Financial reporting provides critical business intelligence that helps organizations to drive investment, secure credit, maintain compliance, and more. While the financial reporting process can be complex, leading organizations still find ways to make the process seamless and cost-effective.
Here are three strategies leading organizations follow to build a cost-effective financial process:
1. Reduce Manual Steps in the Process
Labor is one of the biggest cost drivers for any process, and financial reporting is no exception. Higher labor costs for this process are often due to the hours that reporting teams spend manually pulling, cleaning, and manipulating financial data between disconnected systems. In addition to increasing the risk of errors and the need for rework, highly manual processes take longer—which means the labor costs associated with the process will be higher. Work to automate and integrate your systems as much as possible to reduce manual touchpoints.
2. Train Your People
The reporting process has many moving parts—especially in large and globally distributed organizations. Each team involved with the process needs to clearly understand where to pull the data used for reporting (and from which systems), where to send it, when it is due, how it needs to be formatted, and so on. Standardize the process as much as possible and create resources like checklists that outline the relevant steps as clearly as possible. Process documentation and training guides help to minimize the amount of time that staff spend guessing about what they’re supposed to do and help to reduce the need for rework, both of which will help to keep costs lower.
3. Know Your Audience
Typical stakeholders for reporting include a diverse range of stakeholders: Board members, employees, investors, creditors, the public, and the U.S. Federal Government. The length and content of your financial reports will vary based on which of these stakeholders you address. To avoid the need for rework, extended explanations, or penalties for being out of compliance, make sure your team knows exactly what needs to be delivered to each reporting audience. Some requirements, like those for the U.S. Securities and Exchange Commission, are highly formalized and relatively easy to find. Reporting requirements for your board might feel nebulous and take time to draw out through conversations. Build good working relationships across the business, take the time to learn what each audience needs, and tailor your reporting accordingly.
Explore the average top performers’ spend on the financial reporting process in APQC’s Optimizing the Costs of Financial Reporting.