Given today’s rapidly changing world and the unpredictable nature of many industries, companies are having to rely more and more on financial and operational data to inform strategic decisions. Finding a financial reporting solution that meets the business needs of today – and responds to the still-developing requirements of tomorrow – is therefore paramount to an organisation’s profitability and sustainability
Many organisations find themselves overwhelmed by the reporting complexity that comes with business growth. While multiple entities, divisions, business units and cost centres across borders might be most companies’ preferred position, for the financial director and his team responsible for consolidating data, the complexity it generates can be something of a reporting nightmare. Indeed, such an expansion very often far outstrips the collating and reporting capabilities of the legacy spreadsheet and standalone accounting applications in use right now.
In addition, finance departments have to balance time and resource constraints while at the same time trying to streamline operations and meet more compliance requirements than ever before. And so begins the quest for a financial consolidation solution, only to realise that consolidation solutions can be complex, expensive and time-consuming beasts in themselves.
The question soon arises as to whether it is even possible to find a consolidation solution that cuts through all these ‘headaches’ or if the organisation will have to compromise in some or other area because no solution designed for real-world reporting actually exists.
Below are eight real considerations that organisations should be looking out for in order to modernise financial consolidation.
1 Real functionality combined with simplicity that enables effective financial consolidation, reporting and planning
Ideally, the consolidation solution should be able to provide all the financial functionality, including data collection, consolidation and reporting across multiple cost centres in a simplified way. Streamlining and automating this functionality allows the finance department to apply the technical expertise and skill they have been trained and employed to provide, without the hassle of having to deal with ineffective, complex and time-consuming collating and reporting processes.
2 Bigger is not necessarily better, so look local
Although large international software solution brands have their benefits, they are not always the best solution for expanding organisations. Besides having to deal with foreign currencies and different time zones, choosing an international solution provider does not always give you the development and support turnaround that smaller, local, specialist solutions are able to provide.
Local providers are also more likely to understand the local operating context, business legislation and new compliance criteria in effect, such as King IV.
Furthermore, having to join an international queuing system for post-implementation support can put an organisation at a distinct reporting disadvantage.
3 Be aware of time, scope and project creep
To maximise efficiency and successfully control project scope and cost (during and post-implementation), organisations should preferably manage their own financial consolidation as opposed to leaving it – or parts of the process – in the hands of the solution provider.
Organisations should insist on defining fixed scope, time and cost, and thoroughly investigate the service provider’s track record before committing.
4 Fancy bells and whistles often come at a price
It is also important to bear in mind that more expensive solutions are often just that – more expensive, and not necessarily superior. Consider whether a solution’s fancy bells and whistles are a ‘nice to have’ or if they offer real core reporting advantages that will add more value to the bottom line, such as being able to customise report formats, and publish aggregated and consolidated results to Excel if required.
5 Self-maintainability saves time and money
Significant time, energy and cost savings can be achieved by opting for a solution that is completely self-maintainable.
Organisations should also possess the ability to control and manage the reporting cycle in terms of complexity, size or reporting applications (management accounts, budgets, forecasts, year-end reports, etc) without having to depend on external consultants.
6 Watch out for resource-heavy solutions
Some consolidation solutions require extensive resources, including hardware, software and expert skills, to ensure that the IT infrastructure remains compatible with the new solution. These additional resources deployed by the IT department can unexpectedly and significantly drive up the internal costs of reporting.
7 The hidden cost of training and change management
It is important to research which solution has the highest adoption rate – and how much training and time will be required during and after implementation.
Once again, time equals money. Implementation costs can end up being two to seven times higher than the original cost estimate if the solution provider has quoted based on a minimum set of criteria, knowing full well that a client’s requirements may change and ongoing support will be necessary post-implementation.
8 A one-size-fits-all solution is possible
The majority of solutions out there are useful for specific applications, such as budgeting or forecasting, but only a few allow you to see the full picture.
Twenty-first-century companies need a solution that encompasses financial consolidation, reporting and planning.
Existing accounting software packages or enterprise planning (ERP) platforms often also lack the flexibility required to tailor report formats for specific collating, consolidating, reporting and planning needs. Data collection can be automated with the right solution, removing the operational, continuity and governance risks frequently associated with spreadsheet solutions.
The consolidation solution should also be able to deliver value on an ongoing basis. No matter how big or complex a business, the solution should be flexible enough to be scaled to meet the organisation’s requirements. And as the business expands, you will quickly realise that reporting is crucial throughout the process when moving from a starting point to a position of expanded services, reach and real success.
Remember, it is critical that you choose a solution that fits the company’s culture, maturity and business objectives. You also want to regard the service provider as a trusted partner, so find commonality in focus, values and goals.
While there is much to be considered before selecting a consolidation solution, it is ultimately the right combination of human capital, experience and technology that will ensure success not only for the CFO and his reporting team, but for the entire organisation going into the future.
AUTHOR: Anthony F R (Rhys) Robinson PhD is Executive Director at Infinitus Reporting Solutions