How old are your group numbers by the time anyone sees them?

In multi-entity organisations, financial reports can take weeks to pull together and present to senior leadership. That creates the risk that important decisions will be taken based on out-of-date figures. Speeding up group reporting involves harmonising processes and deadlines, adopting a standardised chart of accounts and getting all entities onto the same software – but you’ll probably need a single unified system to make reporting instantaneous.

The short version

• Group financials can take weeks to produce. 70% of respondents at one iplicit event said month-end was taking longer than 10 days.
• Different ways of working, incompatible charts of accounts, multiple currencies and the need to eliminate intercompany transactions all slow down reporting.
• These delays create the risk that people will make decisions based on out-of-date figures – and sometimes the figures are not just old but wrong.
• Standardising processes, deadlines and software will speed up reporting but real-time data requires a unified finance system.

As the finance team slogs its way through the mountain of tasks that go into producing group reports, you’ll naturally be thinking about how time-consuming and energy-sapping the whole process is.

But as you wonder to yourself why this all has to be so hard, it’s worth reflecting on a question that’s more likely to interest your colleagues outside finance: Just how old is the data in these reports?

A straw poll at a recent iplicit webinar found 70% of finance people present were taking longer than 10 days to close their month-end accounts. Only 3% were managing it inside a week. In rarer cases, group consolidation is a full-time job. All this can mean senior leaders in the organisation are trying to make decisions based on data that’s incomplete or badly out of date.

In this, the latest in a series of articles about the challenges of multi-entity accounting, we’ll look at why data gets so old before it finds its way into reports, what effect that can have and how to speed things up.

Why group reports take so long

Group reporting involves pulling together and reconciling an awful lot of data. Without significant aid from software, your finance team will be stuck working through a lengthy checklist of tasks, all of them vulnerable to delay or human error. Under those circumstances, producing timely group reports is almost impossible.

Only the smallest of organisations can hope to generate real-time group reports without automation, according to Guy Burton, iplicit’s Technical Solutions Consultant. “In principle, producing a consolidated set of accounts just means taking trial balances from companies A, B, C and D and adding them together,” he says.

“But you might have to remap data from one chart of accounts to another. You might have to wait for data from different entities, some of which might be efficient and some of which might be behind, so you can’t necessarily pull that data on demand. Your picture is only ever as current as the last data you’ve extracted from each entity.”

We examined just how inefficient multi-entity accounting can get in the first article of our series. The key challenges are:

• Different entities using individual instances of the finance software – or different software entirely.
• Different entities using different charts of accounts, requiring you to manually map one entity’s set of accounts to another.
• Entities moving at different speeds to close a period – so one entity’s data might be ready but you might be waiting for figures from another.
• Trading in multiple currencies, leaving the finance team to convert the figures into the group’s preferred currency at an exchange rate you need to be clear on.
• The need to check everything for errors in data entry or reconciliation – or for broken formulas in spreadsheets.
• The need to reconcile intercompany transactions and make sure they’re eliminated from the group report.

The impact of delayed group reporting

Are senior leaders in your organisation making decisions based on reports that have been weeks in the making? If so, there’s a strong chance that the financial picture will have changed significantly since that data was gathered.

The seriousness of that risk will depend on how fast things tend to change in the world you operate in. But there’s every likelihood that someone will be making decisions on vital issues such as pricing, hiring and spending based on reports that lag behind reality by weeks.

At Abbey Group, there was a “big time lag before you could see any accurate position for any of our companies”, Group Finance Manager Danielle Disley recalls. A-One Insurance Group used to run nine companies on nine separate instances of Sage 50 – which made consolidation such a slow process that leaders were “driving the business blind”, according to Group Operations Director Sarah Smith.

Slow group reporting also means any problems or looming crises can go unnoticed much longer. At the international nonprofit Health Poverty Action, it was difficult to spot any issues coming down the line because entities in different countries were using separate instances of QuickBooks and Sun. “We found it very challenging, to say the least, to address problems in a territory if the problems weren’t being identified at the earliest opportunity,” says Sandra Tcheumeni Boschet, Director of Finance & Operations. “Dealing with multiple systems meant that sometimes you would discover issues much later than would be ideal.”

There’s a risk that your senior leadership may not even have an accurate picture of how things stood weeks ago. Manual processes present so much scope for human error that the data may not only be old but wrong – especially if time pressures shrank your opportunity to review and check for accuracy.

The practical steps you can take to make data more current

It’s worth reviewing your processes and systems to see how you could speed up reporting. There might be immediate changes you can make – or you might have to spend longer adopting new practices and systems. Adopting common processes, deadlines and systems as far as possible will all help you get better data faster.

• Standardise routines and processes as much as possible, so people in different entities aren’t following different routines and presenting information differently.
• Have common deadlines, so you don’t find yourself waiting for data from one entity that’s behind all the others in reporting.
• Adopt a standardised chart of accounts. That isn’t always viable when entities exist to do different things but it massively simplifies your work by eliminating the need for complex remapping.
• Get all entities onto the same finance software. Ideally, that will be a unified system, so your team doesn’t have to repeatedly log in and out of different accounts to see different entities or the group position.
• Automate as many of the processes that go into reporting as possible. Intercompany eliminations, currency conversions, bank reconciliation and other regular tasks can be left to the software. Your team can then switch from putting data into the system to reviewing what comes out.

How to get group reports ready straight away

There is a world where complete group information is put together very fast, or even instantaneously. In that world, consolidation happens all the time, with no need for long hours and stress at the end of an accounting period. Organisations which once produced consolidated reports the hard way have seen a huge change from moving to iplicit.

For Abbey Group, where Danielle Disley previously reported that “big time lag” in reporting, things changed with the move to a new system. “iplicit has really improved things and allowed the team to work better together. And at the management level, people can look at all the companies together and make their plans with better data,” she says.

At the charity ellenor – where the Head of Finance, Besa Lane, used to spend a lot of time checking for errors – the team gets accurate group information for its group of three entities quickly. “The accounts are ready instantaneously. Once the month end is closed, we just need to check them,” she says. “It has shortened that period of reporting but also, more importantly, it’s improved accuracy. To me, that was the most important thing because the spreadsheets were prone to so many mistakes.”

She adds: “If we put all this information together, we can make very well-informed decisions about where to focus for the next two or three years.”

At Health Poverty Action, Sandra Tcheumeni Boschet can spot any potential problems early. “I can see anything, at the click of a button, in any country, across the entire organisation. It means that I can proactively tackle issues quickly and not wait for departments to report problems at a later date,” she says. “It also means that these issues can’t ‘hide’ in the various departments. The key thing for me is having a unified system, with everybody using one version, and subject to authorisation, having access to any aspect of the business instantly.”

Combining speed with accuracy

It’s soul-destroying to put long weeks of effort into producing reports the hard way, just to provide your organisation’s leadership with data that’s badly out of date as soon as they look at it.

Getting all your entities onto the same unified cloud-based accounting system can turn this situation around, setting you up to produce reports faster and more accurately. But you might have to bite the bullet and change your software provider first.

To find out how iplicit could transform your group reporting, why not take a 3-minute tour of the software?