Since COVID began, finance and accounting teams everywhere have had to adapt to a whole new set of changing realities. The performance management experts at BPM Partners capture these changes in Managing Uncertainty with Confidence: An Executive Guide to Financial Consolidation and Reporting - including the role that consolidation and financial reporting software plays in delivering much-needed agility to your business.
We’ve used the guide above as the basis for a three-part blog series on how you can turn challenges into opportunities, not just to survive but to thrive in a world of constant change.
In the first article in the series, we covered how companies can navigate uncertainty with confidence and the right financial consolidation solution. Then we addressed the need for speed to accelerate business performance and how account reconciliation software can deliver it.
In this final piece, we discuss how financial reporting software can increase your company’s agility. From informing cash flow management to supporting M&A activities, you’ll learn 5 must-have capabilities for selecting reporting software to help you thrive in what BPM calls the new “not normal.”
What is Financial Reporting Software?
Financial reporting software - despite its name - covers a wide range of reporting types, mainly:
- Consolidated financial statements
- Regulatory reports (e.g. for GAAP or IFRS standards)
- Management and dashboard reporting
Mid-sized companies today have plenty of reporting tools available to them. Excel spreadsheets and business intelligence (BI) tools like Power BI are among the most common. Publicly-traded companies may use specialized disclosure management software as well.
Businesses like yours need a reporting tool that integrates with your ERP systems, general ledgers (GL’s) and other data sources across your organization. One that delivers on your financial and operational reporting needs. And ideally, one that’s part of a financial consolidation solution.
Achieving Agility Through Financial Reporting Software
As a business, you need to stay agile to successfully adapt to changing conditions. As a finance leader, you need the right data and insights to inform smart, agile business decisions. Picking your ideal financial reporting software will help get you there.
Below we discuss 5 key factors that should be top-of-mind when considering new reporting software to help your company stay nimble and agile:
- Management Reporting
- Cash Flow Management
- Rising Reporting & Reporting Frequency
- Mergers & Acquisition Functionality
- Unified Consolidation, Reporting and FP&A Solution
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Management Reporting (on a Single Source of Truth)
Especially for companies operating under quickly changing conditions, it’s crucial for management decisions to be based on one, single source of truth. Without the right financial reporting software solution, this is far from an easy task.
Your financial reporting solution should support timely management reporting, and provide your fellow business leaders with real-time, accurate data to make informed decisions. Going beyond consolidated financial statements, your management dashboards should combine operational and financial metrics for a holistic picture of your business performance, today and tomorrow.
It’s vital, for example, to know which products or lines of business to invest in further, and which ones to sunset. With a modern reporting system, you get a fuller picture of how operations are tied to forecasts and financial plans, and how different business decisions affect future outcomes. And when corrective action is required, you’ll have the data needed to guide it.
Cash Flow Management
We know that managing cash flow is vital in a crisis situation, as closures make marks up and down supply chains. In its executive guide, BPM found that cash flow forecasting was among the top 4 criteria finance departments use when choosing their ideal financial reporting software or consolidation solution.
Because market volatility can result in cash flow vulnerability, your business needs to be prepared prepared for a range of cash flow scenarios. Being able to report on cash flow on a daily or real-time basis helps you avoid cash flow problems before they arise.
Determining whether you’re in a positive or negative cash flow situation, or when you have a cash flow problem on the horizon, requires regular analysis of factors including your:
- Cash on hand
- Customers’ ability to make timely payments
- Suppliers’ solvency and invoicing terms
- Available credit
- Available capital from investors or public markets
Rising Reporting & Reporting Frequency
Especially for growing, mid-market companies, staying agile requires more frequent reforecasting and scenario modeling. To stay on top of cash flow, for example, or to prepare for different what-if scenarios resulting from likely business decisions and market conditions.
As conditions quickly evolve, what you may have done quarterly now needs to be completed monthly or weekly. A challenge for mid-sized companies is operating under a tighter budget than their enterprise counterparts. However, a strong financial reporting software will provide the reporting functionality necessary to thrive.
Mergers & Acquisitions (M&A) Functionality
If you’re in finance or accounting at a company growing through M&A, each new legal entity brings with it an added level of reporting complexity. You need to consolidate different regions, subsidiaries and other legal entities, along with their GL/ERP systems, currencies, year ends and more.
To tackle these complexities, you need financial reporting designed with M&A in mind.
How? One example is looking for solutions with automated intercompany eliminations and matching. According to research in the BPM Executive Guide, mid-sized business leaders reported intercompany elimination as an essential capability for their consolidation and reporting software.
Unified Consolidation, Reporting and FP&A Solution
In the past, finance teams used to treat consolidation, reporting, and financial planning and analysis (FP&A) as separate processes. Today, more and more companies are appreciating how much they’re intertwined. Like you may be, they’re seeking unified solutions for integrated, continuous closing, reporting and planning.
As the BPM Partners Executive Guide shows, combining reporting with planning and budgeting is essential for companies with 2,500 to 5,000 employees. This functionality, tied with ease of use, is the number one driver when purchasing a financial reporting solution.
Your agility rests on how quickly you can use all data at your disposal to make quick, sound business decisions. And on how quickly you can move from forecast to report, then back to reforecast.
For rolling forecasts, scenario modeling and variance analysis, you need the most timely actuals available. With a unified solution, you’ll not only get timely data, but a holistic picture of your firm's reality - today and tomorrow.
Tying Agility Back to Reporting Software
Surviving and thriving today’s constant uncertainties means your business needs to stay agile. To be able to respond to changes quickly and efficiently, with the right tools.
How do you get there? With a financial reporting solution that gives you the insights you need from across your company. And one that can adapt as your business does.
Last but not least, keep in mind that change and uncertainty don’t mean doom and gloom. Changing conditions may bring about new opportunities like potential M&A activity, just as they put new pressures on your cash flow management practices.
Your reasons for needing new financial reporting software vary. But what’s certain are the benefits you’ll gain, and how you’ll be able to stay agile in the new “not normal.”
