How do you feel about your monthly, quarterly and annual financial reporting processes? Do you have confidence in your numbers, or are you concerned that there are glaring inaccuracies?
Financial reconciliation is critical for organizations when producing reports. This post explains the how’s and why’s of the financial reconciliation process, as well as why clean, correct data is a must.
The Importance of Financial Reconciliation
Financial reconciliation, the process of ensuring that account balances are correct between accounts at the end of a specific accounting period, is one of the cornerstones that helps you create accurate reports that provide a reliable picture of what’s happening in your organization. Without financial reconciliation, you don’t have an up-to-date picture of your company’s performance.
So, how do you do it? The first step to a smooth financial reconciliation is to ditch static spreadsheets and other manual methods of gathering data. There are a number of reasons why spreadsheets and manual data-gathering methods, such as working off of email streams, are problematic.
For starters, there’s no real-time visibility into processes. A one-off data dump from your ERP into Excel® creates a static spreadsheet (a data silo). Your numbers aren’t in one centralized location, and team members cannot see what’s being entered as it happens.
The lack of real-time visibility and this manual data entry process leads to errors. Most people are familiar with the statistic that 90% of all static spreadsheets contain some type of critical mistake. However, are they truly aware of the impact those inaccuracies can have? Organizations have lost millions of dollars from static spreadsheets, which doesn’t even factor in the reputational damage from poor decisions.
Moreover, static, ungoverned spreadsheets and other manual processes lack version control and compliance frameworks. You don’t know when numbers have been added or by whom. This absence of control is a compliance nightmare, which could lead to expensive fines.
Why Reporting Requires Clean, Correct Data
For financial reconciliation to produce the best possible results for your financial reporting process, it must use clean and accurate data. For companies using manual processes to create spreadsheet reports, reaching that goal is a challenge.
ERP integration and integrating other sources of record is critical to ensure that your data is as timely and up-to-date as it can be. Here's why: Exporting ERP data is a time-consuming process that doesn’t yield accurate information; you wind up having to export it into a static spreadsheet, giving you a snapshot of your financial health. That snapshot quickly fades to sepia because your financial data changes constantly.
The solution? A corporate performance management system that integrates directly with your ERP system. Not only does it provide greater visibility into your financial data, but it gives you that information in real-time. You never have to worry that your data is old and/or inaccurate because you’ve automated the data collection and distribution process.
Creating regular financial reports, shouldn’t be frustrating or panic inducing. Rather, you should have confidence that your data is reliable and timely. Corporate performance management solutions give you that confidence. To learn more, download our report on spreadsheet management.