With access to so many financial reporting solutions, there are many reasons why you should stop creating your reports manually. Manual report production has been the industry standard for decades despite the advancements in software applications. In the modern business environment, there are many reasons why manual reporting limits those who create and interpret reports.
First, it is important to understand how manual reports limit the ability of both report creators and audiences to make decisions.
Manual Reports Limit Decision Making Ability
Management reporting is a fundamental process for all businesses and helps to convey important information to decision-makers. The reports are often used to help assess whether the business is on track or struggling to meet its target. The information garnered in the reporting process helps management to develop methods to either realign the business with its objectives or validate the processes that have been implemented to meet them.
There are a few key ways in which manual financial reporting limits decision-making abilities.
Manual Reporting Places Data Validation Over Data Analytics
Typically, the reporting process is done by creating reports in Excel and presenting it in static form via Powerpoint or some similar presentation. When done in this way, there is a need for several layers of manual data input which requires manual review processes. This overloads management with data validation and takes away their ability to perform data analysis.
There are many points of review that must take place when creating manual reports. First, it is important to review and validate the data going into the report. Then, after reports are created, a second review is required on the method of presentation. This means that manual reports place a higher value on reviewing information rather than analyzing information.
Manual Reporting Is Resource Intensive
When financial reports are created manually it places an increased demand on resources. This is because there exists a need to source, input, and validate data. As a result, there is an increased demand for additional staff or systems to be in place. Automated reporting allows fp&a analysts and finance departments to lean out and places value on analysis over creating and validation.
Additionally, manual reports require the use of a multitude of systems. Typically, there is some database of accounting software that houses the data used for the reports. Then there is Excel, which is typically used to manipulate data, and finally, Powerpoint which is how the reports are presented. All of these systems introduce additional touchpoints in the reporting process which means time is spent creating and reviewing reports instead of delivering critical information.
Manual Reporting Is Time Intensive
The end product of having disparate systems managing data and then creating manual reports is a time waste. The time spent validating and compiling data into easy-to-read slide decks detracts from the time that can be spent making critical and timely decisions.
In addition, a great deal of time is spent formatting objects in Powerpoint and Excel to be more visually pleasing or to fit all of the necessary information on one page.
The end product of these three conditions of manual reporting is that they ultimately take time away from analysis and decision making, resulting in less-timely and less-informed decision making.
Automated Reporting Is Better
The above reasons are not the finite list of issues that can arise when creating reports manually, they simply outline some of the ways that manual reporting places limitations on the decision-making process. In fact, there are a host of reasons why manual reporting is not only less efficient but riskier.
Transposition errors can easily happen and lead to increased scrutiny by reviewers. Manual reporting requires that a series of systems work appropriately, removing the ability to create reporting redundancies to protect against outages and increasing the touch points that can interrupt the reporting process. The outputs are usually static excel files or PowerPoint presentations which might not be visually compelling.
Benefits Of Automated Reporting
Automated financial reporting helps reduce the risk of reporting errors that are the result of transposition mistakes or review point breakdowns. The processes are built into the systems that automate reporting which manually build in redundancies and allow for fast data validation.
Manual data manipulation in Excel has a multitude of limitations and risks associated with it. Aside from transposition errors, there can be formula breaks, stale data links, and version control problems that result in incorrect or outdated information making its way into reports.
Modern automated reporting software allows for the construction of easy-to-read dashboards that reflect real-time key performance indicators (KPIs). This removes the necessity of placing raw data into visual representations and then into a final report for management and instead automatically presents data in a more interpretable way that is visually pleasing.
Finally, automated reporting reduces the time spent on report compilation and instead places the efforts of those using the data on analysis. This value-add proposition simply does not exist with manual reporting.
Automated Report Production Vs Manual Reporting
Automated reports can be generated and produced in a multitude of ways. For example, advanced systems might run queries and automatically produce reports at defined time intervals and deliver these reports via email or other means. This means reports can be in the right hands before the start of regular business hours, giving a major advantage to those who use the information for daily decision-making.
Similarly, dashboards exist that allow end-users to query data for their own specific purposes and automatically receive the information they need in a way that is digestible and usable. The use of dashboards fautom has replaced many manual reports and allows users from various departments to reduce their dependence on finance departments for ancillary data requests. This shift from manually fielding data requests allows finance departments to focus their efforts on value-add activities.
The benefits of automated reporting extend beyond management reporting as financial statement production is often time-intensive and requires a great deal of manual manipulation in excel. The stakes are a little higher with financial reporting as incorrect information reaching investors or stakeholders can destroy confidence and convey a poor message about the internal control environment that the business has in place.
Using Datarails, a Budgeting and Forecasting Solution
Datarails’ FP&A software enhances spreadsheets with real-time data and integrates fragmented workbooks and data sources into one centralized location. This allows users to work in the comfort of Microsoft Excel with the support of a much more sophisticated data management system at their disposal.
Every finance department knows how tedious building a budget and forecast can be. Integrating cash flow forecasts with real-time data and up-to-date budgets is a powerful tool that makes forecasting cash easier, more efficient, and shifts the focus to cash analytics.
Regardless of the budgeting approach your organization adopts, it requires big data to ensure accuracy, timely execution, and of course, monitoring.
Datarails is an enhanced data management tool that can help your team create and monitor cash flow against budgets faster and more accurately than ever before.