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3 of the Biggest Issues CFOs Face With Financial Reporting (and How to Overcome Each One)

September 7, 2021
By Corey Noles

Of the many positions that keep a business running smoothly, few are more important than the CFO. No matter what the industry or the size of the business, managing a company’s financial and reporting tasks is what ensures a prosperous future.

Of course, anyone who has actually worked in this field knows that financial reporting is rife with challenges. Finding ways to overcome these common obstacles is key for improving the quality of your work and ensuring the stability of the company as a whole.

1. Data Deriving From Multiple Platforms

While technology has greatly streamlined financial reporting in many ways, the sheer amount of data now available — and the number of platforms being used to source that data — present new challenges for CFOs.

For example, in a global survey of 400 CFOs conducted from Workday, 32 percent of respondents cited data gathering as the greatest challenge they faced for reporting. Perhaps even more surprising, in another report (also from Workday), 47 percent of CFOs said that they manually aggregated their data, even though an increasing percentage drew information from three to five sources.

Potential sources for financial data include the company’s website, CRM platforms, ERM software, and other tools that track transactions and customer interactions. Unfortunately for CFOs, many of these platforms track a wide swath of non-financial information, as well. While this information can prove valuable in other areas (such as helping identify bottlenecks in the sales process), it further complicates the work of the CFO.

Clearly, manually entering such information can be quite time-consuming. Tools like DataRails make the collection of data much simpler by integrating with pre-existing CRM platforms and ledger systems to automatically collect information into a single report which analysts and executives can access within the familiar environment of an Excel spreadsheet. This can significantly reduce manual busywork, leaving more time for high-level tasks. This also reduces the risk for human error.

2. Staying Up to Date On Regulatory Changes

Regulatory changes are a constant concern for CFOs, particularly when it comes to maintaining compliance for government reports, U.S. generally accepted accounting principles (U.S. GAAP), and International Financial Reporting Standards. The more places a company does business, the more regulatory standards a CFO will need to monitor and be aware of.

As part of this, CFOs must ensure that the rest of the business understands changes in reporting standards and what they mean for the company as a whole. For both local and consolidated reports, the CFO must take the lead in educating the organization and ensuring buy-in, while also prepping the company with the right tech tools.

As Thorsten Hein explains for FEI, CFOs must fully embrace AI and analytics to improve compliance on a company-wide level. As part of this, he suggests, “Integrate teams and reporting. The larger the company, the more heterogeneous the IT landscape, the bigger the data issues. It is essential to integrate actuarial, finance and IT departments to centralize reporting, eliminate data and interpretation issues, and provide a consistent, holistic view across the organization.”

CFOs must also take the lead in improving their company’s data competency while aligning and standardizing processes — including the use of automation tools, when applicable. A proactive approach helps the company remain compliant, even as standards change to reflect new technology and new economic realities.

3. Turning Reports Into Action

A spreadsheet filled with financial data tells a story — but quite often, it can be difficult to understand just what that story is. Even more challenging for CFOs is communicating vital financial information in a manner that will spur meaningful decisions. Accurate financial data provides invaluable insights into the health of the business as a whole.

As Deniz Caglar, Matt Mani, and Josh Peters write for strategy+business, “You [the CFO] help the company turn down many activities so that the few most important can thrive. The deciding factor is strategic value. Economies of scale and market clout are no longer the formidable barriers to entry they once were. The allocation of resources must now favor a company’s most distinctive capabilities—those differentiating things it does particularly well that enable it to outperform competitors over time.”

Unfortunately, turning data into action isn’t always so straightforward. A report from McKinsey found that while four in ten CFOs felt their greatest value lay in strategic leadership, non-finance leadership still primarily associated CFOs with “traditional finance activities.”

To drive performance and decision-making, CFOs must present financial data in a clear and actionable manner. This could include changes as simple as visual dashboards that better communicate information to implementing predictive budgeting tools that can forecast results and performance based on certain actions. Such tools are key to ensuring that financial insights aren’t overlooked by other members of the C-suite.

Improve Financial Reporting, Improve the Business

Optimizing your financial reporting capabilities ultimately reduces the risk of errors, improves the way you use your time, and makes it easier to derive meaningful insights from your data. By adopting the right financial reporting tools and updating your processes, you can become more efficient and achieve greater transparency.

By helping the entire organization better understand your company’s financial standing, you can ensure greater stability in the years to come.

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