There are many challenges faced by financial institutions when it comes to financial reporting or performance controlling. Most finance professionals find reconciliation at the end of a fiscal a great nightmare, an uncomfortable blend of boredom and stress. Some major challenges in this area include lack of financial performance information, too many spreadsheets, key-person dependency, accuracy and well-timed arrival of monthly management reports, and lack of control over daily financial reports.
A 2-part Answer for Financial Reporting and Performance Controlling
Financial reporting and performance controlling must not be laborious. Instead, they have to be business empowering. An answer to ease the financial closing can be 2-part. First, modern accounting systems out there in the market can deliver most of the aspects on your wish list for financial reporting. Second, special attention has to be paid to the areas that are exposed to risks such as revenue recognition, so that we do not have to keep going back to make adjustments later.
Emphasizing on Both Speed and Accuracy
For a faster close, finance personnel have to spend more time on valuable, satisfying work. They have to focus on speed, without sacrificing accuracy. That is to say, executives who are elsewhere in the business can have faster access to the latest financial information, fastening the reaction to market conditions. This is why most finance teams are considering “continuous accounting” to be the best practice. “Continuous accounting” distributes the workload in the finance department evenly during the accounting period. If tasks related to period close such as reconciliations are completed on a daily basis, there won’t be a spike in the jobs left to do when the period end is nearing and closing the books will not take long. If continuous accounting is implemented well, real-time reporting and a finance function that treks towards a wider business are possible.
A study conducted by Nucleus Research of users of NetSuite OneWorld found a marked acceleration in close times. “Businesses migrating from un-integrated legacy and custom accounting systems to NetSuite OneWorld can expect to accelerate financial close times by 20%,” Nucleus found. “Some customers accelerated time to close by up to 50%. Companies with international subsidiaries or multiple legal entities can expect to increase the efficiency and scope of financial and operational data consolidation.”
Role of a Modern, Cloud-based Finance System
Having efficient people and a well-documented process that is constantly updated and comprises of all the necessary steps to close the books are important. However, smart tools and systems can complement them. A modern, cloud-based finance system plays a big role in aiding companies achieve the aim of continuous accounting. Employing cloud simply means that the executives in the finance department can complete period-end tasks regularly, irrespective of time, time zone, or location, merely by logging in to a device with a browser. The modern, cloud-based finance system that is real time and an element of a suite of applications throughout the business enables a company to automate most of the day-to-day tasks such as journal entries, account reconciliations, and variance analysis that might otherwise require experienced, talented manpower. A cloud-based finance system can be configured to make period-end related assignments available to appropriate people in the team.
More and more mid-market businesses are turning to the cloud model for financial consolidation. Here are some of the measured NetSuite Cloud ERP Benefits:
– 20%-50% Reduction in financial close
– 25%-75% Reduction in invoicing costs
– 10%-20% Improvement in DSO
– 50%+ Quote to cash improvement
– 50%+ Reduction in audit prep time
– 50%+ Less IT costs than on-premise