Financial organizations today are riddled with stressful manual processes. It’s no surprise that CFOs are increasingly worried about undetected errors (especially their own), inefficient workflows, lack of collaboration and accountability.
Last minute changes and inconsistent information are the two main causes of errors. Too many finance functions rely on information collected in face-to-face meetings and data from more than six different sources.
Manual processes are not the only problem, however. Multiple contributors, compliance requirements, and increasing deadlines also add to the stress.
So how can you best manage your external reporting process, eliminate errors, and give your finance team a good night’s sleep?
Producing business results is a long and very stressful exercise that unfortunately does not end when the financial statements are approved. There remains the process of communicating the results to your stakeholders, from the management team to the board of directors, including investors and regulators.
And they want more than hard numbers. They also want to read the story the numbers tell about the company. If that wasn’t enough, each stakeholder has a different point of view and this makes it difficult and potentially risky to meet each other’s needs.
Communication with external stakeholders involves different departments of a company, from finance to HR, risk, IT, etc. and can take different forms which can be a press release, an investor brief or a logbook.
When data is manually inserted into a system, there is always some degree of risk. If numbers from disparate and incompatible operating systems or applications need to be recombined into another, version issues arise. Questions can be raised regarding the accuracy and even the objectivity of the data can be called into question if it goes through too many layers of hands.
It is the responsibility of the finance team to bring together all the data from the different departments. The problem is, finance doesn’t own the data, so finding it can be time consuming and error prone.
Workflows and audit trails increase accountability and decrease risk. It is therefore essential to give the content and consumers of your reports alignment, precision and confidence.
Make it reproducible
The worst part of the reporting process is that it has to be done over and over again. This is not a one-off operation but a monthly and quarterly operation. It is a long, manual and repetitive process that distances other value-added activities.
The use of manual processes can lead to a lack of consistency and control over data. And with regulatory mandates intensifying the need for change, having the right systems and processes in place in the form of a reliable and unified business performance management platform can be the solution to reporting problems and a cure. to the sleeplessness of CFOs.
The right platform shouldn’t require major technology investments or a major process overhaul, as you should be able to easily map it into your existing IT architecture.
Automating your reporting process means having a source for multiple reports, a database for accuracy and consistency, a repeatable process that saves time and resources, financial intelligence to ensure accuracy and the workflow to manage many people in many departments.
An effective unified system should do all of the above, allowing you to communicate your numbers to all your stakeholders accurately, quickly and easily, and in doing so, reduce your financial reporting risks. Automate and transform your data into a winning reporting process for your business.
John Hancock / Manulife Case Study
Manulife, a Canadian-based financial services group, acquired American insurance leader John Hancock in 2004 to become one of the world’s largest insurance companies. With different processes and regulations in North America, it was increasingly difficult to manage all reports, which is why, in 2011, the organization began to focus on how to improve the reporting processes. financial reporting in all entities. The challenges included multiple reporting requirements and the use of manual processes. For example, data provided by decentralized business units for the same footnote had to be consolidated manually. To add to the complexity, the finance teams in each country used different processes. The Canada team used built-in Excel files while the US team manually updated all numbers and text, resulting in an inconsistent financial statement presentation process. Another problem was that only one user at a time could update a document.
In September 2011, the company formed a project team to identify a set of goals and begin the search for an automated reporting solution. The plan was to implement a solution in 2012 for the John Hancock unit in the United States and deploy it to parent company Manulife in 2013.
The primary goal of the team was to simplify the financial reporting process. An essential objective was to create a source of truth to produce all financial statements. The reporting solution also had to integrate with Lawson’s general ledger system. The project team also wanted to ensure consistency and standardization of all financial reports without tedious and error-prone manual work.
In January 2012, the company selected a collaborative disclosure management (CDM) solution with advanced features.
In March 2012, the team documented and reviewed the operational requirements and implemented the CDM in a test environment. Then the team began testing, reporting, and training. The company has also established a working group of super users, including IT staff and financial reporting.
In May 2012, CDM software was officially implemented. Building on the existing Lawson ledger system and Essbase database management system, the team created a second data store so that all financial information could be uploaded to a central repository. Over the next few months, the project team focused on producing nine reports, which included several sets of verified US GAAP statements, verified statutory reports that are filed with insurance regulators and the National Association of Insurance Commissioner (NAIC), and unaudited footnotes included in regulatory documents with insurance regulators and the NAIC. Within six months, the company had trained staff, created all the requirements, and started producing financial statements.
In early 2013, the organization began using the CDM for other John Hancock reports, including several sets of Management Discussion and Analysis (MD&A) required by the NAIC and insurance regulators, as well as quarterly internal management reports for audit committees and the board of directors. By the end of 2013, 96 people at John Hancock had access to the software and the finance team was producing reports involving three different accounting policy bases and 15 legal entities.
In addition, Manulife has started using the CDM to produce its annual and quarterly interim financial statements. In early 2014, Manulife also used the MDP for MD&A in its quarterly reports to shareholders and for its press releases.
Today, John Hancock / Manulife has a central repository for all financial information. The data collection process is much simpler and the organization has a more controlled environment where users know exactly where to go. The CDM also allows data to be constantly monitored with built-in checks to ensure it is balanced before anything is downloaded from the general ledger.
The processes are much more streamlined and standardized. For example, business areas have standard templates that allow them to update their data during the quarterly or annual close process, which allows for greater consistency between financial statements.
The organization has developed a very strong group of expert users within North America’s finance teams. The group’s efficiency made it possible to speed up the management review process and considerably reduced reporting time. For example, the team was able to release John Hancock’s 2013 financial statements four days earlier than in 2012.
Going forward, the project roadmap includes leveraging the CDM link functionality between various Manulife reports and utilizing the software’s XBRL capabilities and implementing the new work planning functionality. So many reports run one after another and these can take 15-30 minutes each. The CDM has helped create a scheduling function that will actually allow jobs to run overnight. When the team arrives in the morning, the financial statements will be updated and ready for management review.