Financial statements are records of a company´s financial activities and the position of an entity. It is a document that is meant to structurally present critical business information in a way that makes most sense to its users.
Ideally, these financial statements are the documents that would garner the full confidence of investors, board members, and all other company stakeholders because they are meant to be documents that will help them make accurate forecasts as to the magnitude, timing, and degree of certainty or uncertainty of company cash flows. They are also supposed to be documents that help these people in their decision-making when it comes to new acquisitions or allocation.
The truth of the matter is that today, these investors, board members, and other company stakeholders cannot fully rely on the outputs of financial reporting because of the following reasons:
- Financial statements rely heavily on estimations and judgment calls that may not always be accurately or intelligently done despite best efforts in doing so. This is especially true for companies that do their forecasts/estimates the traditional way – through manual labor-intensive spreadsheet systems.
- Companies today use ”standard financial metrics” that they think will enable them make intelligent comparisons in order to make near accurate assessments as to the value of the company. However, these metrics carry with them certain flaws or challenges. Metrics can backfire and can be subject to intense manipulation. In addition, some companies are even too metrics obsessed that many people either end up looking for creative ways of coping or just simply disengage from the process altogether.
- There is a corporate practice of incentivising the injection of errors into financial statements. It is not uncommon for managers and executives to receive incentives in cooking both the books and the decisions. It has been widely observed through the years that managers sometimes overprovision or underprovision in order to have a reserve that can help them in future periods in order to inflate profits or to ”borrow” profits from a future period in order to boost the present.
The Value of Excel-based Reporting Software
Finding ways to address these aforementioned challenges in corporate financial reporting is not easy but a combination of accounting revolution in terms of international accounting standards and the introduction of modern technology that aids in improving how financial reporting can be done certainly helps.
The attempt to introduce universal standards in the world of accounting deserves its own discussion as it comes with it several issues that need to be carefully peeled. However, the rise of excel-based reporting tools certainly has made strides when it comes to financial reporting improvement.
As mentioned, one of the major problems in forecasting or reporting is the manner and platform in which it is done today – through excel spreadsheets.
Excel has always been a tool relied upon by finance personnel which is why weaning these employees off of a tool they have grown familiar and accustomed to is not the smartest idea.
That being said – excel is not a perfect tool as it never was meant to do complex financial forecasting or financial reporting. This is the reason why using pure excel means proliferation of errors in the statements, high degree of inaccuracy, and significant staff time expenditure.
This is where excel-based financial reporting software comes in handy. By using an excel-based reporting software like Performance Canvas, there is no need to wean employees off of excel which can lead to resistance to change and longer training times to learn a new solution.
Excel-based reporting software like Performance Canvas uses excel as its user interface but it sits on top of a powerful engine that offers finance personnel not only the ability to do excel modeling but also server modeling. This makes working more standardised, consistent, and less prone to errors due to its self-check mechanisms and increased transparency in the entire process.
On top of that, excel-based reporting software Performance Canvas more than just automating financial reporting through business rules setup, also incorporates best practices on how to do financial reporting. This includes but is not limited to suggestion of sound and effective financial metrics to measure real performance as well as modern ways of streamlining the entire process.
Lastly, with its enforcement of accountability in the entire financial reporting software, it becomes easy to go after managers who purposely underprovision or overprovision in order to falsely inflate profits because the system makes it easy to spot who is responsible for which figures and deviances.
Find out more about Excel-based Financial Reporting Solutions
Are you looking for ways to improve the way you do financial reporting today? Do you want to invest in a new tool without moving away from ways that are familiar to you?
Visit www.performancecanvas.com today and you will see that there is no need to make a blind leap when it comes to improving financial reporting in your organization. Email firstname.lastname@example.org to see a free live demo of the tool or to talk to one of our seasoned finance consultants.
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