In far too many cases, a company’s finance department is out of step with the management’s need for financial reporting, according to PA’s Lars Paredes, business transformation expert, commenting in Økonomisk Ugebrev’s CFO newsletter.
Rather than focusing on delivering the reporting fast, management needs to be sure it shares the right information. This can be achieved by implementing the right process for reporting, by making the content relevant and by ensuring the right mindset.
“This approach enables the finance department to deliver reliable and valuable information to the management. In our work with a large Danish company, we found that one of the biggest challenges with regard to internal information was data quality. When no one could count on the quality of the information, it was either ignored or people were asked to make time-consuming manual data validation. We suggested that the company implement an end-to-end process to ensure data quality from the very beginning,” says Lars.
Lars adds that companies may also save time by creating a process for coordinating activities around the monthly financial reporting.
“My experience shows me that trying to limit the contents of financial reporting to the most relevant information can be quite a challenge […] The boldest companies reduce their reporting, focusing only on critical content. Companies need to make this kind of delimitation to be able to reduce the large amounts of data to the most relevant reporting,” says Lars.
The article explains that companies need to challenge their existing mindset: “The organization needs to understand what characterizes relevant information and why. The right mindset is the key to success through continuous improvement,” says Lars.
Lars Paredes is business transformation expert at PA Consulting Group
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