Businesses are under intense pressure to manage the financial consolidation process in a timely and efficient manner. For publicly traded companies, this is particularly important, and yet the task can be challenging even with many established ERP products. Decision makers increasingly require financial statements on a more regular basis to gain better business visibility, as well as meet external reporting requirements. Reporting software is more critical than ever.
Unfortunately, most ERP software does a poor job of producing consolidated financial reports. If you have multiple legal entities running different systems, the challenges of consolidated reporting multiply. Add the nuances of GAAP vs. IFRS reporting, and the process can quickly become overwhelming. Managing all that complexity using manual processes is unnecessarily slow and tedious, often introducing errors.
Specialized Tools for Consolidation Process Improvement
Depending on your industry, you may report to multiple regulatory bodies as well, some of which can span US and international markets. Of course, regulatory bodies aren’t the only entities with an interest in financial consolidation; this process is also essential to providing stakeholders and investors with better information and disclosures about the state of the organization.
The challenges businesses face in meeting these objectives include streamlining the financial close process, integrating sets of financial data without compromising the accuracy of those data, ensuring visibility of the consolidation and close process, and managing costs to remain within budget.
To meet these ever-growing demands, businesses turn to automation solutions that facilitate faster, more efficient financial consolidation.
The Four Benefits of Automation
Some of the benefits of automation seem obvious. Your team can spend less time performing manual tasks and more time applying their skills to thoughtful analysis. Others, though, are less apparent. Here’s how automating your close and consolidation processes can solve some of the common problems faced by corporate finance teams.
- Automation eliminates many common sources of errors. When you rely on manual processes, human error is inevitable. Even your most organized, detail-oriented team member can make mistakes. Mistakes in financial reporting can lead to costly and potentially embarrassing inaccuracies.
When you automate your close and consolidation processes, you can eliminate much of the inevitable human error that arises from incorrect data entry, copy/paste mistakes, or even changes to source or destination file formats that produce unexpected (and erroneous) results when you are creating your intercompany accounts. Automation allows you to better define how protocols are followed and who can access your company’s sensitive financial information. This not only prevents errors but also reduces the risk of fraud by keeping tabs on user activity and individual transactions.
- Automation speeds up the closing process and improves real-time visibility. In the context of a rapidly changing business environment, leaders are eager to get information as quickly as possible, but without sacrificing accuracy. Many have turned to more frequent reporting and planning cycles as a way of increasing business agility and responsiveness. When your organization relies on manual processes to produce monthly reports, the finance team inevitably gets bogged down with tedious and repetitive tasks that consume far more time than they should. Automation removes a great deal of friction from that process, producing results much faster.