There are a lot of stereotypes and misconceptions about the accounting profession (we’re not introverted math nerds!), but one common belief is true: The pace of change in the accounting profession is accelerating.
In order to stay relevant, it is not only important to remain current with new accounting pronouncements, but also to focus on smarter and more efficient ways of doing our work. With more and more functions turning to the cloud, it’s time for accountants to embrace a cloud solution in an area that is extremely manual and time-consuming—financial reporting. After all, in most organizations, the accounting team is the keeper of the keys—the source from which the financial data originates.
As such, accounting is often under intense pressure to provide financial reports and respond to urgent financial data requests—all while making sure everything we distribute is accurate and up-to-date.
Whether it’s the senior management team, FP&A, or other cross-functional leaders making the request, they all need the “right numbers,” and typically want them yesterday. It’s not getting any easier. Business is moving faster. And so are the demands on accounting to deliver reports quickly.
Been there, done that
I know, because I’ve lived this reality. Having worked both as an auditor/accounting advisor and as a finance team lead on financial reporting at technology companies, I can safely say that the accounting practices at most companies are decidedly old-school. As an example, in order to publish quarterly financial statements, companies usually download various reports from their enterprise resource planning (ERP) or business intelligence tool into an Excel spreadsheet, tick and tie the numbers, format the data, add commentary, and incorporate comments from various layers of review (by finance, legal, auditors, and others).
This usually requires an army of accountants working for the better part of two weeks or more, depending on the maturity of the process and the size of the company. The time-devouring process is akin to building a house of cards—one change or post-close adjustment and the whole thing collapses. Then we start from scratch and repeat the steps. The same manual process noted above is followed for other periodic financial reporting processes (financial reporting covenant requirements for banks, periodic reporting to investors under the investor rights agreement, 409A-related financial data used as inputs for valuation of common stock, management reporting, etc.).
There is a better way. Since coming to Adaptive Insights, I’ve seen the potential for cloud software to be a game-changer for accounting. It offers a better path to deal with the challenges that accounting regularly faces.
Here are three of the biggest headaches and the prescriptions to cure them.
Headache: Creating reports is time-consuming, manual work: Anyone working in an Excel-only environment has experienced this world of hurt. Merely corralling data, entering it on spreadsheets, and updating the reports is a major time-eater. Clunky legacy systems aren’t much better and typically require ongoing IT involvement and customization that create another bottleneck. As a result, nearly all your time is devoured by manually moving and manipulating data.
The cure: Cloud solutions can dramatically reduce these front-end frustrations. After the initial entry of data in the source system (such as an ERP), which is then integrated to a cloud application such as the Adaptive Suite, the bulk of the downstream manual work disappears. Financial statement schedules or other periodic reports (contained in Excel or even Word) can be linked to the cloud application. If a change is required, you don’t have to waste time chasing down rogue spreadsheets or doing the same updates you have done for the last umpteen months just to get to a starting point. The clunky manual reporting process involving multiple man-hours of effort can be handled in a few minutes using cloud technology so that quality time can be spent on analyzing the data rather than just providing the data to the people who need it.
Headache: Data gets stuck in silos: Accounting can feel a lot like herding sheep. You need to chase down information from various cross-functional teams. The problem is magnified by the fact that data is siloed and lives in separate spreadsheets or applications in these departments. That means before anything can get done, you have to send multiple requests for relevant information, then validate the information received for accuracy and completeness. The silos don’t only separate data, they also tend to keep different departments from collaborating effectively. No wonder our CFO Indicator Q4 2016 report found the majority of CFOs say the lack of data integration is the key technology hurdle standing in the way of delivering actionable information to stakeholders.
The cure: Perhaps the biggest win for cloud solutions is the ability to develop a single source of truth—one set of numbers. The key here is that data from different sources (whether spreadsheets or other applications) can be centralized in the cloud application. Once the data integration is built, the numbers can be updated automatically and easily on a periodic basis. Over time, the silos break down—and with them come down the barriers that often stand in the way of better collaboration, allowing for more strategic insights that can be derived from seeing the whole financial picture of the company.
Headache: Reports are static: It’s been said that Excel is brittle. I like that description. One change, one mistake, and the whole spreadsheet can crumble. And if one spreadsheet crumbles, it’s a pretty safe bet that there will be a ripple effect, requiring manual changes across many spreadsheets and reports. This is not only a nuisance; inconsistency in the numbers ramps up the chance for mistakes considerably.
The cure: Reporting is dynamic in a cloud-based environment. If a number needs to be changed, no worries. Once the correction entry or adjustment is made, the change flows through the entire connected solution, updating the single source of truth cloud app and all other downstream reports or other connected documents (Word, Excel, PowerPoint) in which that number appears (including numbers within both tables and paragraphs, such as within footnotes to the financial statements). The risk of errors and inconsistencies is dramatically reduced, which ultimately builds greater trust in accounting. Meanwhile, customized dashboards provide key stakeholders with ready access to the latest data. Check out our infographic for more information on how changes in the reporting process can impact the future of finance and corporate performance management.
No doubt, for a profession generally viewed as averse to change, the move toward a cloud software platform might feel outside of the comfort zone. Yet here’s the reality: It will make your life easier, and your numbers and data will be more accurate and up-to-date. Ultimately, this positions accounting as a true value add business partner.