Going the Distance: Achieving
Record-to-Report Peak Performance

It can be a long and winding race from record to report. Many finance and accounting (F&A) teams deal with gaps in process, technology, and data. They resort to manual brute-force spreadsheet work to reconcile transactions, close the books, consolidate financials, conduct analysis, and generate reports.

That’s at odds with the ideal of the record-to-report (R2R) cycle—getting accurate financial data to management as quickly and efficiently as possible to support informed business decisions.

Traditional R2R activities can amount to perpetual chaos on a deadline, sort of like running a relay race with slippery fingers. Your F&A team didn’t train only to fumble the baton at every handoff. It’s time to explore how to go the distance with speed and flawless execution throughout R2R.

The R2R process spans five key phases of record, close, consolidate, analyze, and report. In essence, you’re transforming raw data into insights for data-driven decisions, recording transactions, substantiating balances, consolidating entity financials, analyzing variances and trends, and reporting to stakeholders. As analyst firm IDC describes the R2R process:

If your foundation is shaky, your financial reporting will be shaky, too. Despite efforts to fortify the foundation, multiple challenges can complicate R2R cycles:

Improving activities across the R2R cycle has become a high priority as companies seek a competitive edge.

Finance leaders increasingly recognize that a convoluted R2R process can bubble up to impact the effectiveness of the Office of the CFO, and ultimately, business performance and profitability.

Your company could find that:

• Business agility is diminished in the face of inflation, tariffs, economic volatility, changing market conditions, geopolitical disruptions, and faster-moving competitors.

  
  

• Slow or misinformed decisions become more likely when management doesn’t have timely and accurate financial statements and analysis.

  
  

• F&A staff satisfaction and retention drop when your team handles heavy manual workloads rather than using their trained skillsets, resulting in costly turnover and unfavorable workplace reviews.

  
  

• Value from M&A activity, from initial evaluations to absorbing an acquired business, is slowed by unanticipated financial and technological complexity and weaknesses in analysis and reporting.

These issues tend to worsen over time at organizations that stick with time-consuming and
labor-intensive R2R that relies on compartmentalized data sets, unintegrated systems, and non-standardized processes.

Forward-looking organizations look to hurdle over risk by automating and streamlining each phase of R2R.

The R2R process is a structured series of five steps that transform raw financial data into accurate, actionable financial reports. Here’s a look at each phase:

1. Record
In the Record phase, financial transactions are captured from all business activities, including sales, purchases, payroll, and investments. These transactions are posted to entity sub-ledgers (e.g., accounts payable, accounts receivable) and then consolidated into the general ledger (GL).

Record occurs throughout the month, and closing adjustments are made during the Close phase to adjust records in the underlying systems. Data validation helps ensure that transactions are accurate, consistent, and properly classified before F&A moves on to the next phase.

2. Close
The Close phase is critical to ensuring financial data is accurate and complete. The focus is on verifying the data recorded in the general ledger, reconciling accounts, and resolving any discrepancies before finalizing the books for a reporting period (typically performed monthly).

The Close process depends on account reconciliations that verify balances in sub-ledgers match those in the general ledger, along with investigating any discrepancies. Journal entry adjustments are made for adjusting entries that are needed for the end of the period, such as correcting errors found during reconciliation before ledgers are finalized. In the final step of this phase, approvers confirm that the financials are accurate, with no outstanding issues that could affect reporting. The books are then closed for the period.

3. Consolidate
In the Consolidation phase, financial data from multiple subsidiaries, business units, or departments is aggregated so teams can prepare consolidated financial statements that show a full snapshot of the company’s financial performance.

Consolidation depends on complex calculations for any multi-entity business and can be especially challenging for large or multinational companies operating with multiple divisions or in different geographic regions. It often requires intercompany eliminations (i.e., transactions between subsidiaries) and foreign currency conversions.

4. Analyze
Analysis occurs throughout the R2R process, typically with trending and incomplete data. Once financial data is consolidated, Analysis on complete and accurate data can begin. This is where finance teams review the data to identify trends, variances, and insights that will help stakeholders make informed decisions.

It involves both financial and operational analysis, often comparing actual performance to budgets or historical results. Teams drill into data, sometimes down to the individual transaction, to gain insights to inform the story of business performance. Types of analysis include: variance analysis that examines differences between periods, actuals, and forecasts; trend analysis on changing patterns; and root cause analysis to identify underlying factors.

5. Report
The Report phase involves generating final consolidated financial statements and regulatory reports for internal and external reporting. These reports provide a clear picture of the company’s financial health and may be shared with management, investors, regulators, and auditors via documents, slide presentations, spreadsheets, and other digital formats.

The primary reports are income statements, balance sheets, and cash flow statements. F&A teams provide these statements with the context prepared as part of their analysis. F&A teams also create customized reports for internal decision makers, which may include performance dashboards, KPIs, and financial forecasts. External regulatory reporting is geared to show compliance with state, federal, and international regulations such as GAAP, IFRS, and SOX.

In theory, each R2R phase should be interconnected, ensuring that accurate financial data is captured, validated, analyzed, and reported in a timely manner. The reality is often complex processes and ad hoc workarounds that fall far short of the ideal.

Finance automation software provides organizations with future-ready R2R capabilities that pay dividends out of the gate and over years to come. And with AI-enabled solutions, organizations can equip themselves to achieve new heights in financial management control, efficiency, visibility, and insights.

BlackLine is the only solution that integrates end-to-end R2R activities in a unified, AI-enabled platform. We are recognized by leading analyst firms IDC and ISG, both of which named us as a Leader in their most recent R2R vendor assessments. Ventana Research (an ISG company) named us an Exemplary Vendor and Overall Leader in its 2024 Financial Close Buyer’s Guide.

BlackLine is the trusted and safest choice for finance transformation in virtually every industry.
We partner with top advisory firms such as Deloitte, EY, KPMG, Accenture, Capgemini, and IBM to enable customers to scale up quickly with leading practices across R2R that are accurate, efficient,
and intelligent.

BlackLine is also the only SAP Solution Extension partner in the financial close, consolidation, and intercompany space. Our solutions were specifically chosen by SAP, a BlackLine reseller, to extend SAP ERP and other R2R solutions by offering exceptional capabilities for finance and accounting teams,
with a world-class security infrastructure certified for internationally recognized security standards.

BlackLine's future-ready platform offers a comprehensive suite of AI-enabled applications that automate, streamline, and enhance control over R2R activities, improving accuracy and efficiency through its cloud-based solutions.

Here’s how BlackLine addresses R2R challenges:

Unified data integration. Integrates with systems, including ERPs, to provide a single source of truth for financial data across the R2R process.

Automated account reconciliation. Automates account reconciliations, reducing manual intervention and providing real-time visibility into account status.

Automated journal entry. Automates the creation, validation, posting, and approval of journal entries for improved accuracy and compliance.

Intelligent workflow management. Automates scheduling, tracking, and reporting of R2R tasks, ensuring full visibility.

Intercompany management. Automates intercompany processes from contract creation to elimination, ensuring proper intercompany alignment across entities.

Consolidation. Automates the aggregation of financial data from subsidiaries and related adjustments, ensuring accurate and timely consolidation of financial statements.

Streamlined financial reporting. Automates the generation of balance sheets, income statements, and cash flow statements, ensuring standardized, audit-compliant reporting.

Vertically integrated financial analysis. Centralizes data from close to report for real-time access and drill-down capabilities for detailed analysis of variances and trends.

Compliance and audit-readiness. Automates compliance checks and provides audit trails for every transaction, simplifying audit processes.

AI analytics and agents. Uses AI-driven risk detection, insights, and more to identify trends and anomalies, helping finance teams make data-driven decisions and optimize forecasting.

BlackLine’s AI vision is to deliver meaningful and reliable AI to F&A teams by going beyond the hype. Our AI-enabled solutions automate workflows and repetitive tasks to proactively detect risk, streamline processes, transform data into actionable insights, and accelerate action—all while maintaining the accuracy of your financial data.

BlackLine is continually introducing and enhancing AI-enabled solutions for use cases such as fraud detection and compliance, financial insights, predictive analytics and guidance, advanced transaction matching, and simplifying search and navigation across complex finance ecosystems.

BlackLine is committed to excellence and continuous optimization in an R2R platform that helps our customers achieve future-ready financial operations with three hallmark characteristics.

• Accuracy that supports informed business decisions and compliance

  
  

• Efficiency that enables F&A teams to do more with fewer people

  
  

• Intelligence in analytics and forecasting based on real-time insights