When does manual work become a risk in the reporting process?
First published on Executive-People, 22 November 2019, by Bart van Praag.
Inconsistent, fragmented and controversial. These are words that apply to the method of financial reporting at many companies in the Netherlands. The reasons for this are apparent. Cold fears of companies and sticking to outdated systems ensure that companies continue to take the risk of human error. With fines, costs and reputation damage possible as a result.
Technological progress has played an important role in improving reporting in the financial sector. While traditional reporting was done through manual, paper-based processes that cost an enormous amount of time, resources, and money, technology enabled organizations to streamline processes efficiently, despite the increasing amount of data.
Although the acceptance of digitization has increased, many organizations still limit themselves by using old processes and legacy systems. This is often due to the bandwidth of IT teams and their ability to adopt and manage software. But it can also be traced to the simple reason of familiarity. Many teams prefer the use of old processes and systems because of the ease of working with a technology they already know.
Complexities associated with fragmentation
With some organizations that use existing systems and others that do embrace digitization, financial reporting has become an increasingly inconsistent process. It has become a fragmented mishmash, which means that fines and reputation damage are lurking. Simply because the error margins become larger. A study by Shred-It shows that 53% of C-suite executives and 28% of small business owners see human error or accidental loss by an external party as the main causes of data mishaps.
Fixing a single error in multiple spreadsheets, presentations and reports is a complex and labor-intensive process. To do this and to guarantee 100% accuracy, organizations must spend considerable resources - both in terms of costs and in support of employees. And even then the question is whether the report is error-free.
Use of automation to streamline the reporting process
Nowadays we consider connected cars, houses and appliances as the norm. Nevertheless, many organizations refuse to look at the reporting process in the same way. Via automation you can connect all values - both qualitative and quantitative - with each other across multiple reports, documents, etc. The logical consequence is that you minimize the risk of errors, save money and improve consistency for future use. In addition to streamlining the reporting processes, an overhaul of an existing system with an end-to-end solution can also streamline the process of document consolidation, production, review and approval. This makes the financial reporting process painless and efficient.
More generally, automation offers more benefits:
- Data consistency - EY research shows that nearly 75% of companies rely on more than six different reporting systems - such as ERP, CRM and HCM systems. However, the data within those systems lose their context and consistency when they are exported and disconnected from the source. Linked reports, on the other hand, unite people, processes, and data to deliver accurate reports that are required for internal and external use.
- Collaboration - Since outdated processes and disconnected software technologies are inefficient, organizations often rely on cumbersome manual processes, large teams, external consultants and a variety of single-point solutions to perform important tasks. In such an environment, try to trace the most recent version of each document. This applies in particular to organizations that work in different teams at different locations and in different time zones. Automation can ensure accuracy across the different versions of documents, regardless of time, location or language, and can improve collaboration for fast, reliable reporting to management, investors, regulators and management.
- Accurate Reporting - A common challenge within the industry is the continued growth and complexity of many companies, with an increasing number of employees and data points spread around the world. This wealth of data is then distributed to hundreds of different sources and stored in incompatible formats. It is precisely by creating a single source of truth that organizations can be confident that all documents, presentations, dashboards and reports are up-to-date and consistent, reducing the risks of erroneous information.
- Trust in IT -The integration of a new financial reporting tool or a data conflict tool should involve the IT team, from installation to software upgrades. In addition to being a complex process, IT teams are likely to have to plan several hours of downtime to download and install each update. Cloud-based technologies, on the other hand, eliminate the need for IT teams to deliver software patches and upgrades. Platforms in the cloud are automatically updated in the background, allowing teams to work efficiently and uninterrupted and IT teams can save valuable time to focus on priorities.
The volume of available data and associated regulations will increase further in the coming years. Organizations that want to be successful in this must give priority to transparency, efficiency and verifiability when filling in their files, audits and reports. With future-proof, cloud-based technologies to modernize processes, control and stimulate collaboration and secure access in an integrated environment.
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