For those in the finance industry, the positive feelings at the start of a new year are slightly dampened by the looming financial year-end. This period can be extremely stressful for financial directors and their teams, who have the unenviable task of compiling a year’s worth of transactions from across the company.
While this is certainly one of the more challenging jobs that financial teams face, completing this task efficiently is an integral part of supporting the business.
Most firms are aware that financial planning, forecasting and reporting are all essential for commercial success. Whether this is for staff costs – such as bonuses and expenses, month, quarter or year-end close – a huge amount of time and money is committed to financial planning. However, these resources are not always invested in the best way.
For a start, many financial departments are still struggling to draw together multiple data sources and resolve complex adjustments, mainly because they continue to rely on traditional tools such as spreadsheets. It is not just the efficiency of the planning process that suffers with this approach; businesses are also leaving themselves open to hidden errors.
These errors are often a combination of both spreadsheet and human shortcomings, as many financial teams enter their data onto a spreadsheet manually. Entering data manually isn’t an issue for businesses if there is only a small amount of solitary data. The issues arise when there are multiple batches of data from across several departments within an organisation. After all, each department may have different ways of formatting its financial data, leaving the finance function with the gruelling task of finding a way to represent the data in an organised way.
Rules and regulations
The sheer volume of data is only one issue facing financial teams at this time of year. The finance industry is no stranger to updated regulations, with new rules being introduced or amended on a regular basis. As such, teams looking to compile their end of year reports must also factor in regulatory changes, something that will become even more complex for UK businesses when the true repercussions of Brexit begin to reveal themselves.
Ensuring that the company complies with new regulations, or changes to existing ones, takes much time and finance teams are often left feeling the pressure as the deadline for reporting fast approaches. This means that they are more likely to make errors when inputting data and submitting their monthly accounts. These can quickly snowball, making the end of year process even more problematic for companies.
Against the clock
Entering data manually is neither cost nor time effective. Recent research on the month-end cycle showed that no less than 94% of businesses implement an early month-end to ensure that they have enough time to respond to the errors that are commonplace in their data.
Over half of the chief financial officers (CFOs) and financial directors (FDs) that took part in the research stated that time-consuming manual adjustments happen every month, and nearly 45% raised concerns over the sheer volume of errors that need to be ironed out each month. Unsurprisingly, with so many errors occurring on a month-by-month basis, financial teams often struggle to amalgamate all of this data at the financial year end.
Finding a solution
Thankfully there is a way that finance teams can reduce the volume of errors in each monthly report and help themselves when it comes to the close of the financial year. First, businesses must complement their use of spreadsheets and trust that automation is the future for both financial planning and reporting.
By implementing automated software, businesses will have a system that is capable of organising and analysing data more efficiently than more traditional programs such as Excel. Automation drastically reduces the need for finance teams to manually correct errors and in doing so, streamlines key processes.
Automation is not only useful for creating a more time and cost efficient process for finance teams in any industry, it also reduces stress when it comes to the financial year end. The reports produced at the end of March and April allow a company to better understand the requirements for the year ahead, including where extra resource may be required.
As with any change, it can be difficult to find the courage to make the transition to automated systems, but businesses that take this step now will reap the benefits of financial automation very quickly and pave the way for a happy financial new year.
Automated accounting promises to save business owners time and money and remove much of the tedium from routine tasks.
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