BlackLine Home page BlackLine home page
Solutions
Solutions
Financial Close Management
Financial Close Management
Overview
Overview
Account Reconciliations
Account Reconciliations
Task Management
Task Management
Transaction Matching
Transaction Matching
Journal Entry
Journal Entry
Compliance
Compliance
Variance Analysis
Variance Analysis
Smart Close for SAP
Smart Close for SAP
Accounts Receivable Automation
Accounts Receivable Automation
Overview
Overview
Cash Application
Cash Application
Credit & Risk Management
Credit & Risk Management
Collections Management
Collections Management
Disputes & Deductions
Disputes & Deductions
Team & Task Management
Team & Task Management
AR Intelligence
AR Intelligence
Intercompany Financial Management
Intercompany Financial Management
Overview
Overview
BlackLine Intercompany
BlackLine Intercompany
By Organization Size
By Organization Size
Midsize Organizations
Midsize Organizations
Large Enterprises
Large Enterprises
By Industry
By Industry
Banking & Financial Services
Banking & Financial Services
Consumer Products & Services
Consumer Products & Services
Energy & Raw Materials
Energy & Raw Materials
Healthcare & Life Sciences
Healthcare & Life Sciences
Manufacturing
Manufacturing
Retail
Retail
Technology, Media & Communications
Technology, Media & Communications
See All Industries
By ERP
By ERP
SAP
SAP
Oracle
Oracle
Oracle NetSuite
Oracle NetSuite
Microsoft Dynamics
Microsoft Dynamics
See All ERPs
Customers
Customers
Customer Success
Success Stories
Success Stories
Collaborative Accounting Experience
Collaborative Accounting Experience
Modern Accounting Playbook
Modern Accounting Playbook
Training & Education
Training & Education
CUSTOMER SUPPORT
Global Support
Global Support
Developer Portal
Developer Portal
BlackLine Community
BlackLine Community
Resources
Resources
Events
Events
Upcoming Webinars
Upcoming Webinars
On-Demand Webinars
On-Demand Webinars
White Papers
White Papers
Blog
Blog
Accounting Glossary
Accounting Glossary
Global Support
Global Support
About
About
Company
Company
About BlackLine
About BlackLine
Leadership
Leadership
Diversity, Equity & Inclusion
Diversity, Equity & Inclusion
Environmental, Social & Governance
Environmental, Social & Governance
In the News
In the News
Press Releases
Press Releases
Investors
Investors
Awards & Recognition
Awards & Recognition
Careers
Careers
Partners
Partners
Consulting Alliances
Consulting Alliances
Solution Provider Partners
Solution Provider Partners
Software & Cloud Partners
Software & Cloud Partners
Business Process Outsourcers
Business Process Outsourcers

Record-to-Report

What Is Record-to-Report?

Record-to-report (R2R) is a finance and accounting management process that involves collecting, processing, and presenting financial information in the form of documents that are used by management to perform analysis and review.

The process is conducted in two distinct phases, with the first feeding into the second.

Record is the first phase and involves several steps that serve to properly document all activities, or transactions, that have a financial impact on the business.

Report is the second phase and refers to the collection and compilation of that data into documents that are referenced in evaluation of the business’s overall performance and financial health.

Both phases are equally important. The value of the reports produced in the second phase of the cycle is dependent on the quality of the data gathered and processed in the first phase. It is critical that the entire cycle be well administered, with minimal errors, to support an efficient process that produces valuable insight for analysis.

Record-to-report is an integral element of a well-run business. It relies on timely and accurate accounting data which is then used to produce documents that inform high-level evaluations. Those evaluations support strategic thinking and decision-making, and allow stakeholders to make detailed analyses about the business’s operations and its success.

How Does Record-to-Report Work?

Record-to-report is a systematic approach to business accounting. Within the two phases outlined above, a number of steps and processes are executed to complete the cycle.

The first step in the cycle involves the recording of all transactions. This is the building block of R2R. All transactions should be recorded accurately and in a timely fashion. If a business has well-run accounting practices in place, the R2R process will be substantiated by reliable accounting data.

Although they come in all shapes and sizes, transactions encompass the myriad of basic and fundamental activities that are associated with the accounting process. They include such actions as journal entries, receipts, invoices, payroll, and supplier payments.

The R2R process typically also involves a regular closing cycle, usually on a monthly, quarterly, and/or annual basis. To perform the close, the business’s accounting team will review, record, and reconcile all account information to confirm that the data is accurate for the period in question. Closing accounts allow the business to track financial activity within a well-defined time period. This ensures discipline in the recording process and equips F&A teams to evaluate patterns from one reporting period to the next.

As the final step in the record phase of the cycle, the accounting team will sort and consolidate all the data. All suspense accounts should be cleared or eliminated. Subsidiary ledgers should be journaled to the general ledger, and all intercompany transactions eliminated.

To execute the second phase of the cycle, the accounting team will use the data gathered and organized in the first phase to produce various reports. These can include balance sheets, cash flow statements, and income statements.

A balance sheet outlines a business’ total assets, liabilities, and stockholder equity for a specific period of time. The income statement, or profit and loss statement, summarizes total revenues and expenses incurred by a business and shows the net income or loss (profitability) of those transactions.

The cash flow statement summarizes all inflow and outflow of cash. Unlike the income statement, it doesn’t consider non-cash activities like sales or purchases on credit or depreciation.

The three reports are often combined in one financial statement package. These documents provide the basis for management review of the business.

FAQ

What Are the Benefits of an Efficient Record-to-Report Process?

Record-to-report confers several benefits to a business or company. Having reliable data presented in a standard format allows businesses and their stakeholders to perform comprehensive reviews of the business. These reviews support important decision making and strategic planning for the business.

The R2R process also helps a business comply with financial regulations. Having a systematic process for gathering data and presenting it in standardized forms enables the business to comply with various regulations at both the federal and state levels.

States can have different laws and requirements, so having a consistent process for collecting and presenting data gives business leaders the confidence to respond to regulations that can vary from state to state.

The documents from record-to-report also help a business prepare for and comply with tax requirements, as well as minimize its tax obligations.


What Are Some of the Challenges of the Record-to-Report Process?

As important and helpful as the record-to-report process is to the business, it also can be challenging. In today’s fast-paced, digitally driven world, a business faces a number of challenges related to the data that forms the backbone of R2R.

Gathering data from different sources and platforms that is unstructured and in varying formats can present a challenge for an organization to process. Collecting and consolidating the vast amounts of data can also be a tedious endeavor. Finally, validating and reconciling data is an important step to ensure the accuracy of the reports that are generated.

However, today’s digital world provides businesses with solutions to make the record-to-report process more efficient. Sophisticated software platforms enable organizations to work through many of the challenges of record-to-report.