Today, the expectation is on finance teams to play a more strategic role in the…
The role of finance has changed. Not only are departments facing growing pressure to do more with less, but the expectation for finance teams to play a more strategic role in the organization, providing the insights needed to fuel top-down decision-making, is increasing.
This presents an exciting opportunity for finance leaders, but meeting this demand requires new levels of visibility and agility. In large organizations, these qualities are dependent on fast and accurate financial consolidation. And this is where problems tend to arise.
Today, many consolidation processes are outdated, time-consuming, and disconnected from planning activities, preventing finance departments from delivering the speed and depth of insight required to fulfill these new strategic expectations.
Modernizing and digitizing consolidation is fast becoming a priority – but even this has to be approached in the right way to deliver true value.
A modern, digital approach to financial consolidation can yield transformative results. Reporting and compliance are more straightforward, close processes are faster, and finance teams gain the time and insight needed to fulfill their strategic ambitions.
For many organizations, though, this is not the reality. Disconnected legacy systems and time-consuming, excel-based processes still sit at the heart of consolidation activities. As a result, it can be near impossible to consolidate data from different tools and solutions. Manual errors, a lack of alignment between finance and operations, and glacial close processes are typical results.
A recent Board poll found that 43% of companies need more than seven days for a statutory close at the group level. Further studies showed that 78% of finance departments were either overwhelmed by too much poorly managed data, constrained by limited access to the right data, or hamstrung by a lack of technology to generate insight from the data they have.
At a time when finance teams need to provide future-facing strategic insights, the truth is that these processes, stuck firmly in the past, no longer measure up.
Suppose finance teams are to free time for the value-added activities expected of them, and provide the strategic guidance the wider business needs and expects. In this case, they need access to timely, accurate, and unified data that gives insight into what is happening now—and what is likely to happen tomorrow.
The need for change is clear. But knowing how to approach that change is not always as easy to understand.
Many change initiatives in consolidation target one or two specific pain points, which leads to the implementation of a couple of minor enhancements. And then maybe a couple more later down the line. And so on.
The result of this ad-hoc approach can be kind of like Frankenstein’s Consolidation Monster, comprised of different tools and solutions with little thought given to how they might work together. As you might expect, this rarely leads to the seamless, efficient close processes and single version of the truth finance departments crave.
In our experience, modernizing consolidation requires an entirely more holistic approach that considers the organization’s overall operational needs as part of a change program.
The only way to unite finance, strategic planning, and operational management properly is to have a comprehensive, multi-faceted vision for what you want to achieve from the outset, made up of multiple goals that extend across departments.
This might include the automation of planning and performance reporting or a desire to run a leaner finance department. Or you may focus on enabling real-time data ingestion to help more accurately project financial reporting.
Either way, by implementing a guiding philosophy and overall vision before investing, you can avoid common problems and inconveniences and ensure your new consolidation solution aligns with your priorities – not just in the short-term but in the long term too.
The consolidation solution you chose must be capable of meeting the key criteria laid out by your strategy. And, in turn, that your strategy considers the key needs of your organization as a whole. But knowing this and knowing how to do it are two different things.
In our recent whitepaper, 10 key requirements for next-level financial consolidation, we look at both the strategic and functional elements that go into choosing a truly transformation financial consolidation solution.
One of the things we focus on is the importance of integrating consolidation with planning to compare outcomes and plan for different scenarios, adding accuracy and confidence to strategic choices.
Our experience in this area shows that companies who take this approach are capable of faster, more accurate, and more consistent planning across locations and geographies. They also have more vital collaboration between operations and finance and can perform rapid, accurate projections across even the most complex organizational structures.
In addition, 77% of companies that implemented a performance management system for financial consolidation said that they achieved faster month-end closing, with 37% reducing closing time significantly.
Learn more about how you can build a financial consolidation strategy that will deliver your current and future goals