Automation of Financial Reporting: Benefits & Best Practices

Finance and accounting departments have a lot of responsibilities to carry. Their work often dictates many of the biggest business decisions since they are often centered around finances. As such, the automation of financial reporting can take a load off, increase report accuracy, result in cost savings, and provide increased transparency for the organisation.

Let’s take a look at the different types of financial reporting and how financial reporting automation can help your organisation perform better, without having to work harder.

Coming Up

1. What is Financial Reporting Automation?

2. What are the Benefits of Automating Financial Reporting?

3. What is the Best Tool for Automation of Financial Reporting?

4. How to Implement Tools for Automation of Financial Reporting?

5. What Financial Reporting Can You Automate?

6. What are Best Practices for Automation of Financial Reporting?

7. Wrap Up

What is Financial Reporting Automation?

Financial reporting automation is the use of software that covers the essential aspects of curating and generating financial reports. The tool can execute account reconciliation, perform data entry, and prepare financial reports and statements while minimising errors.

With a financial reporting automation tool, your finance team’s processes are streamlined. Your team no longer has to sift through multiple systems, or even worse, paper trails, to find the data they need to update financial statements. Instead, the software automatically pulls data from multiple systems (including legacy systems) to generate reports in a timely manner and move them through any necessary approval processes.

At the same time, everything that happens within the software system is stored, which makes audit trails easy to pull or send, if need be. As finance processes are carried out, team members and executives alike can always check in to see the status of a process, providing your organisation with the transparency you’ve always wanted.

What are the Benefits of Automating Financial Reporting?

When you remove the tedious, repetitive, and time-consuming burden of financial reporting from your team’s shoulders, you free up a lot of time for your employees to focus on higher-level, analytical, and forward-thinking tasks.

Not only will your team benefit from saved time, but you will also reap additional advantages, like:

1. Quick Approvals

Most financial reports require some type of approval, whether it be an expense reimbursement or budget approval. Without automation, the process can get held up if a single person forgets to review a document or send it over to the next person in line.

Additionally, when passing documents through emails, it’s easy to lose version control. Automatic approval systems keep the process on track and hasten the approval time while preventing the aforementioned hurdles from taking place.

2. Boosted Efficiency

Transforming your financial processes from manual to automatic results in increased efficiency right away. Anything that may have potentially slowed your team down before (i.e. searching for data, data entry, approvals, etc.) becomes issues of the past.

3. Data Integrity

No matter how much attention to detail a person has, there’s always margin for error. It’s possible to make a mistake while entering data, or perhaps, a vendor sends over the wrong information.

Data integrity is of utmost importance when it comes to financial statements, reports, and documents. Automated solutions provide you with total confidence that the data is accurate.

4. Transparency

When you have connected data systems, you have a clearer view of your organisation’s financials. When you can pull data quickly and run reports, it makes it easy to recognise patterns and make decisions accordingly that are in the best interest of the business.

5. Reduced Fraud

With financial report automation, you can reduce the risk of fraud as it becomes an objective process without much need for human intervention. Furthermore, if fraud is occuring, the speedy completion of reports makes it more likely to catch issues sooner rather than later.

6. Audit Trails

Financial automation tools can prepare audit trails in no time. With every action stored within the system, you can always refer back to historic payments or reports to help remedy any discrepancies or questions that may arise in the future. This feature is also great for regulatory compliance.

What is the Best Tool for Automation of Financial Reporting?

When searching for the right tool to help achieve financial reporting automation, there are some key features to look out for. The financial reporting process may slightly vary from organisation to organisation, but on the whole, your team will want a solution that is easy-to-use and easy to deploy.

Along with these key aspects, keep an eye out for an automation solution that provides:

• Understandable report structure: It’s of utmost importance for the solution you choose to be understandable. Solutions exist with customisable dashboards and reports. This way, you can create CFO dashboards that allow executives to view the necessary information at a glance.
  

• Interactive interface: Most finance professionals become experts at Excel. In the same vein, you’ll want your team members to be able to navigate the software solution with ease. Some solutions provide your team with drag-and-drop options to set up the graphical interface so that they can understand datasets and outcomes effortlessly.
  

• Actionable insights: Choose a software solution that has the power to perform advanced analytics. This way, you can transform your data into actionable insights.
  

• Support: Naturally, should an issue or question arise, you’ll want to be able to reach out to your software provider for assistance.
  

How to Implement Tools for Automation of Financial Reporting?

Once you have the right automation tool by your side, you can follow a series of steps in order to ensure the optimal deployment of the solution. To get the most of your automation of financial reporting, consider the following:

1. Standardise Your Processes

Before you get working within the tool, take a pen and paper or a flowchart software to outline your financial processes.

Involve your team who is hands-on with the day-to-day execution so that they can provide feedback and insights into what works versus what needs fixing. In this process, you’ll be able to notice areas that are ripe for improvement.

2. Design a Workflow

Design your workflow within the software system once you have an approach and process that seems suitable to achieve business goals and desired outcomes. Run it on a small scale to test the feasibility and results.

3. Check Integrations

Be sure to check that the software is communicating properly with other systems. Your financial automation software should be able to work alongside legacy systems and pull data from multiple sources.

What Financial Reporting Can You Automate?

The automation of financial reporting makes it simple to create reports, share them with desired parties, electronically review and monitor their statuses, and achieve transparency within your organisation. From management reporting to financial statement analysis, the system can pull and transform data to create the types of reports you need.

Here’s a quick look at all the types of financial reporting and use cases that automation can handle, in whatever frequency you wish.

• Annual Financial Statements
• Quarterly Financial Statements
• Consolidation Purposes
• Management Reporting
• Financial Statement Analysis
• Year End Close
• Post Audit Reclassification
  

In using an automation solution, you increase data accuracy, lessen the time it takes to generate financial reports, and ensure the credibility of financial data.

What are Best Practices for Automation of Financial Reporting?

Before you jump into working with an automation solution, take the time to review these best practices and recommendations.

General standards

Whether you are working manually or with automation, you’ll need to comply with general principles of reporting and accounting standards. Be sure to do so while also considering your business’ financial objectives, which will serve as a way to gauge your finances.

Review data

All financial reporting comes down to having access to accurate, stable, and available data. Before the data is pulled into an automation tool, be sure that it is correct and verifiable.

Automation tools do have the ability to help format and structure data according to the desired outcome, but that can only take you so far if the data isn’t right in the first place.

Collaborate efficiently

Financial reporting can serve as a foundation for business decisions. In order to make the most of financial reporting, you’ll want to involve different departments and review budgets holistically.

This way, all people within business can be aligned to achieving the same overall goals and strategically utilise the reports to help with decision-making.

Consider presentation

Reports are the most useful when they can be understood without confusion. Oftentimes, this means using more visuals and figures, rather than just data and numbers.

Take the time to customise your reports to include graphs and visual representations so everyone within the organisation (and stakeholders) can make use of financial reporting.

Wrap Up

Automation of financial reporting is a game changer for finance teams. It removes the burden of having to spend countless hours deep in data, manually transferring it, and creating reports by hand. Instead, an automation solution can pull data from various sources, create financial reports in minutes, and share the information quickly. In turn, the automated process ensures that business leaders have the proper information they need to make decisions on the spot.