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Turning Income Statements, Balance Sheets into Faster Analysis

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Handing off the baton in the relay race of finance
July 30, 2020

Every month, it was like clockwork. Once the consolidated trial balance wrapped up, our accounting and finance teams would be off to the races. I like to compare it to a relay, except in this case, you're handing off the baton to multiple runners at once so they can all start the next leg. 

First up: accounting would have to prepare the income statement and balance sheet. These two financial statements served as the foundation of a dozen other sets of analysis and monthly reports—from the statement of cash flows, to flash reports, all the way to the CFO deck.

In my previous life, our organization maintained financial data in more than 700 general ledgers and systems. We had processes in place to combine this information, but it was no small feat.  As you can imagine, the process was tricky to navigate, time-consuming, and involved a lot of people. It's just one of the many reasons why we decided to use the Workiva platform to streamline our analysis and reporting, but I know other teams that aren't as lucky.

Now, not every organization is this complex, but managing data regardless of whether you use one system or hundreds of systems is a challenge. In fact, C-level and financial executives say the lack of confidence in the accuracy of their financial figures is due to a dead heat between being overwhelmed by so many data sources and human error. The process of preparing and analyzing the income statement and balance sheet is an instance where we see significant and time-cosuming manual work. And unfortunately, these financial statements are the starting point for the majority of analysis performed in an organization.

While the income statement and balance sheet are coming together, our finance relay runners start their preliminary analysis. This is equivalent to running around in circles while waiting for the baton. The finance team works off in-process data they receive from the accounting team to start. This means asking accounting for updated "preliminary" data routinely during the close.  One edit, misstep, or late addition to data—such as an intercompany adjustment—could mean analysis is no longer up to date. When it got down to crunch time, I could be reaching out to my controller three or more times a day for updated numbers.

Besides finance's analysis, other critical financial statements are dependent on the finalized income statement and balance sheet, including the infamous statement of cash flows (by far my favorite because "cash is king"). Therefore, similar to finance, our cash flow owners are getting anxious waiting for the baton, working off preliminary data that is constantly updating and also reaching out to that controller multiple times a day.

Let's go back to our relay race. Our income statement and balance sheet owner is sprinting with the baton. The other teams are running in place while they wait for the handoff. Meanwhile, they keep asking the income statement and balance sheet runner for updates on their progress. This sounds like a fun race, right?

The manual and disparate nature of this process requires everyone to constantly be in tune and overcommunicate. Unfortunately, it's difficult to pause and breathe when you're running non-stop. This is where we tend to see process breakdowns and errors from manual steps, leading to the use of outdated and inconsistent data.

Regardless of whether the process goes smoothly or you have to restart multiple times, the rest of the timeline doesn't change. Here are four strategies to accelerate that first leg of the monthly reporting race—the income statements and balance sheets—so you can create more time for analysis.  

1. Connect your data instead of collecting it manually

A good rule of thumb for faster financial statements each month is setting up schedules before the start of your next close period. You can reduce inefficiencies of waiting, and hold each other accountable. Make sure to review these schedules with all contributors and stakeholders in your process. 

But if you really want to fly, try using a platform that can connect to multiple general ledgers and systems to automate data pulls directly into your analysis and reports. For example, with Workiva, you can connect to your ERP to pull in your consolidated trial balance or entity trial balances and automate much of the analysis required to prepare and organize your income statement and balance sheet. This also reduces the biggest risks of each handoff: sharing Excel files which can contain outdated, inaccurate, or incomplete data. 

2. Map your accounts so they automatically populate

In the past, you might have had to combine data across multiple spreadsheets by hand or through vlookup formulas. That's simply not the best use of your time when you're dealing with multiple systems or offline datasets. Regardless of whether you're using one system or a thousand, best practices suggest automating this tedious task.

The Workiva platform has a data preparation layer that enables you to set up and maintain account mapping and establish hierarchies in a connected spreadsheet. This allows you to combine various datasets quickly and efficiently so information populates automatically each month. No reassembly required. 

3. Bring teams together in a virtual workspace

Whether you're in the office or working from home, nothing should slow you down. Collaborating in a cloud platform means everyone can work at the same time, with the same data. Within the Workiva platform, you can set view/edit/ownership permissions for every document, spreadsheet, and even cell, so your crew can divide and conquer without accidentally overwriting the source data. Plus, you can assign tasks and manage sign-offs and certifications to track progress all without ever leaving the platform.

4. Let the analysis begin

Obviously I'm biased, but this is my favorite part. When we started using Workiva, there was no more waiting. Our data was always up to date and we were connected to contributors across our organization. Our team was able to conduct preliminary analysis with live numbers. And even if there was a change, we could adapt quickly and focus on the new information—not starting from scratch. With Workiva, I could also easily set up conditional logic so that if a number changed, my analysis and commentary changed with it.

Turn your financial statements around in record time 

Each month, accounting and finance are all running toward the same goal—telling an accurate company story to our stakeholders. The quicker you can deliver the income statement and balance sheet, the more time the rest of your team has to run the race. Plus, you relieve the burden of manual work and remove the risk of handing off bad data.

We can show you how easy preparing your income statements and balance sheets can be. Ask for a demo and see how connected data can help you cross that finish line faster than ever.

About the Author

Dominick Fatibene, Senior Product Marketing Manager at Workiva, works exclusively with controllership and financial planning and analysis (FP&A) organizations to identify and support simplified internal financial reporting approaches that reduce risk and drive efficiency. Prior to joining Workiva in 2018, Dominick spent seven years at General Electric, holding various positions across finance, including operational finance, global and operational controllership, internal audit, and corporate FP&A. Dominick has been involved in all aspects of finance, including entity and segment accounting, consolidation, strategic planning, earnings, investor, and board reporting. Dominick was a member of GE’s prestigious leadership programs, including the financial management program and corporate audit staff.

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