The innovation in Financial Reporting Global Survey 2018 builds on earlier research about attitudes to innovation in the finance function and fascinatingly highlights that innovation in reporting is at the vanguard of the finance function’s attempts to modernize.
Almost half (46%) of respondents to this global survey said they had made innovative changes to their reporting procedures over the last three years compared to just 37% in FSN’s earlier survey, “Innovation in the Finance Function” 2018, that had implemented innovations across the finance function as a whole.
Crucially, the Innovation in Financial Reporting survey underlines the importance that innovation plays as finance professionals seek to transition from their traditional role in financial stewardship and good governance to a more outward facing role as strategic advisor and business partner to the rest of the C-Suite. Broadly speaking, innovation in reporting releases more time for finance professionals to devote to the delivery of business insight and growth.
However, the report reveals that for the vast majority of finance functions there has been little improvement in their effectiveness (time to close the books, speed and accuracy of reforecasting) over the last three years. Most finance professionals remain mired in fractured systems and processes with data scattered to all four corners of the organization. And this is against the backcloth of steadily falling finance headcount and rapidly increasing demands on time, such as regulatory and statutory reporting as well as meeting the demands of more complex and diverse reporting needs.
Yet the report also shines a light on the qualities and conditions that lead to superior performance and finds that mastery of finance data holds the key to everything else. The study reveals a steady progression along what we call the ‘data maturity curve’ from “data over-loaded” finance functions at one extreme to “data masters” at the other. An organization’s positioning along this curve determines to a very large extent the ability of the finance function to liberate itself from the drudgery of, data capture and manipulation, to a situation where report production is largely automated.
The link between finance function performance and data-mastery is compelling. According to the survey, the biggest challenge to collaboration in reporting for all groups is everyone working off different reporting and not having ‘one version of the truth’. However, data masters were considerably less impacted by this, with only 46% affected, compared with 73% of the data overloaded.
But most compelling of all is that data masters have time to add value. Data masters were far more efficient than those at the outset of their data journey, and could spend more time than their counterparts on value-added activities like analysis, risk management and performance management.
This adds more value where it’s needed the most – in the boardroom. Data masters were far more likely to consider that their reporting supports the workings of the board compared with those CFOs that describe themselves as data overloaded. What is more, 60% of finance functions which deemed themselves to be data masters have worked on innovative financial reporting projects over the last 3 years. More than any other group.