Rob Frascone from Host Analytics presented the Proformative webinar “Technology Webinar Series: Cloud Based Consolidation & Reporting” on December 5, 2012. In this presentation, Frascone talks about how pre-built financial and accounting software in the cloud can help your company reduce the time spent on analysis. Moving away from traditional software allows your organization to reach fact-based decisions much faster.
Companies Increase Risk by Using Outdated Systems
Many companies are still relying on outdated systems and technologies for finance and accounting. The most popular example of such a program is Microsoft Excel. Companies often don’t even realize the problems they create by relying on spreadsheets to create budgets and forecasts.
Using spreadsheets increases the likelihood of errors. It doesn’t take much to break formulas inside of Excel, and it’s easy to accidentally change a number. The problem is that executives are using the spreadsheets to make important business decisions. And if they can’t rely on the numbers, then it’s going to be difficult to make the right decisions.
There are different signs that your spreadsheets aren’t working out for you. First of all, your forecasts may end up all over the board because of data inaccuracies. It’s also unlikely for your company to stick to the budget you have set up.
Another important concern is that it’s difficult to close the books efficiently. It may take a long time to close the books. Part of the reason is that spreadsheets don’t utilize workflows to help get things done. Additionally, there is a lack of processes when you rely on spreadsheets.
How Cloud Applications Can Help
Using Cloud-based applications can alleviate a lot of those headaches. One of the biggest advantages of moving your finance and accounting applications to the Cloud is having access to real-time data. Using the Cloud allows you to organize your data in a way that makes it accessible for the people who need the information to make important business decisions.
The Flow of Financial Data in Your Organization
It’s important that your financial system is useful for the flow of information that has to take place in your company. First, your managers and financial and accounting employees use budgets for revenue planning, workforce planning, and capital planning. They have to take into account economic indicators, too. Before setting a budget, your financial executives will need to simulate different scenarios.
The next step is to consolidate your financial records and transactions inside of your general ledger. Your company has to allow for currency translation and rates in order to properly close the books. Generally, the controller is in charge of close management.
After the books have been closed, the CFO will use the financial information to perform analytics. This may include board reports, ad-hoc analysis, financial reporting, and financial benchmarks. Then the information will be disclosed if it’s a public company. In your company’s disclosure, you’ll have to mention certain assumptions that have been made in preparing the financial statements.
The next step is for the chief executive officers to plan strategically for the future. They may use dashboard views and standard key performance indicators (KPI) to make new decisions for the company. These strategic decisions will then roll over onto the budget that is set for the managers and finance and accounting departments.
The flow of your financial data represents a cycle. The cycle doesn’t end with strategic planning, because strategic planning marks the new beginning of the next financial cycle. And that’s why it’s really important for your company to have accurate financial data on hand in order to use the data in your organization effectively.
Cloud Technology Offers Many Advantages
Traditional software is expensive because it requires companies to purchase hardware as part of the installation costs. Companies also have to pay for upgrades every couple of years with traditional software. With traditional software, your company has to have the resources necessary to pay for IT personnel to provide software management and support.
On the other hand, Cloud technology doesn’t require you to pay for any large upfront costs. Instead, you use the services on a subscription basis. The IT burden is moved to the Cloud provider, which leaves you with more resources. Cloud applications are easy to implement. And while your business is managing the day-to-day use of the Cloud software, the Cloud provider remains in charge of upgrades and support.
Requirements for Cloud Financial Consolidation and Reporting Applications
Businesses have to meet many different requirements on a regional and global level. Using the Cloud for your financial systems makes sense because Cloud applications offer you the capability to remain compliant at every level. Whether your company is centralized or decentralized, Cloud operations keep your operations seamless and scalable at the same time.
Your financial Cloud application can be used to manage disclosures you have to make at various levels. Not only will it help you manage your disclosure requirements, but it will even provide you with the right type of output, whether that ends up being a Word document, a spreadsheet, or some type of dynamic reporting.