Digital transformation is accelerating the pace of change in businesses across the globe and finance heads need to raise their game. Stakeholders demand real-time information and faster decision-making tools, meaning the pressure for finance heads to report timely information is immense.
The era of a financial close taking days or weeks are gone. Speed and efficiency is paramount and businesses know that those who can deliver a fast month-end close and accurate reporting are going to improve their business and lead their respective industries. CFOs are no longer just number crunchers they have become forward looking, strategic, data-driven executives, and this had happened with the use of technology. Modern financial consolidation software now goes beyond the bounds of traditional group reporting and extends into performance management and operations.
A recent McKinsey CEO study reported that finance executives identified three key drivers necessary for business success:
1. Faster decision-making mechanisms
Finance now needs to be more adaptable, more automated, more controlled and more agile. Financial close software can do all this and drastically reduce the time to close and produce finance packs, often reducing the reporting timescale by several days. Budget cycles can be replaced with rolling forecasts, meaning that real-time information is always available to influence operational decision making.
2. Increasing use of technology
When automation is applied there is improved data accuracy because the opportunity for manual error is completely removed. Enhanced consolidation and reporting tools also enable a leaner head office function, reducing costs and freeing up team members for real-time accounting review to improve process and operations.
3. Improving Collaboration
Businesses that employ consolidation software have better commercial insight across the business units, providing one version of the truth. This enables them to streamline and consolidate business processes across many functions in real-time.
The biggest issues for finance in group reporting
Globalisation, changing regulatory requirements, more complex intercompany transactions, and increasing M&A activity have increased the complexity of group financial consolidation for both statutory and management reporting. Finance’s additional challenge is delivering on the increasing requests for more timely 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. One of the biggest issues for a financial close relying on spreadsheets is the amount of checking and verification of data that needs to take place. Once the data has been consolidated it needs to be checked, manually adjusted and then re-checked with every iteration prior to distribution. This is not timely or cost effective and is extremely tedious for those undertaking the task,
Three key financial processes that need consolidation
There are both common and unique challenges that financial consolidation software can resolve, within the three broad categories of consolidations – actual results, budgets and forecasts, and operational data.
Problems of consolidating actual data can come in many forms, where companies are global then aligning time zones for information cut-off can be problematic. Incomplete data sets from different regions, or regulatory dis-alignment across jurisdictions may require extensive and time consuming manual adjustment.
Completing monthly rolling budgets and forecasts is a struggle when organisational or operational changes occur and are not updated in unison across departments.
Operational Data Consolidation is virtually impossible for global entities spread across multiple time zones and locations. Spreadsheets are always out of date and not robust enough to cope with real-time operations because of the time taken to update them.
How modern financial consolidation technology can bridge the gap
Finance teams are under pressure to add more value to the business and improving finance systems is the key to this challenge. Fundamentally, systems need to be more adaptable, more automated, more controlled and ready to flex when the business requires it.
Consolidation software can forecast updates; deliver improved management reporting, run business scenarios and simulations, giving closer monitoring of cash forecasts which in turn will impact the bottom line. Finance teams have better tools to support the business and can direct the business to improved financial performance in a timely way.
Few activities in an organisation are more critical than financial consolidations and close. By updating its financial consolidation software and processes, a business can modernise the finance office, transform the business processes, increase the speed of reporting and help create competitive advantage.
Tagetik – Leader in Financial Consolidation Software
Global businesses are constantly looking for value, the market-leading capabilities available with Tagetik’s Financial Consolidation software include:
- Process efficiency & automation – The software instantaneously validates, reconciles, and can run calculations using an in-memory driven consolidation engine.
- Better controls – The consolidation cockpit allows users to monitor each consolidation step and analyse the result through the consolidation engine.
- Internal benchmarks / sharing best practices – The software contains audit Logs which capture and track changes to journal entries, metadata, adjustments, narrative, calculations, and other information.
- Regulatory tools – The software can 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.
- 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.
Modern financial consolidation tools don’t just consolidation, they provide a platform to meet objectives for financial and management reporting and planning. And they also help finance teams be better business partners.
As well as being a core financial platform Tagtik’s functionality includes forecasting and planning capabilities and is recognised as a leader and visionary in the sector bringing its partners best in market, pre-packed, quick to deploy solutions.
Gartner ranked Tagetik’s consolidation and close software as a Leader in the 2019 Magic Quadrant for Cloud Financial Consolidation Solutions.
AIS Consulting – Your Transformation Partner
If you are looking to revamp how you do things and are looking for technology to assist, AIS Consulting can help. AIS partners with CCH Tagetik to offer finance transformation and software implementation leadership. It can help you replace legacy systems with speed and agility whatever the size of your project. Before diving into requirements and design, a thorough project initiation phase will ensure the project’s critical success factors are defined, and a plan for implementation is developed making sure any potential black hole for IT spending along the way is minimised.
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%.