With continuous advancements in technology, enterprises are increasingly adopting automation tools for several business areas, especially for the finance department, where they generate large-size financial data.
As a business’s financial information contains several aspects that usually make it vast and sometimes complicated, many corporate finance teams are moving from manual preparation of financial statements to automatically generating financial reports.
If you are still adhered to traditional, manual practices for producing financial reports, you might want to consider financial reporting automation and its advantages toward overall business financial management.
An Overview of Financial Reporting
Financial reporting includes financial results a business discloses to its management, external stakeholders, and the public.
Financial reporting generally includes:
- Financial statements – income statement, cash flow statement, balance sheets, etc.
- Quarterly and annual reports
- Revenue-related press releases
- Financial reports that companies submit to government agencies
Financial Reporting Automation
The entire process of generating these reports often becomes monotonous due to manual, repetitive, time-consuming tasks. That’s why more and more companies are shifting toward financial reporting automation.
Automation-empowered financial reporting tools help streamline processes that consume a lot of your finance teams’ time and effort, leading to better finance operations.
Let’s now discuss how financial reporting automation can solve different problems your finance team often encounters.
Errors in Reports
Manual processes cannot ensure complete accuracy in reports because humans are prone to errors. Even if you get your best team member with an eye for detail, there are still chances of common mistakes. When it comes to financial reporting, even the smallest inaccuracies can lead to costly repercussions – fines/penalties.
With technology, you can automate error-prone activities like data entry. Besides this, it enables you to clearly define protocols that everyone must follow and select personnel who can access the sensitive financial information of your company. This will prevent errors and help you keep track of transactions and user activity in real-time.
Data Transparency Issues
Having financial reporting automation tools in place, you can link all your financial results to the raw data sources, improving data transparency and availability. Moreover, when data is uploaded automatically on a system, you can see your company’s critical financial stats as soon as transactions occur.
These tools (with a user-friendly dashboard) can deliver a detailed reporting level, helping you prepare for the challenges your company faces.
Absence of Comparison
Some financial reports typically include comparison columns; in the absence of calculated comparison, readers will need to calculate the difference either mentally or using a calculator. Both ways consume a lot of time, and there are always chances of mistakes.
Here, automation tools can do a great job. These tools can automatically calculate numbers accurately and help your finance team add compared data columns, allowing you to spend time studying the reports rather than crunching numbers.
Manually producing financial reports eats up valuable time and can be tedious at times. With automation, you can combine data collected from various sources and generate reports in less time. This can also help cut costs significantly; team members burdened with manual tasks can reduce overtime, especially during the busy season, and when you have tight reporting deadlines.
Adding automation to your financial reporting process can be the next best decision you can take to enhance your finance department’s efficiency and productivity.
Less Time for Financial Decisions
Apart from working as a financial expert, CFOs today are responsible for sound decision-making toward better financial management. By implementing automation to create financial reports, which will boost your finance department’s efficiency, you and your team members can free up some time to focus on other important jobs.
With this extra time to observe and discuss, you can work on generating data-driven, valuable insights that will help you make result-oriented financial decisions, driving your business toward growth and expansion.
High Paper Costs
Corporate offices usually use a lot of paper. When it comes to financial statements, finance departments need to send different reports in multiple copies to provide the information to numerous recipients, i.e., management, stakeholders, government agencies, press, etc.
Instead of getting each report printed and organizing them in different hard paper files, you can save a lot by refusing paper use. System-generated reports in digital format can not only reduce or eliminate the use of paper but also offer a myriad of options to present data in a manner that makes it easily understandable. Going digital for financial reports enables you to cut paper costs.
Costly & Complex Implementation of Automation in Financial Reporting
Many companies are reluctant to try innovative financial management solutions available in the market as they are comfortably familiar with traditional, manual processes. Much of the pressure comes from the costly and complicated process of implementing new technology.
For instance, adding to the cost of a software subscription, you might hire more people having skills in utilizing the software or invest in training your in-house accountants. Instead, you can simply outsource to a trusted accounting service provider having exceptional skills, offering software solutions at affordable costs, helping you save money you would otherwise invest in recruitment and training. Besides, your outsourcing partner will use your software/system remotely, ensuring complete control and monitoring remains in your hands.
Here are a couple of tips you can consider while implementing automation for financial reporting.
Select an All-in-one Solution for Financial Reporting
When choosing software for automating financial reporting, consider selecting one that offers different features to meet all your reporting objectives, including monthly/quarterly reports and statements that you will be sent to regulatory agencies.
Make Your Reports Easily Understandable
While you might prefer a program that processes reports faster, it is equally important to select one that allows you to prepare reports, for which readers would not need to spend much of their time understanding the information inside. Choose software that offers analytics tools and creative data visualization features.
Today’s advanced reporting software programs can offer customized tools to improve content, style, and formatting to enhance the overall financial reporting quality.
In a fast-changing business environment, companies must review their processes, both operational and back-office, in order to ensure they remain at the forefront in their specific industry. Financial reporting and budgeting are critical business processes; to efficiently manage these processes, finance teams need to handle complex functions such as extraction, conversion, organization, appropriate utilization of financial data, preparation of budgets, statements, and reports distribution.
While it might seem intimidating to implement automation for all the complicated and time-consuming finance functions, modern, cost-effective software solutions offer several features that can help optimize your finance team’s productivity, helping you make better budgets and strengthen your company’s capabilities toward effective, fruitful financial management.