Which Financial Reports Should I Automate - and Why?

There are many good reasons to automate tasks within the finance team. The role of finance is evolving, and the highly valuable members of the office of finance have better things to do than manually enter data, or cut and paste information from one spreadsheet to another. Plus, that manual work results in a lot of review and quality assurance to avoid errors. However, when an organization begins to plan for financial reporting automation, it can be a daunting task. Process mapping and planning and the actual automation of a financial report takes time. CFOs and their teams want to get the most value out of the first tasks and reports that they automate. Where should the team start? Certain reports have a cascading effect, resulting in additional wins when it comes to automated financial reporting. Starting with other, lower level processes can provide a foundation for other key reports.

Top-Down: Go for the Elephant in the Room

When it comes to financials, there are four reports that stand above the rest: the balance sheet, the income statement, the cash flow statement, and shareholder equity. Each of these has its own purpose and timing. But automating the balance sheet can yield big returns for the company and for the finance team. The balance sheet represents a company’s assets, liabilities and shareholder's equity at a moment in time. However, automating the balance sheet’s creation can mean that moment in time is almost any time. If the data that feeds the balance sheet is provided through integrations with the primary systems that hold that information, this report can represent a moment in time that is meaningful for other reports as well. By automating data, for instance, within the assets section of the balance sheet, your cash flow report is largely automated as well. So is your shareholder’s equity statement. It becomes trivial to automate some of the other core reports once the balance sheet’s automation has been mapped and implemented.

Bottom-Up: Automating Lesser Tasks Can Be Impactful

Taking a top-down approach to automating reports means you’ll have done the heavy lifting needed for other financial statements as well. But automating some of the lesser tasks and reports will provide an accurate underpinning for the top-level reports to pull from. For example, automation of expense reports can simplify the process for the finance team and provide the foundation for the income statement. By automating indirect and direct expenses, the income statement gains accuracy and removes the manual process of copying the data from spreadsheet to spreadsheet. The key for all of this, of course, is to use tools that allow for automation of these statements while also supporting integration with the core systems of record from where the data can be provided. FP&A software that facilitates integration and generation of key reports will make automating these statements easier and allow the finance team to concentrate on mapping the processes and setting up the automation.‍