The future of financial consolidation and reporting is digital
Do you trust your data? And are you willing to live with the financial implications your errors create for the annual report?
In a digital age like ours, technology develops rapidly; it goes not only for Finance but for all industries. New and advanced technologies continuously become available to empower us. And where we see the most significant impact is in the repetitive processes of our daily work. Here, technology truly increases our work’s quality, flexibility, and efficiency – while saving us time. However, looking at Finance’s digitalization, Excel seems to act as a stop block for going digital when making the annual report. But why exactly? Especially since research shows that almost 90% of all spreadsheets contain errors – 90%! Just take a moment to digest that.
We often think our own spreadsheets do not fall in this statistic. But with a 90% error rate, we fool ourselves if we remain in this belief.
In the words of the stoic Roman philosopher, Seneca: To err is human, but to persist [in error] is diabolical.
While you keep that in mind, let’s move on a bit and look at the most common and prominent errors when using Excel for the annual report.
Why making your annual account in Excel is a tedious, time-consuming task
- Excel is highly prone to fundamental human error (remember the 90%). And you will make the same errors again and again
- Excel quickly gets out of control as different versions circulate
- Excel lacks transparency as it fails to show a complete audit trail and documentation
You probably have more errors to add to this list, but we are sure you will get the picture by now.
So, with these errors in mind, let us pose some questions to you. What is your reason for using Excel for the annual report? Does Excel live up to your needs and requirements? Do you trust your numbers? Do you have the documentation you need? Or do you have to go over your data multiple times and confer with your subsidiaries on an ongoing basis?
Stepping into the digital era where automation and standardized process tools are a part of your everyday life is a true game-changer. And that is what you will experience with software for financial consolidation and reporting. Regardless of size, every group must make an annual report at the end of each financial year. If you are using Excel for this, you already know the tedious and time-consuming process of looking through numerous sheets to get an overview of the financial data for the past 12 months. But it is not only in the annual report that Excel plays a big part as a time-stealer. Also, every month or every quarter, the financial consolidation and reporting in Excel is extremely time-consuming due to the number of errors the spreadsheets accrues.
What automation can do for you
Imagine for a second that instead of using Excel, you have a database that automatically saves and updates all your financial figures and calculations for your reporting. All the documentation is visible, and you have a full audit trail – meaning there is a complete overview of where the numbers originate. In this scenario, transparency makes the annual report much faster and the workflow smoother. The reason is that instead of looking through numerous sheets, you can draw the numbers you need from one database. Also, this transparency makes it unnecessary to check your subsidiaries’ financial figures. Furthermore, the system finds the errors for you. As a result, you don’t spend much time on error-finding but can go directly to correcting the errors instead.
Even though this scenario might sound too good to be true, the reality is that it is not.
Automating and standardizing work processes, like your financial consolidation
The result of standardizing and automating repetitive processes is a more smooth, efficient, and flexible workflow. For example, if the financial consolidation process is automated, you can reduce consolidation time by approximately 50% by eliminating:
- Manual controlling and uploading of your subsidiaries’ reporting
- Error-checking a spreadsheet, too many hands have edited
- Manual calculations like:
- Exchange rates adjustments
- Intercompany eliminations
- Non-controlling interests
- Inaccuracy in financial data
The extra time you gain enables you to make room for other value-adding tasks, like in-depth financial analyses and counseling of your management. You can better influence your group’s decisions and not just deliver the financial figures. Simply put, your consolidation will ‘just’ be another report.
If you are still clinging to your Excel spreadsheet for your financial reporting and consolidation, you must have an excellent (and unknown) reason. But if you have yet to come up with that exact reason, then you are most likely well on your way to leaving Excel behind and saying hello to the digital age of Finance – just like your fellow CFOs, Finance Managers, and Controllers around the globe.
Do you want to know how to enter the digital age by implementing financial consolidation and reporting software? Then book us for a short product tour here.
Authors:
Martin Birch, Finance Business Partner at Konsolidator and former Chartered Accountant from Deloitte.
