Financial Reporting

Five Financial Reporting Priorities for the Modern CFO

Corporate demands compel financial leaders to examine their procedures and implement broad changes as the total cost of financial reporting continues to rise for most enterprises.

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As CFOs navigate their ever-expanding roles and responsibilities, perhaps no area presents more challenges and opportunities for growth than financial reporting.

Reliable and efficient financial reporting is the backbone of many of today’s most successful modern enterprises. However, a host of emerging complexities are forcing finance leaders to take a hard look at whether the financial reporting methods they have relied on for over a decade are the right ones to move their businesses into the future.

The Financial Accounting Standards Board’s new revenue recognition standards, for example, are motivating CFOs and financial leaders around the globe to examine how they plan to comply with the upcoming regulations.

Corporate demands, including heightened controls around risk and greater scrutiny of reporting, also compel financial leaders to examine their procedures and implement broad changes across a variety of systems, policies, procedures and personnel. The result is that the total cost of financial reporting continues to rise for most enterprises.

To reduce these costs, CFOs often turn to technology to automate and solve their most critical financial reporting challenges. In fact, a 2014 survey by Gartner and Financial Executives International found that the CFO has “significant influence over IT investments, more than any other executive.” Knowing where to prioritize these technology investments, however, can be the difference between a successful financial year and a poor one. As a result, CFOs need to ask themselves: “What are our most important financial reporting priorities and what technologies can we leverage to address them quickly and cost-efficiently?”

#1 Accurate, Actionable Data

One of the top priorities for CFOs is data accuracy. Financial leaders can differentiate their organizations in the marketplace and protect their reputations by assembling and delivering high-quality financial reports based on accurate and actionable data. However, today’s huge growth in data collection across enterprises can make reporting precision difficult. With Gartner forecasting that nearly 25 billion connected things will be in use by 2020, the severity of the data volume issue will likely only increase.

To ensure data reliability and consistency, CFOs are increasingly taking an integrated, cross-team approach to financial reporting. They are moving away from their desks and talking directly to field sellers, data analysts, IT staff and other internal and external personnel to understand their needs and break down information silos across the organization. Enterprise Resource Planning (ERP) technology is a centerpiece of this cross-team collaboration. As businesses consider their ERP technology, they should choose an integrated solution that quickly delivers accurate information, anywhere and on any device. Their ERP systems should enable them to get actionable insights from their business data to they can optimize their financial reporting and stay ahead of the market and their competition.

At Microsoft, we are following this approach as we tackle the new revenue recognition standards and align the company around our goal of “One Finance.” This continuing journey of unifying the finance organization across the company to operate as one entity in a mobile-first, cloud-first world has helped us increase process standardization and controls while providing flexible and accurate reporting capabilities to our teams.

#2 Speed and Efficiency

In today’s fast-paced world, accuracy is just one piece of the financial reporting cycle. How quickly one can access the data is a key success factor as well. CFOs want accurate data and they want it delivered rapidly. When every second counts, CFOs need to access concise data on-demand to make critical business decisions.

To meet these demands for speed and efficiency, the combination of mobile technology, an easy to use and intuitive user experience and capabilities such as in-memory computing serve as critical components to delivering access to business data and financial reporting anytime, anywhere. CFOs can maximize their investments in their people by giving them the tools to collaborate securely, be more productive and get the right information at the right time, on any device, to do their jobs more effectively.

By prioritizing the key performance indicators and reports that are most critical to the business and putting solutions in place that easily enable people to tap into that business intelligence, CFOs can make sure their employees are spending their time where it can make the most impact.

#3 Leveraging the Cloud

Monitoring the pulse of a business is only possible with real-time access to business intelligence. The cloud is a critical component for securely supplying that data, serving as both a way to power the backend infrastructure and a customer’s business needs. Cloud computing continues to be top of mind for CFOs who want to leverage its benefits to improve the accuracy and accessibility of financial reporting information.

Many CFOs still think of the cloud in the traditional sense of data center deployments, but the next generation of cloud computing goes far beyond those capabilities. It enables businesses to be more flexible, giving them the ability to make better businesses decisions while increasing agility and productivity.
Implementing new data visualization and cloud-based reporting technologies can reduce financial reporting costs by empowering organizations to automate processes and do more with fewer resources. The cloud combined with flexible, intuitive reporting tools can make the most current financial reports easily accessible at a moment’s notice. Consolidating multiple source systems into one centralized cloud-based data repository can enable finance leaders to gain the single, integrated view into the business they need for comprehensive financial reporting.

#4 Intelligent Forecasting

Reliable financial reporting must also take into account future conditions and predict how macro factors could impact the long-range success of the business. Consumer demand fluctuations, foreign currency exchange rate changes, and oil price increases are just a few of the factors today’s CFOs need to consider to forecast and address upcoming issues.
Professor David Hand of Imperial College London was famously quoted as saying “…nobody wants data. What they want are the answers.” This is particularly true when it comes to financial reporting. Executives are increasingly looking to the CFO and their financial teams to use predictive analytics to anticipate areas for concern and set a direction for growth. Data needs to be actionable and intelligent to serve as a reliable foundation for solid decision-making.

The advent of machine learning technologies is changing the landscape for CFO forecasting. With machine learning, CFOs can automate financial reporting tasks that were previously extremely time-consuming and gain deep insights into the large volumes of data they are collecting. The true power of the latest generation of these tools lies in the ability to anticipate business needs, staying ahead of costly incidents like unexpected maintenance and business downtime for customers. It is changing the way that finance professionals do their job while driving the transition from controllership to stewardship. As a result, CFOs and their teams can leverage machine learning to free themselves up from manual data crunching to focus on analyzing the insights the data provides them.

#5 Security Risk Management

Unfortunately, new risks can arise from increasing the availability of data for financial reporting. Data breaches and cybercrime are becoming more prevalent and can have significant consequences on a company’s financials. In fact, customer trust is quickly becoming one of the most important issues for enterprises, with a Forrester study finding that “79 percent of consumers reported that they are worried about how organizations handle their personal data and are consciously taking actions to preserve their data privacy.”
In addition to customer data protection concerns, a breach of intellectual property can lead to even more far-reaching consequences, damaging competitive advantage and long-term viability for the company. As a result, CFOs are quickly prioritizing security and risk management considerations when it comes to financial reporting, protecting the data that lays at the center of accurate and timely business intelligence.

Today’s finance leaders need to monitor the pulse of their businesses with a protected, holistic view of all important financial reporting information in a single place. They want to collect and access data securely from across various sources like spreadsheets, web analytics, databases, and ERP/CRM systems to get instant insights. To do this, CFOs should choose enterprise-grade software that implements a security-aware development approach, operational management techniques, and threat mitigation practices to ensure strong protection of the business.

From controllership risks to external risks, technology can help finance leaders identify potential issues that can be assessed and remediated. Choosing technology that prioritizes business intelligence, flexibility and enterprise-level security can ensure CFOs tightly automate processes within their finance departments and across the company. This will help CFOs address operational risks, enforce corporate policies and meet regulatory requirements that could adversely affect financial reporting and the business at large.

The changes in financial reporting offer CFOs the opportunity to become a critical part of the leadership team, driving operational gains and steering their company’s future strategies. Resistance to change always exists, but CFOs that can educate their stakeholders and work with them to overcome this hesitancy can accomplish real and long-lasting results. By focusing on the right priorities and choosing the best technologies, CFOs can tackle the reporting challenges that lay ahead and emerge stronger in the digital age of finance.

Umran Hasan is a senior marketing manager at Microsoft. Umran is responsible for the story behind what Microsoft can do for finance professionals.

This article first appeared in Financial Executive magazine.