well. Using an FPM software lets you either report within the tool or export all data to third party business intelligence tools. Using an API to additional tools, such as Power BI, can simplify this process and speed it up even further, as no manual effort is needed. This lets controllers and accountants do real time reporting.
Speed up your financial processes now
A clear process and data flow with the help of an innovative FPM software is a huge benefit to optimise data quality at the very source and speed up other processes. The repetitiveness of these processes can be decreased. Now, there is finally sufficient time for evaluating results and tackling other topics.
More information is on our detail page:
In the upcoming blog post of the series Why FPM? we will talk about why investing in an FPM solution pays off. Stay tuned!
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