Published on the 12/05/2020 | Written by Asavin Wattanajantra
Can working in the cloud make your finance team more effective?…
Is cloud financial reporting a key component for you and your finance team?
Financial reporting is a crucial measure of business performance, and CFOs are charged with producing reporting that is useful to leadership and key stakeholders.
Traditionally, CFOs have been limited to looking backwards through a rear-view mirror. They review financial reports and balance sheets that capture the state of the business at the end of a period.
The world has changed.
Financial reporting is still highly important. However, technology and the availability of data has made it possible for businesses to get real-time information about company performance – and even how the business can perform in the future.
Financial data with context and a clear story can be very useful.
There’s a huge amount of untapped power in what is a legal requirement in most countries.
What’s been the problem with financial reporting?
Financial reporting has always been challenging and time-consuming.
In the modern finance function, end-to-end reporting means carrying out a number of complex tasks with supreme accuracy. Mistakes could make the entire effort invalid.
Your business might be reliant on multiple spreadsheets for financial reporting. But there’s a good chance errors could creep in, while hours of effort are likely spent on keeping spreadsheet reports up to date.
However, it’s not just a spreadsheet issue.
With legacy IT on-premise infrastructure, the increasing complexity of the business can put pressure on systems. This can slow down processes and cause performance to suffer. The IT team might have to do a lot of firefighting, leaving a lengthy backlog.
Financial reporting is crucial to a business.
As well as tracking performance, it’s needed for areas such as regulatory compliance and investor relations. As a result, CFOs could be feeling pressure from the business to provide better financial data.
- A corporate mandate to improve the quality of financial and accounting data
- A management focus on improving the productivity of financial/accounting staff
- Stakeholder demand for financial data access and the need for more regular disclosure (monthly instead of quarterly or annually, for instance)
- A need to augment financial reporting with non-financial performance data.
According to CFO 3.0: Digital transformation beyond financial management, a Sage research report that looks at how CFOs can move from historians to visionaries within their companies, decision-makers are still spending as much time collecting and preparing data as they are analysing it, due to unwieldy legacy systems.
As a result, 63 percent of CFOs said administration has a significant impact on team productivity.
Why cloud computing can help
The benefits of financial cloud solutions are already well documented. Research and advisory firm Gartner describes the major benefits as:
- The ability to keep up to date with new releases
- More consumer-like features
- Improved analytics
- Improved agility through faster introduction of new functionality
- More emphasis on finance staff managing applications, with less reliance on technical staff
And with the cloud, you have the opportunity to make financial reporting much more streamlined, accurate and less time-consuming. It offers error-free reporting, a single version of the truth, and tools that don’t need constant watching and manual maintenance.
How working in the cloud can make finance teams more effective
The role of the CFO and finance department has changed. Instead of simply being thought of as a financial leader, the CFO now needs to actively drive business change through finance.
Thanks to cloud technology, they have access to a variety of tools focused on and intelligence, with machine learning and artificial intelligence potentially changing the game even further.
Cloud technology helps create a nimbler and more cost-effective finance function. It minimises the need for hardware and storage, providing more scalable and easily automated processes. You can enable a connected operating environment that provides greater automation and advances in real-time insights.
Automation is a reliable way to improve the quality of financial data and increase the productivity of financial/accounting staff.
Instead of being tied up with time-consuming transactional tasks and gathering data, automation offers an alternative.
Automation can allow businesses to:
- Minimise the manual intervention needed in financial and accounting-related tasks, such as ledger entries and reconciliations
- Reduce the potential for human error
- Improve the use of staff time through a reduction in manual processes
- Increase and expedite turn-around.
Through automation and the use of integrated business systems that serve as an auditable system of record, CFOs and their departments can make use of technical capabilities to make them more effective and useful for the business.
This includes automated financial reporting with narrative analysis. Financial data with context and a clear story can be very useful. In addition, you have access to:
Real-time updates to financial metrics
Real-time metrics improve the quality of related data and the efficiency of prepared reports. Having inputs uploaded in real time rather than batch processes reduces reporting turnaround time and helps avoid financial data gaps.
This allows multiple codes to be used to generate models and charts from compounded sets of data. It allows data and analytics from various transactions to be aggregated.
Future-proofing the finance function means more automation. More than nine in 10 (94%) businesses agree that financial management technology will play a crucial role in tomorrow’s finance function.
Conclusion on using cloud financial reporting
According to Sage , over 90 percent of financial decision-makers say their role has changed over the past five years, with 67 percent agreeing this transformation has been from number cruncher to business strategist. It might be down to you to add value and shape the future strategy of your finance function.
You could well be central to making sure your business makes the significant investments it needs in tools and systems to expand your capabilities, which may require you to move to financial cloud management software.
Moving to cloud financial management software can help break down data silos and accelerate the way you do business.
The right technology platform can provide a consolidated view of your financial data from across the business. It can also provide the integrated business analytics functionality to deliver the data-driven insights the new breed of CFO needs to drive broader business transformation beyond financial management.
By monitoring and understanding this data, you can make better decisions and uncover more opportunities in areas such as cost reductions, process waste removal, customer cross/up-selling, and the delivery of new products.
Not only can analytics find you ways to cut budgets in the right areas, it can help you find suitable ways to expand.
Asavin is Sage’s dedicated expert in issues impacting large businesses worldwide. He specialises in topics including industry 4.0, digital transformation and cloud innovation.