The future of financial consolidation and reporting is digital
Almost 90% of all Excel spreadsheets contain errors: Do you trust your data? Or are you willing to live with the financial implications your errors create for the annual account?
In a digital age such as ours, technology develops at a rapid speed. New and advanced technologies continuously become available that empower us to increase not only the quality of our work, but also the flexibility and efficiency of our work while simultaneously saving time – especially when it comes to repetitive processes in our daily work. It goes not only for Finance but for all industries. But when talking about Finance, Excel seems to act as a stop block for going digital when making your annual account.
But why exactly? Especially considering that almost 90% of all spreadsheets contain errors – 90%! Just take a moment to digest that.
We often like to think our own spreadsheets do not fall in this statistic, but at a 90% error rate, we are fooling ourselves if we remain in this belief.
In the words of the roman stoic 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 to make the annual account.
Why making your annual account in Excel is a tedious, time-consuming task
- Excel is extremely prone to basic human error (remember the 90%). And you will make the same errors again and again
- Excel easily gets out of control as different versions circulate
- Excel lacks transparency as it fails to show a full audit trail and documentation
You probably have more errors to add to this list, but I’m sure you get the picture by now.
So, with these errors in mind let me pose some questions to you. What is your reason for using Excel in relation to the annual account? 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. Every group, regardless of their size, is obliged to make an annual account at the end of each financial year. If you are using Excel for this, then 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 at the annual account that Excel takes up a lot of time – also every month or every quarter making the financial consolidation and reporting in Excel is extremely time consuming due to the number of errors accruing in the spreadsheets.
Imagine for a second that instead of using Excel, you have a database where all your financial figures for your reporting are automatically saved and updated. The risk for errors is eliminated because the system finds the errors for you. You don’t use a lot of time on error finding, but can go directly to correcting the errors instead. All the documentation is visible, and you have a full audit trail meaning there is a complete overview of where the numbers are coming from. This transparency makes the process of making the annual account a lot faster and the workflow much smoother because instead of looking through numerous sheets, you just have to draw the numbers you need from one database. Also, this transparency makes it unnecessary to check up on financial figures with your subsidiaries.
The scenario above sounds too good to be true, but actually, it is not.
The benefits of automating and standardizing your work processes in a digital system
When repetitive processes are standardized and automated then a more smooth, efficient, and flexible workflow is created versus when the processes were handled manually. For instance, if the financial consolidation process is automated with financial consolidation software, you will be able to reduce consolidation time by approximately 50%. Extra time you gain enables you to make room for in-depth financial analyses and counseling of your management – meaning you will be able to actually influence decisions for your group, not solely deliver the financial figures.
A financial reporting and consolidation software also provides increased accuracy of your financial data and an extremely low risk of producing errors, which can be a huge help when you have to make your annual account.
If you are still clinging on to your Excel spreadsheet for your financial reporting and consolidation you must have an extremely good (and unknown) reason. But if you have yet to come up with the 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 you can step into the digital age by implementing financial consolidation and reporting software? Then go to www.konsolidator.com
Authors:
Martin Birch, Finance Business Partner at Konsolidator and former Chartered Accountant from Deloitte.
