Financial reporting is a standard accounting practice that uses financial statements to disclose a company’s financial information and performance over a specific period. This is typically done on a quarterly or annual basis. In short, financial reports reflect where the money is coming from, how much money an organization has, and where the money needs to go. It is crucial to conduct accurate financial reports in order to make any business decision. Potential investors and banks will also use a company’s financial reporting to decide if they want to invest or loan the company money.
Having defined financial reporting, and considered its criticality, it should be mentioned that in recent years, a specific high tech innovation has led to serious advancements in financial reporting: automation. The speed, accuracy, cost-effectiveness, amongst other aspects of financial reporting, have improved significantly from increased automation, which is usually implemented through the adoption of an FP&A software. Finance professionals should know what benefits are offered by automating financial reporting, and what potential software options they have at their disposal.
7 Benefits of Automating the Financial Reporting Process
1. Reduced Delays:
Automation can eliminate delays that can occur in reporting to stakeholders and regulation boards with instant report generation. Deadlines are simple when each branch’s data sources are neatly compatible and reporting narratives check the required boxes. Companies are mobilizing faster and more confidently compared to when various checkups in reporting were done manually.
2. Higher Quality Reporting Via Dedicated Error Proofing System:
A dedicated error-proofing system provides a huge advantage when attempting to maximize the quality and accuracy of financial reports. Automation platforms provide automated checks to clear redundant data and reduce risks for manual error. Stacking on real-time alerts helps provide your team an ongoing way to drill down into specific events as they happen, rather than discovering them in the middle of reporting crunch time.
3. Heightened Operational Efficiency Through Redirection of Focus:
Any finance team has a ton to gain when they are able to redirect their focus from error checks and mundane data hunting to high-value tasks. Opportunity costs are substantial when the team is occupied with non-scalable manual number crushing. Finance departments are finding a 100% accurate first-pass of report processing means a compounding leap in valuable output across the whole team.
4. Internal Follow-up For More Insight:
This feature of automation offers more chances to glean more understanding from the company’s periodic performance. Instead of being slowed down by manual, cyclical processing, finance teams are enabled to put their energy into collaborative intelligence. As Deloitte recently stated, “the laborious grind of management and financial reporting today likely won’t exist in the future. People will be insight generators, not report builders.”
5. Saved Time Across the Board:
Manually generating spreadsheet financial reports is a time consuming process prone to human error. Automated financial software can significantly decrease the timeline, combine data from different sources, and create reports in just a few minutes.
Additionally, this sort of software speeds up the process of gathering data and generating reports. There is no need to search for any earlier reports. The system can easily fetch years-old details in under minutes so that the finance team can focus on more important things.
6. Reduction of Associated Fees & Internal Costs:
Automation systems often offer consistent, professionally designed statements that eliminate the need for graphic designers and the associated time delays and expense (as well as the risk of human error).
Handing an electronic file to your auditor that is linked from statements all the way down to scans of supporting documents means they have the easiest to review, most complete year-end file possible. Saving the auditor time translates into reduced audit fees.
Automating vast portions of complex reporting tasks can also reduce over-time related costs. For example, with the use of spreadsheets, the time required to tackle year-end and the associated deadlines means evening and weekend work is inevitable.
For those where overtime is not paid, the weeks of time savings can be invested in other projects/tasks. It translates to "free" weeks of time available for other tasks for the organization or restoring the work/life balance for your dedicated staff.
7. Clean, Compliant, Audit Ready Accounts:
Financial automation tool creates audit trails that allow finance teams to get complete visibility on each of the payouts. With the digital footprint, auditors can get a comprehensive understanding of any payment that has occurred along with the timeline.
Leading Automation Solutions
As evidently shown by these 7 benefits, automating financial reporting is a powerful competitive advantage for any organization. There are a number of FP&A software options that automate various tasks in financial reporting, including CashWeb Community, Pureshare Activemetrics, and DataRails, the latter of which is designed to work in tandem with Excel spreadsheets, while reaping the benefits of automating financial reporting.