As companies start to immerse themselves in year-end processing and finance teams around the world begin to burn the midnight oil, thoughts will once again turn to why it all takes too long – and with good cause. Despite the vast sums of money that are lavished on financial reporting processes, finance teams routinely complain about the quality and timeliness of management information, inadequate process visibility, and the difficulty of keeping to ever more stretching reporting deadlines.
But underneath the obvious complexity of financial reporting, for example, the intricacies of international financial reporting standards and the convoluted organizational hierarchies lies a fundamental truth – which is the lack of even basic process support.
In common with many other business processes, the typical corporate finance organization relies on a hotchpotch of informal communication methods, such as email, telephone calls, ad-hoc meetings and the ubiquitous spreadsheet to manage period-end close tasks and prop up the reporting process when things start to go wrong.
Unfortunately, commonplace productivity tools such as Microsoft Outlook and Excel sit outside of the formal reporting process, placing the finance function at a disadvantage. In effect the finance organization occupies two distinct and unconnected worlds, operating parallel processes.
On the one hand, financial information (structured data) is communicated through the group consolidation application, but task management which is essential to efficiently marshaling information along the reporting supply chain remains out of scope.
Worse still, the finance organization is effectively confined to operational silos where each reporting unit in the same organization is cut off from the other and the key processes in which they are stakeholders. And it is this ‘disconnect’ between the finance organization and the process that makes it impracticable to make inroads into the process, share best practices and respond to change.
Modern finance functions are turning to digital technologies such as the cloud and mobile to standardize the process and help them reassert control over close management. New cloud-based task management applications provide a readily deployable platform for collaboration in which the global finance function can define, monitor and manage the tasks necessary to bring the close to a controlled and timely conclusion.
But more than this, a shared environment in which all of the modern finance function has visibility of the process tasks, (what causes delays and how these can be rectified) provides the basis for a process of continuous improvement – so that next period-end close will be different.