Boast financial results - intelligent performance and analytics


Authored by RSM US LLP

This article is part seven of a seven part series providing a practical playbook for today’s CFOs

The office of the chief financial officer (OCFO) fields more enterprise-level reporting and analytics than any other business entity. As the central hub for all financial and nonfinancial data, the OCFO must ingest and integrate information from every corner of the enterprise. The CFO determines the financial data, reporting and analytics strategy for the firm, complete with KPIs to prioritize effort and resources.

Because credit, liquidity and overall cash flows can change very quickly--sometimes without obvious triggers or forecastable causes--cash flow and balance sheet projections are critical to the entire executive team. Meanwhile, business, legal and economic changes further complicate the need for rapid forecasting, analysis and insight to address emerging trends or changing market conditions.

Financial data and reporting strategy

The CFO requires a data and reporting strategy that aligns with and ensures delivery of financial strategy and planning milestones, including data-driven outcomes in reconcilement, close and consolidation processes, as well as financial and management reporting. To maintain a competitive edge, CFOs must continuously evaluate and refine their organizations’ reporting strategies to meet operational and strategic analysis needs and drive innovation and performance improvements through explorative technology.

Integrated data and reporting governance

As financial data expertise has become a core requirement of the OCFO, the level of data and reporting governance has increased to include demand and requirements management for information delivery. Governance is more than a set of controls or a process, it ensures that the supply of data satisfies business demand in terms of trusted quality and timeliness. Reporting and analytics governance address this demand for data at the requirements and analytic model levels to ensure that analytics reconcile to the systems of record in financial, regulatory and management reporting.

Applying analytic techniques in driving financial transformation

Finance teams can leverage data mining and intelligent process automation tools to explore financial and operational data to identify transformation opportunities. With proper discipline, CFOs can build data mining veins that are suitable for production analytics design and delivery, and utilize analytical tools to expose leverage points suitable for process automation.

There are three phases of an analytics life cycle that align to these data exploration techniques:

  1. Exploratory assessment. Using data science or process mining tools, companies can explore sample financial data and visualize processes on the fly to identify major financial improvement options.
  2. Data mining analysis and solution design. Once improvement opportunities have been identified, companies can produce a target architecture and develop sustainable, scalable reporting and analytic solutions.
  3. Harvesting the value in solution delivery. The final step is to apply the plan and model to produce the solution, whether business intelligence or process automation delivery.

This simple process--accelerated by analytic exploration and assessment of business opportunities in financial terms--highlights key business and operational areas where financial impact can best be obtained from process, data and reporting improvements, and innovation. Intelligent automation and RPA often provide the lift expected once mining and analysis prove their value.

Expanded options for financial performance management solutions

Financial performance management (FPM) refers to the set of processes and related automation options available for end-to-end financial processing and analytics. By supporting and improving intelligent accounting and financial process automation, FPM helps firms address operational accounting, accelerated reconcilement and close processing, financial and management reporting, and financial analytics.

Performance management software is generally grouped into two classes. The first, CPM, addresses many of the close, consolidation and reconciliation needs, as well as budget, planning and forecasting requirements. The second class, EPM, adds multidimensional cost and profitability analytics with scenario-based analysis that can recast data through multiple financial models. While leading software vendors often use the terms interchangeably, solutions from Oracle and OneStream are generally grouped into the EPM category.

FPM software provides CFOs with a broad range of functional capabilities, including:

  • Financial consolidation and close. The solutions address business process requirements for detailed functional support for complex consolidations, intercompany eliminations, constant currency analysis, close process orchestration, supplemental data collection and more.
  • Account reconciliation. Products facilitate real-time visibility into the performance of reconciliations, ensuring they are prepared and properly qualified. They address a company’s need to streamline and optimize performance by automating reconciliation tasks and variance analysis.
  • Planning and modeling. FPMs fulfill the CFOs need to create custom planning and forecasting models, as well as leverage prebuilt, customizable calculations, dashboards and reports. Solutions address long-range scenario modeling, financial statement planning, workforce planning, capital asset planning, project financial planning, information technology financial management, sales and quota planning, and more.
  • Profitability and cost management. Products can significantly automate and control allocation-based business processes such as customer and product profitability, management allocations, shared service costing, cost transparency initiatives, and legal entity allocations to support operational transfer pricing.
  • Tax reporting. Software solutions aid corporate tax departments in continuously meeting best practices for global tax reporting requirements by providing capabilities for workflow, configurable tax schedules, dashboards and robust reporting to automate tax processes. They also help mitigate issues, including controversy management, uncertain tax positions, R&D tax credits, data collection for transfer pricing and tax compliance.
  • Narrative reporting. Software addresses a CFO’s key requirement to provide a secure, collaborative, process-driven approach for defining, authoring, reviewing and publishing financial, management and statutory report packages for internal and external stakeholders.