Avoiding fiscal fiascos: key concerns for year-end financial reporting

In financial reporting, both throughout the year and at financial year-end, it’s not a matter of saving time, but what you do with the time you have that matters.

With financial year-end looming for many South African businesses, corporate finance teams responsible for year-end consolidation and reporting are either dreading what’s to come or moving forward confidently. 

The difference between the two hinges in great part is on how each business’s finance teams spend their valuable time in the reporting process. In environments that take a manual (spreadsheet based) approach, finance teams are likely spending the bulk of their time collecting and consolidating data from multiple sources, instead of focusing on the analysis and presentation of an organisation’s results and forecasts.

On the other hand, those that have employed the appropriate software technology to not only automate these time-consuming processes but allow for the seamless consolidation of 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 – especially during year-end financial reporting processes, when time is anything but on your side. 

To better understand this concept and visualise how finance teams in many corporate environments are currently spending their time versus how they should be operating for optimal efficiency, 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. 

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.

Of course, finance teams across different businesses will approach these four phases in different ways, depending on the nature of the business and its unique approach to managing financial data. 

Finance teams in corporate environments where a ‘manual’ approach to year-round as well as year-end financial reporting is preferred (typically through the use of Microsoft Excel) spend the bulk of their time collecting and consolidating data. Their time is valuable, and could be better spent analysing financial data and reporting on these findings to the various stakeholders within and outside of the company. This leaves little time to problem-solve and contribute value to the decision-making process. What’s more, manual data collection and consolidation opens the way for human error to creep in, risking good governance in a business. [See figure 1 below for reference]. 

Figure 1: How corporate finance teams spend their time in a ‘manual’ (non-automated) environment

Similarly, businesses that implement reporting software would expect that the time and resources of its employed finance professionals are being utilised as efficiently as possible – that is, with greater emphasis on the analysis and presentation phases. 

The challenge with some of these financial reporting system packages, however, is that a great deal of the features you’re paying for go unused as you take from the software what you need and ignore the rest. That’s because 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 a standardised, ‘uncustomisable’ software package offers. 

To tailor a solution to the specific people, processes, circumstances, skillsets and risks of an organisation, 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. 

That being said, companies operating in the digital era cannot underestimate the importance of embracing technology in every aspect of their business, and this includes financial reporting procedures throughout the year, to ensure year-end reporting goes off without a hitch. 

When it comes to deploying technology to increase efficiency, however, 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 during year-end reporting. 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 [see figure 2 below for reference].

Figure 2: How corporate teams in automated financial reporting environments should spend their time.

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. In financial reporting throughout the year and at financial year-end, it’s not a matter of saving time, but what you do with the time you have that matters.

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