Digital transformation and rapid market shifts are accelerating the pace of change in businesses across the globe. Speed is at a premium in all functions, especially financial consolidations, group reporting, and month-end closes.
Outdated information is flawed information. For finance to be a strategic advisor and partner to the CEO and operations teams, more timely management reporting, quantitative and qualitative analysis, and rolling forecasts are required which can be enabled by use of a financial consolidation software.
A recent McKinsey CEO study revealed the CEO’s belief that increasing the speed of their business was paramount for success, and the primary drivers were:
1. Faster decision-making mechanisms
2. Increasing use of technology
3. Improving collaboration
Group Consolidation Challenges and how financial consolidation software can address them
Globalisation, changing regulatory requirements, more complex intercompany transactions, and increasing M&A activity have exponentially increased the complexity of group financial consolidations and statutory and management reporting. Finance’s additional challenge is delivering on the increasing requests for more timely ad hoc reporting and analysis, rolling forecasts, and predictive analytics, with reduced resources.
If you are struggling with your financial consolidation systems and processes because of reliance on spreadsheets and manual processes, you are not alone. Nearly 90% of financial statements consolidated in Excel spreadsheets are wrong.
Three key considerations for consolidation
There are both common and unique challenges that a financial consolidation software can resolve, within the three broad categories of consolidations – management information, budgets and forecasts, and statutory consolidations – and warning signs for each type.
· Legacy consolidation and close-related systems are heavily dependent on IT for even minor updates.
· Consolidation process is separate from the reporting and disclosure processes.
· Multiple products are utilised to meet the variety of consolidation and close requirements.
· Additional resources and time are spent manually reviewing data and calculations due to lack of controls and data validation.
· Post-close analysis takes place outside the systems in spreadsheets.
· Fragmented consolidation process between entities requires manual effort to complete.
Management Information and Reporting:
· Organisational and operational changes create difficulties in the timely completion of the management and group reporting process.
· Difficulty or inability to provide leadership with “on-the-fly” multiple scenario reporting.
Budgets and Forecasts:
· Completing monthly rolling forecasts is a struggle when organisational or operational changes occur.
· Delivery of variance analysis lags management expectations.
· Manual “workarounds” are required when new statutory requirements are issued.· Niche software is necessary to support IFRS disclosure and multi-GAAP requirements, EBA reports, iXBRL in ESEF format, and other regulatory standards.
Modern Financial Consolidation Software
Few activities in an organisation are more critical than financial consolidations and close. But many companies fail to prioritise updating their systems and processes. This is often due to a “devil you know” approach that fears changes to such an essential function. Plus, many companies are challenged to keep up with the day-to-day activities and do not possess the in-house expertise for implementing new consolidation systems and processes.
Financial Consolidation solutions unite the last mile with the first mile of finance. By updating your financial consolidation software and processes, your company can modernise the finance office, transform the process, increase the speed of the business, and help create competitive differentiators. Industry-leading financial consolidation and close software can provide you with a multitude of benefits, including:
· Speed – Automating processes eliminates the time consuming and quality compromised manual processes necessary in legacy systems.
· Single Point of Truth – Implementing an end-to-end solution provides your relevant data and reporting in a single repository.
· Compliance and Control – Utilising one set of data improves IFRS, XBRL, and other statutory reporting.
· Simplification – Removing complexity from the process by enabling users to make system changes, visualise potential changes, and utilise pre-packaged templates.
· Transparency – Gaining more process clarity through automated process monitoring, validation rules, and audit logs.
· Lower Cost Structure – Automating tasks reduces burden on the staff, freeing them for more higher-value activities.
Tagetik – Leader in Financial Consolidation Software
At AIS Consulting, we partner with CCH Tagetik to offer a powerhouse combination of finance transformation and software implementation leadership, and industry-leading financial consolidation and close software. Gartner ranked Tagetik’s consolidation and close software as a Leader in the 2019 Magic Quadrant for Cloud Financial Consolidation Solutions.
“CCH Tagetik’s unified solution combines a single point of truth with financial consolidation and close, packaged regulatory reporting and disclosure management, so finance teams can accelerate the close and support large consolidation projects with ease.”
The market-leading capabilities available with Tagetik’s Financial Consolidation software nclude:
· Process Automation – Instantaneously validate, reconcile, and run calculations using an in-memory driven consolidation engine.
· Process Monitoring – Consolidation Cockpit allows users to monitor each consolidation step and analyse results through the consolidation engine.
· Audit Logs – Capture and track changes to journal entries, metadata, adjustments, narrative, calculations, and other information.
· Regulatory – Perform multiple regulatory consolidation adjustments on the same set of data. All adjustments are stored for easy auditing of IFRS, IAS, and local GAAP, back to the data source.
· Double entry logic – All consolidation and calculation rules automatically create journal entries along with an audit trail, and drill-down ability.
· Data Validation – Diagnostic checks and automatic validation tools ensure consistency during data entry and the consolidation process.
· Calculation Engine – Define multiple consolidation scenarios and rules for underlying levels during the data collection process.
AIS – Your Transformation Partner
AIS Consulting brings 20 years of experience packaged into best practice knowledge, leading technology partnerships, and a tried and tested implementation framework to ensure the success of your financial consolidation and close transformation. You need a transformation partner to guide you through the complex changes required to transform your consolidation and close process. Ensure the success of your finance project by leveraging our implementation experience to gain the maximum return on your software investment. We can help you cut financial consolidation and reporting cycle times by 70%.
In financial consolidations, the race is to the swiftest. While you may not quite reach warp speed, more timely, robust, and transparent consolidations and reporting provide a competitive differentiator for your organisation. With dramatic market shifts, a resilient solution to increase the speed of your reporting to meet the CEO’s and organisation’s needs, and regulatory requirements is critical to the sustained health and prosperity of your company.
Learn more about how AIS can help transform your financial consolidations with our complimentary consulting workshops.