Benefits and Best Practices of Automation of Financial Reporting
Benefits and Best Practices of Automation of Financial Reporting
Financial reporting automation is the process of curating and generating financial reports through the use of software. Using this tool, you can complete tasks such as account reconciliation, data entry, and the preparation of financial reports and statements while reducing the likelihood of human error.
Utilizing a financial reporting automation tool, you can streamline the processes of your finance team and save time and money. To locate the information required to update financial statements, your team will no longer be required to sift through multiple systems, or even worse, paper trails. To the contrary, the software extracts data from multiple systems (including legacy systems) in order to produce reports on time and route them through any necessary approval processes.
The software system records everything that happens in real time, making it simple to retrieve and send audit trails when needed. Members of your team and executives can always check in to see how a finance process is progressing, providing the transparency your organization has long desired.
Advantages of Automating Financial Reporting
Taking away the tedious, repetitive, and time-consuming task of financial reporting allows your team to devote more time to higher-level, analytical, and forward-thinking tasks, allowing them to achieve greater success.
Not only will your team benefit from the saved time, but you will also reap a number of additional benefits, including the ones listed below:
1. Audit Trails
Financial automation tools can generate audit trails in a short period of time. You can always refer back to previous payments or reports to assist you in resolving any discrepancies or questions that may arise in the future due to the fact that each action is recorded and stored in the system. Aside from that, this feature is advantageous in terms of regulatory compliance.
2. Increased Productiveness
Making your financial processes more efficient right away will result in increased efficiency. Things like data searching, data entry, approvals, and other processes that could have slowed your team down in the past are no longer an issue.
3. Approval in a Short Amount of Time
The majority of financial reports require approval in some form, whether it's for expense reimbursement or budget approval, and this is true for all types of financial reports. An entire process can be hampered by a single person forgetting to review or forward a document to the next person in line. Automation eliminates this possibility.
Furthermore, when documents are exchanged via email, it is easy for version control to become lost. When used in conjunction with automatic approval systems, they can help to keep processes on track and expedite approval processes, all while avoiding the difficulties mentioned above.
4. Reduction of Fraud
Financial report automation lowers the risk of fraud because it transforms the process into one that is objective and requires little human intervention, thereby reducing the likelihood of fraud. Moreover, in the event of fraud, timely completion of reports increases the likelihood of identifying and correcting problems sooner rather than later.
5. Transparency
When your data systems are linked, you can get a more complete picture of the financial health of your organization. The ability to retrieve data quickly, as well as the ability to generate reports, makes it easier to identify patterns and make business-critical decisions.
6. Data Integrity
No matter how meticulous a person is, there is always the possibility of making a mistake. The possibility exists that you will make an error when entering data, or that a vendor will send inaccurate information.
Maintaining data integrity is critical when it comes to preparing financial statements, reports, and other important documents. You can have complete confidence in the accuracy of the data provided by automated solutions.
Is there a best financial reporting automation tool out there?
If you're looking for the best tool to assist you with financial reporting automation, there are several important features to look for. While the financial reporting process varies slightly from organization to organization, on the whole, your team will want a solution that is simple to use and simple to implement.
Also, look for an automation solution that includes the following features, in addition to these critical ones.
- An easily understandable report structure: It is critical that the solution you choose is simple and straightforward to use. There are solutions available that include dashboards and reports that can be customized. You can use this method to create CFO dashboards, which allow executives to access critical information quickly and easily.
- Interactive interface: The vast majority of finance professionals become experts in the Microsoft Excel spreadsheet program. Additionally, you'll want your team members to be able to navigate the software solution with minimal assistance from you. The ability to configure the graphical user interface in a drag-and-drop fashion is provided by certain solutions, allowing your team to quickly comprehend datasets and results.
- Actionable insights: Look for a software solution that incorporates advanced analytics capabilities into its design. It will be possible to turn your data into actionable insights in this manner.
- Support: The ability to contact your software provider for assistance if an issue or question arises is, of course, an important consideration.
How to Implement Tools for Automation of Financial Reporting?
Following the selection of the most appropriate automation tool, you can proceed through a series of steps to ensure that the solution is deployed as efficiently as possible. Take into consideration the following to get the most out of your financial reporting automation investment:
1. Standardise Your Processes
You should sketch out your financial processes on paper or in a flowchart software before you begin working with the tool.
Members of your team who are directly involved in day-to-day execution should be included so that they can provide feedback and insight into what is working and what needs to be corrected. It is likely that you will be able to identify areas that are in desperate need of improvement throughout this process.
2. Design a flowchart of the process
Once you've identified an approach and process that appears to be appropriate for achieving your business objectives and desired outcomes, you can begin designing your workflow within the software application. A feasibility study and results analysis should be carried out on a small scale first.
3. Take a look at integrations
Check to see that the software communicates with other systems in an appropriate manner. In order to be effective, financial automation software must be able to integrate with legacy systems and pull data from a variety of sources.
What Financial Reporting Can You Automate?
Create reports, share them with appropriate parties, electronically review and monitor their statuses—all of which are made easier with financial reporting automation. It also helps organizations increase transparency. Management reporting to financial statement analysis are all possible with the system's ability to extract and transform data to generate the reports you require.
In this section, we'll give you a quick overview of the various types of financial reporting and use cases that automation can handle on a regular or irregular basis.
- Annual Financial Statements
- Post Audit Reclassification
- Quarterly Financial Statements
- Management Reporting
- Consolidation Purposes
- Year End Close
- Financial Statement Analysis
With an automation solution, you can improve data accuracy, reduce the time required to generate financial reports, and ensure the data's credibility. Learn more about automation solutions here.
What are the Best Practices for Financial Reporting Automation?
Before you begin working with an automation solution, take a moment to review the best practices and recommendations listed below.
Standards that are widely accepted
The general reporting and accounting principles must be followed, regardless of whether the work is done manually or by automated means. Keep in mind the financial objectives of your company, which will serve as a barometer for your financial performance as you go about your business.
Analyze the information
All financial reporting is predicated on the availability of accurate, stable, and readily available information. Take steps to ensure that the information is accurate and verifiable before importing it into an automation tool.
While automation tools can assist in formatting and structuring data in order to achieve the desired result, this will only be effective to a certain extent if the data is incorrect to begin with.
Collaborate efficiently
In order to make business decisions, financial reporting can be used as a tool. For the best results from financial reporting, you'll want to involve multiple departments and conduct a comprehensive review of budgets and financial statements.
It is possible to achieve greater alignment throughout the organization by having everyone work toward the same overall goals and by strategically utilizing reporting to aid in decision-making.
Consider presentation
Easily understandable reports are the most beneficial reports. In addition to data and numbers, this frequently entails including more visuals and figures in the document.
Preparing your financial reports with graphs and visual representations will ensure that financial reporting is accessible to everyone in your company (and to stakeholders).
Conclusion
Financial reporting automation has the potential to completely transform finance teams. There is no longer any need to spend countless hours digging through data, manually transferring it, and manually creating reports because of this solution. Instead, an automation solution can gather data from a variety of sources, generate financial reports in minutes, and share the information with others as soon as it is available. As a result, the automated process ensures that business leaders have access to the information they require in order to make timely decisions.
