Increasing complexity in the financial close and reporting process is a reality for most CFOs and financial executives today, says Luigi Albini, CFO at Tagetik. New regulatory demands are coupled with a more complicated business environment , thereby requiring finance to play a bigger and more analytical role in charting and navigating global operating and competitive challenges.
More than ever, the CFO needs to be a strategic partner to the CEO - not just the person who certifies the financial state of the company. In addition to providing an accurate assessment of the company’s performance, management expects the finance organization to help plan and forecast where the business is going in an environment that is changing more rapidly and dynamically then ever before.
“Yes, regulatory requirements are increasing. But market complexity is also challenging CFOs. Today, the CFO must be a business partner who continuously provides the analysis and answers the CEO needs to drive the company forward. ”
To Albini, this means the financial close and reporting process must now be inextricably linked to strategic planning and budgeting.
“Nowadays, it’s crucial to have the capability to integrate actual close data with forecast and budget data. It’s not enough to have a static understanding what happened in the past and what is projected for the future. Management needs to see the impact of actual results to forecasts in a dynamic way in order to make ongoing assessments and adjustments.”
On one hand, a more global and diversified competitive environment requires increased sophistication and detail of analysis. On the other, these same competitive challenges are increasing complexity inside of the company and the financial function itself. Mergers and acquisitions, for example, can significantly complicate the financial close.
“To consolidate company figures coming from different sources - from multiple ERPs, business units, and even accounting principals - is a challenge the CFO faces on a daily basis.”
Add to that the fact that integrated reporting, which incorporates a wide range of non-financial data and metrics from multiple databases and systems, is becoming a requirement for many companies.
With overall business complexity growing and the level of government regulation dramatically increasing, particularly within the financial services and insurance industries, CFOs are clearly being asked to do more - and to do so in an increasingly timely and cost-effective manner.
Older legacy financial systems are really not up to the challenge, says Albini. One of the greatest downfalls of legacy systems is that they are actually a patchwork of systems designed independently of one another and are not well integrated. There’s one platform for the close, another for consolidation, another for forecasting. The result is much lower levels of efficiency.
Modern Enterprise Performance Management systems are critical to meeting the new challenges of financial consolidation, reporting and planning. CFOs need to simplify financial management and provide more in-depth reports and detailed analysis to meet external and internal requirements and, of course, help drive and manage the company’s forward progress.