The future of financial reporting is built on the backdrop of clear, well-stipulated responsibilities — especially for the modern financial executive. While providing greater insight and finding ways to lower costs were viable functional requirements for CFOs in the past, the future calls for financial executives to play much more dynamic roles.
Given the present accelerated transformation of economies worldwide, increased market interdependence, and shifting customer expectations, not to mention increased volatility and uncertainty of global financial markets, the role of CFOs and finance executives is shifting from its previous static and rigid design.
Nowadays, customers are not only more demanding but there is also an increased challenge in achieving sustainable, long-term growth and value creation. For this reason, financial executives have to be adaptive to new changes, agile, and develop resilient models of financial reporting.
The future of financial reporting continually relies on the adaptive performance of finance executives. Their role in steering entire organizations towards more efficient models of financial reporting and the overall performance of the company is one of the catalysts in a chain reaction that can either be positive or negative.
Clear examples are seen in the historic divergent fortunes of Apple and Kodak. While one organization was on a sustained decline, the other was at its peak. In retrospect, it is hard to deny that the eventual reversal of fortunes for both companies hinged on the success or failure of finance executives identifying and navigating new industry-wide trends and data.
Such incidents highlight the fact that the behavior and performance of finance executives should be well-calibrated and aligned with industry-wide trends thus enabling an organization to function smoothly and adapt to change effectively.
Finance leaders should be able to not only identify emerging solutions but also plan for the implementation of new changes with a strong knowledge of financial and management accounting.
As the scope of financial data increases, so do financial reporting rules and regulations. This funnels into the increasing demand for in-depth data analysis by stakeholders and investors, and CFOs will have to be the catalysts that push organizations to adopt new technological solutions.
Modern solutions and data analytics platforms will help CFOs and their organizations dive deep into every aspect of a business’s finance operations while leaving room for decision making.
The most ideal approach to financial reporting is to develop a shared repository of financial facts and figures that is relevant to investors, regulators, and other stakeholders. Yet, this is rarer than most realize.
According to a study by PWC, top-performing finance teams take about a week to produce their financial forecast while underperforming ones take up to 19 days. This disparity is made possible by the use of emerging technologies that simplify the process of establishing a single source of truth from which finance leaders can analyze and compile finance reports.
The application of these sophisticated technological solutions not only helps finance leaders automate repetitive work but also provides sufficient time for them to conduct adequate and well-informed decision-making.
These solutions include platforms such as OverlayAnalytics which enable businesses to save up to billions in costs that may have otherwise been spent on outdated accounting tools and CRMs.
With the increased complexities of data in the world of finance, executives will increasingly find it necessary to implement such tools to keep up with the changes as well as bring context to the rows and columns that make up part of the collected financial data.
As the scope of the finance industry expands into new territory, so too does the grasp of regulatory requirements. Watchdogs and other regulatory agencies of the world over are not slacking behind. In 2020 for instance, some hefty penalties hit the headlines due to the failure of a range of financial institutions to provide compliant financial reporting.
Whether it’s KYC and AML misreporting or oversight of new compliance regulation, finance executives bear the burden of performance as the reputation of an organization is affected. These risks are increased as more companies expand their operations across various jurisdictions worldwide.
For this reason, finance executives should encourage their organizations to prepare financial statements in compliance with several regulatory frameworks. While the business environment is changing, financial reporting hasn’t evolved much over the last century. This is why finance executives should consider tapping into emerging tools that re-imagine financial reporting while supporting compliance-based reporting.
The future of the finance industry will require CFOs to build closer relationships with investors by speaking their language, which is transparent reporting. This will require finance leaders to establish a deeper level of financial reporting that shows transparency.
While existing financial reporting tools are useful when it comes to collecting and compiling data, they fall short whenever there is a need for in-depth data analysis. With increased competition for capital nowadays, however, investors are moving more towards robust, flexible, and scalable reporting tools.
Therefore, to be at par with investors’ needs, finance leaders need to be mindful of the level of transparency demonstrated, as well as the availability of adequate deep reporting that users want.
The world of finance is changing faster than ever before. Given the rising level of data produced by the modern organization, the increased need for interoperability, and the rising scope of regulatory compliance measures, finance leaders will benefit the most by adopting new solutions. These technological alternatives will help them improve their reporting while increasing accuracy, transparency, and compliance.