The end of the month and year are notoriously stressful periods for the Office of the CFO. A time when speed and quality in preparing the financial statements are essential. From data collection and reconciliation to final financial consolidation and reporting – this process is a real challenge, especially without the right tools.
A financial statements solution is a powerful way to accelerate the entire workflow and boost efficiency. In this article, discover how it does this and which areas it brings significant improvements to.
Key steps to the financial statements process
The financial statements process typically starts in the accounts departments of the individual subsidiaries. They send their financial data to the group headquarters, where it is thoroughly reconciled and validated – a vital step to eliminating discrepancies and ensuring high data quality.
This is followed by intercompany reconciliation. If any discrepancies arise, then these need to be resolved with the local accountants, and the process starts over again until all the data are accurately reconciled. Only then can the financial consolidation be done, reports created, and the whole reporting process finalized.
How a financial statements solution helps you
1. Single source of truth
Integrating local ERP systems into central finance software creates a single source of truth – a unified data hub. There's no need to export data to Excel or other programs, reducing manual efforts and minimizing formatting errors. The financial data can be fed into the software overnight, reducing the workload and optimizing the reporting processes for local accounting departments.
By fully integrating ERP systems into your finance software, you can analyze each value in real time at the transaction level. This makes reconciliation easier, and you can tell managers or other parties exactly where the data come from. Your data are then more transparent, and the data flow is automated.
If any reconciliation or validation issues arise, accountants can make changes in their ERP system directly and update the data instantly.
2. Efficient, decentralized data collection
By integrating ERP systems with your financial statements solution, data collection is made more efficient. But the data still need to be reconciled. A decentralized reconciliation process significantly simplifies this step, with some finance software solutions offering specialist tools for this purpose.
A decentralized reconciliation process, where companies communicate directly with each other without detouring through the holding company, makes manual work smoother and speeds up financial consolidation.
Local accountants can input additional information into the software, including asset registers and statistical data like employee headcounts. Collecting all this information in a single tool helps automate validation checks. Calculations, including cash flows, can be automated using data from the balance sheet and profit and loss statement.
3. Automated consolidation processes
After successfully reconciling and validating the data, your financial statements solution can automate financial consolidation processes, such as income and expenses as well as debt financial consolidation. This ensures a clear and transparent data flow that saves time and guarantees reliability. What's more, reports can be simultaneously generated as part of the management or legal consolidation.
4. Standardized reporting
The financial statements process typically results in reports for management and external stakeholders. Since all data come from a single source, these reports can be standardized and automated. With finance software for the CFO office, reports can either be created directly in the tool, or all data can be exported for use in third-party business intelligence tools. Integration with other tools like Microsoft Power BI can further streamline and expedite this process, as it eliminates the need for manual intervention. This allows for real-time reporting.
