The finance department is a company’s nerve center, where all the various connections throughout the company come together. Not only in international corporations, but especially in medium-sized companies, CFOs and reporting managers have oftentimes become the sparring partners with management.
But the responsibility and importance that goes with this brings about new challenges – especially in the area of management reporting. In this article you can read which of them are the biggest challenges and how they can best be overcome.
Challenge 1: When management reporting becomes international
Many group corporations, but also medium-sized companies, generate the majority of their revenue outside Germany. As a result, more and more subsidiaries, investment holding companies, or joint ventures get founded abroad. These entities must also be included in the scope of consolidation and in management reporting. Takeovers and mergers are also changing the requirements for management reporting.
Finance departments and those responsible for reporting processes therefore face the following challenges in management reporting:
- Diverse reporting requirements that are country-specific
- Various national languages, currencies, and number formats
- Heterogeneous data formats and data sources
- Various system landscapes and database formats
- Decentralized organizational structures and reporting responsibilities
Challenge 2: Data quality in management reporting
The process for compilation in management reporting is often still very inefficient and prone to errors. What’s the reason why? Different formats, release statuses, databases, and manual merging of data make it difficult to integrate the various data sources.
The result? Relevant financial data for important strategic decisions are there only too late in proceedings and the management reporting process takes on a convoluted life of its own. In the worst case, the management reports do not represent reality and lead to unwise strategic decisions.
Challenge 3: Management reporting and Excel
Why should financial statements and financial reports in controlling not be created exclusively with Excel?
- A company might suffer from a lack of data quality and business management may prove to be difficult as there is no uniform data model.
- There is a lack of powerful interfaces to ERP and other databases.
- Such a company might also have several Excel databases on the same topic, replete with multiple versions of the same issues.
For companies that also consolidate, the following challenges are added if they only use Excel:
- Intercompany reconciliation is not possible.
- Parallel audits in accordance with HGB, IFRS, or GAAP are not possible.
- Stakeholders welcome certification of the software by auditors.
The solution: Work better with management reporting software
The corona crisis clearly shows us that, more than ever, it is important for companies to keep an eye on their figures at all times, to analyze them, and to identify risk factors in good time. Reliable, meaningful, and fast reporting is indispensable for this.
The reporting process with automated software increases the quality of key figures and the entire management reporting process. The figures are more accurate – and are available more quickly. This is because only one system is used for the individual steps in management reporting – thus avoiding media discontinuity.
CFOs and other finance executives can count on the following benefits when they rely on the right management reporting software:
- More efficiency in reporting
- Significant improvement in report quality and the time frame for its preparation
- Up-to-date and realistic information about the performance of the company
- The freeing up of controlling capacities for deriving measures and following up on them
- Bundling of decentralized reporting responsibilities into a central location
And best of all: only using Excel for reporting is a thing of the past.
Is your finance department in crisis? More tasks, less time, increasing numbers of errors? The solution: FPM software! We have some proven tips for choosing your vendor.
Digital accounting offers many benefits for various companies. However, many financial professionals have still not digitalised the accounting process and rely on error-prone manual accounting.