For many, financial consolidation is a process that simply exists. We don’t refine it. We don’t tinker with it. We don’t look at ways of innovating it. We belive we have what we need, even if the process isn’t ideal. (The phrase, “If it works, don’t fix it” comes to mind.)
But what if we told you that outdated consolidation processes are costing you more than time? In this whitepaper, we’ll lay out unexpected ways traditional consolidation methods are draining your resources — financial, operational, and human — and tease out why an end-to-end, automated consolidation strategy is the key to unlocking consolidation’s — and Finance’s — insight generating potential.
In this whitepaper, you’ll learn:
- The key indicators of a costly consolidation process
- Why we ignore mission-critical consolidation updates
- Four cost drains of legacy consolidation systems
- Financial statement errors
- Human resources consumed by menial tasks
- Data-less decision making
- Bound to the office in a virtual world
- How to evolve the financial close and consolidation with automation
Key indicators of a costly consolidation process
How do you know if your financial close and consolidation process is slow leaking resources? Have you experienced one — or more — of these pain points:
- Extremely slow data processing
- Inability to easily update the system for the latest organization change
- Your monthly or quarterly close takes longer than six days.
- You haven’t replaced your consolidation software in the last 11 years.
- Your system requires high levels of customization
- Your close and consolidation software are divided by point solutions
If you see these maladies reflected in your consolidation process, we’ll tell you now, they’re not insurmountable. All it takes is a little automation to drastically turn this process around.
Now let’s take a look at the four underlying costs of a legacy consolidation system.
Cost 1: Financial statement errors
Misstatements most often occur when information systems fail to accurately capture business transactions, or when financial reporting processes are not adequately aligned with the requirements in the applicable financial reporting framework. The consolidation process is onerous at best, and massively erroneous at worst. It’s risky. It’s taxes internal controls. It makes audits incredibly difficult. Afterall, it’s pretty easy to gloss over an out-of-place figure when you’re spreadsheet-blind after a day spent zoomed in at 150% in Excel.
Ask yourself: are these costs you’re willing to incur?
Cost 2: Human resources
The cost of human resources swallowed by legacy consolidation system is layered like an onion. First, there’s the obvious top layer: long, manual consolidations require someone — or some few — to oversee the process. Close and consolidation is efficiency and cost issue and it quickly transforms into an HR issue that could cost your organization in turnover, re-training and talent. Then, to continue the onion analogy, there’s the more conspicuous layer of human resource consumption: IT. Legacy consolidation systems inundate IT departments with systems management.
The more you automate, the more your staff is freed up to focus on mission critical, value-driven aspects of their job.
Cost 3: Data-less decision making
The c-suite has come to see Finance as a stratic partner to the business. All the while, Finance is still learning to juggle its new roles as data steward, data interpreter, and, more recently, data prophet. And yet, if you can’t be confident in your consolidation, how will you ever be confident in your analytics, your reporting, or your recommendations? Close and consolidation are the foundation that all other financial processes branch out from. This means that a lagging, isolated, poorly systematized close and consolidation software eats away at the success and impact of all other processes.
At its core, close and consolidation is a data management issue. Implicitly, it’s a large part of the analytics problem. Without integrating the close and consolidation process into the rest of the financial management mix, you’ll continue to experience data management issues that hinder your ability to trust your data, your reports, and your decisions.
Cost 4: Bound to the office in a virtual world - or agility
The digitization of finance has long been touted as an incoming trend, but the pandemic has pushed it through to an urgent red-light action item. If we cannot access our financial systems in a remote environment, how can we complete our financial processes from home? While the future is up in the air, one thing is certain: critical, repetitive processes, like close and consolidation, must be virtualized.
Evolve the financial close and consolidation with automation
Legacy consolidation systems are costing you more than the comfort of using them is worth. It’s time for the office of finance to evolve from the bottom-up, starting with the close. Only then can we meet our potential as a strategy-driving, data-centered, forward-thinking department that decision-makers rely on. While we all have an eye on alluring technologies — like predictive analytics and forecasting — we must remember that, to use these technologies, you must have a firm foundation of consolidated data and the human resources available to analyze results. And that’s precisely what automated close and consolidation promises. An accelerated process that streamlines corporate data and allow Finance to do what we do best: understand the numbers.
CCH Tagetik’s automated financial consolidation and close solution can help you with that! Learn which are the 5 paybacks of CCH Tagetik automated solution.
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