Lumenia Guest Post from Arturo Pinazo, SAP FICO S/4HANA Certified Senior Consultant at Delaware UK & Ireland
Financial reporting is the process of preparing and presenting financial statements that reflect the true financial position and performance of a business. The accuracy of these reports is paramount.
In this blog, we explore why accurate financial reporting is so important in 2024 and beyond, and the barriers preventing organisations from achieving it.
Why do businesses need to ensure their financial reporting is accurate?
Regulations:
Accurate financial reporting helps organisations comply with the legal and regulatory requirements of their jurisdictions, such as tax laws, accounting standards, and audit regulations. Complying with these rules can avoid penalties, fines, and reputational damage that could harm their operations and finances.
Relationships:
Investors, lenders, customers, suppliers, and other stakeholders rely on financial information to make informed decisions. By providing accurate and reliable financial statements, businesses can enhance their credibility, transparency, and accountability, and foster trust and confidence among their stakeholders, which can lead to better relationships and outcomes.
Insights:
Accurate reports are crucial for measuring and managing performance, risks, opportunities, and challenges. Analysing and interpreting financial data enables businesses to gain valuable insights into their strengths and weaknesses, as well as their profitability, efficiency, and growth potential. They can also identify and mitigate financial fraud, errors, and irregularities that could affect their results and reputation.
Agility:
Adaptability to the changing and complex business environment of 2024, characterised by increased competition, globalisation, digitalisation, innovation, and disruption, is essential for businesses that want to survive. By keeping track of their financial position and performance, companies can respond to the emerging trends, demands, and expectations of their markets, customers, and competitors, seizing new opportunities and overcoming challenges that could arise in the future.
Evidently, accurate financial reporting is vital for businesses that want to achieve their strategic, operational, and financial goals and objectives, as well as create value for their owners and stakeholders.
However, achieving accurate financial reporting is not an easy task for many businesses, as they face several obstacles and challenges that can compromise the quality and reliability of their financial information.
Some of the main factors that prevent businesses from achieving effective financial reporting are:
Poor data management:
The collection, processing, storing, and analysing of large amounts of financial data from various sources and systems, such as transactions, invoices, receipts, payroll, taxes, and audits is crucial to the finance eco-system.
Challenge – Many businesses lack the proper data management practices and policies that can ensure the accuracy, consistency, completeness, and timeliness of their financial data.
This often creates errors, discrepancies, redundancies, and gaps in their financial records, which can lead to inaccurate and misleading financial reports.
Outdated technology:
Businesses need to leverage the latest technology and tools that can facilitate and automate their financial reporting processes, such as accounting software, cloud computing, artificial intelligence, and blockchain.
Challenge – Finance teams still rely on outdated and inefficient technology and tools hindering and delaying their financial reporting processes, such as manual spreadsheets, paper documents, and legacy systems.
They need a solution to the increasing volume, velocity, and variety of financial data, but fail to produce timely and accurate financial reports.
Resource constraints:
Businesses need to allocate sufficient resources, such as time, money, and human capital, to support their financial reporting processes and activities, such as data collection, data analysis, report preparation, report review, and report dissemination.
Challenge – However, resource constraints can limit and restrict financial reporting capabilities, such as tight budgets, staff shortages, skills gaps, and competing priorities.
The lack of necessary resources and expertise to perform and oversee their financial reporting processes and activities effectively and efficiently.
Regulatory compliance:
It’s imperative to comply with the relevant laws, rules, standards, and regulations that govern their financial reporting practices and procedures.
Challenge – Keeping up with the changing and complex regulatory compliance requirements can be hard. These include new or revised laws, rules, standards, and regulations, as well as different or conflicting requirements across different jurisdictions, markets, and industries.
They may cause difficulties in understanding and applying the appropriate requirements to financial reporting practices and procedures, and risk facing penalties, fines, and sanctions for non-compliance.
How Delaware can help
SAP S/4HANA Public Cloud is a next-generation enterprise resource planning (ERP) system that helps businesses tackle the aforementioned challenges of financial reporting. The solution not only enables businesses to comply with various financial reporting standards and regulations across different regions and industries, but it can also help businesses optimise resource utilisation whilst modernising their technology landscape.
Join Delaware’s experts at the upcoming Lumenia ERP HEADtoHEAD event for an insightful demonstration on SAP S/4 HANA Public Cloud.
Our presentation will start with a high-level introduction to the simple to use and intuitive SAP user interface and an overview of who we are. Following this, our experts will delve into financial and management reporting, showcasing how SAP can effortlessly generate and share financial reports with your team. We will also explore the cash flow forecasting capabilities of SAP and highlight the benefits it can offer to your business.
