Financial Reporting Automation: A Comprehensive Guide

As enterprises across industries continue to evolve, facilitating efficient organizational functioning has become an important focus area for resource allocation. A key aspect of achieving this goal lies in ensuring that a company’s finances are accurately collated and incisively analyzed to enable better business decisions. 

Given this, moving to automate financial reporting is sure to help enterprises maintain a competitive edge and support their continued progress.

For a better understanding of how that can be done, this guide outlines the functioning of financial reporting, the aspects of automation that can be incorporated into it, and how these additions can be advantageous to the firm.

What Is Financial Reporting Automation?

Financial reporting automation is the use of software to streamline the creation of financial reports. It automates tasks like account reconciliation, data entry, and monthly closes, ensuring accuracy and efficiency. This process simplifies the preparation of financial statements and management reports, reducing manual effort and errors.

Financial reporting automation involves several subsidiary actions such as: 

• Curation of data from disparate sources
• Validating the accuracy of collated data 
• Compliance checks 
• Error detection across the report generation process 

The use of reporting solutions to generate automated reports can help streamline various activities financial teams would otherwise have to perform manually, eliminating the need for physical statements to track the necessary data. Financial reporting automation software gathers the required data from all connected systems, irrespective of location, for easy report generation. 

All the gathered data and analyses are digitally stored for future reference, enabling transparency at all times with respect to the status of processes, as well as regular insight into the financial health of the firm.

Operational Gains From Financial Reporting Automation

Implementing software to automate financial reporting unlocks several advantages for organizations in terms of how they manage their financial processes, enabling better decision-making strategies and market insights that are critical for success. Let’s take a look at some of these advantages:

1. Increased efficiency through time saved

Automated reports reduce the requirement for manual data collection. The lengthy process of collecting and organizing large volumes of data can now be streamlined to be completed within shorter time frames. This means that the previously occupied resources are now available to be reallocated to higher priority, higher level processes, helping increase the efficiency of the firm.

2. Improved accuracy through better error detection

Financial report automation software has a secondary advantage beyond simple speed: enhanced error detection. The use of reporting automation solutions reduces the manual errors generated during the data collection process by systematically checking the data at the outset, thereby eliminating the need to cross-check for accuracy at the end of the report generation process. The absence of these errors also improves the reliability of the analyses conducted during report generation.

3. Faster reporting timelines 

By automating the data collection process and ensuring its accuracy, financial statement automation enables the timely generation of reports. Such timeliness provides real-time insights to decision makers, helping them drive strategic growth by identifying and responding to trends and patterns as they emerge in the market. This directly affects the company’s ability to make informed decisions in critical situations. Additionally, financial report automation allows for reports to be pre-scheduled and repeatable once programmed, further adding to the utility of the solutions that are implemented.

4. Better tracking and compliance 

Every financial report generated by the software is added to a digital record, with the software making it possible to track all changes to financial data. This simplifies audit processes and enables the enterprise to consistently showcase documentation of its regulatory compliance, from accurate entry of data to its modification and other required report approvals.

5. More agile reporting systems

Financial report automation also incorporates elements that allow it to scale with the firm’s growth. Software can be programmed to easily incorporate new sources of data or modified to include further parameters of analysis as required by the firm over time. Growing data demands are also of little consequence, as the system is designed to automatically adapt and create new processing algorithms that are capable of handling massive data sets while consistently delivering the right financial insights at all times.

Use-Case Scenarios for Financial Report Automation

It’s clear to see that financial report automation has the capability to aid enterprises in their everyday operations. 

It is, therefore, important for companies to understand the specific implementation of automation in their financial reporting process. Below are a few examples:

• The software can perform a variety of tax-related analyses, including state sales tax liabilities and variance across regional tax regimes, even dealing with international currency conversions. The system is also capable of forecasting cash flows, analyzing financial KPIs, and performing asset and liability reconciliation.
  
  
• Within the marketing space, generated reports give companies the possibility to track ad revenue earned across platforms. Based on the insights extracted from analyzing these figures, companies can design and optimize platform-specific marketing strategies to increase ad revenue.
  
  
• The software also enables companies to create analytics workflows for different types of data sets in short time frames. These analytics can then be shared in a variety of formats to different geographical sectors and even be integrated into previously constructed databases, allowing for integration with both legacy and modern systems.

Reporting Tasks Ready for Automation

Upon choosing the right tool for financial report automation, companies can rely on the selected software for several tasks, such as:

• Data collation and analysis
• Insight-based decision suggestions
• Budget planning
• Forecast planning
• Encrypted report sharing

A host of different types of automated reports can also be generated with the help of the solution. Some of them are:

• Annual financial statements
• Quarterly financial reports
• Management reports
• Budget utilization reports
• Regulatory reports
• Post-audit reclassifications

Challenges To Be Aware Of

As with all software solutions, financial reporting automation tools come with certain challenges that firms need to be conscious of.

For many companies, the first major hurdle arises with respect to implementation costs. While some firms may be skeptical of the initial investment, the long-term benefits of financial reporting automation ensure a high return on investment.

Next, some firms may face issues with respect to the integration of automated solutions with legacy systems that are not configured to collaborate with them. However, cloud-based solutions have been shown to be highly adaptable, and with upgrades and adjustments, this challenge can be easily overcome. These upgrades would focus on helping legacy systems connect to the cloud while simultaneously adjusting the software within modern systems to effectively draw and analyze data from said legacy systems.

Finally, the industry continues to be cautious of automation solutions due to the risk of data security breaches. As automated solutions present unique cybersecurity risks, it is important that service providers ensure their software gets regular security updates to mitigate these concerns. 

Optimize Your Financial Reporting With Savant Labs

Automation has proven to be key to maintaining a competitive advantage. Solutions like Savant’s AI-powered analytics automation platform provide all the necessary tools to optimize financial reporting and give business leaders deeper market insights. By adopting Savant’s solution, it is possible to accelerate analytics across finance, sales, marketing, and more in a seamless and effective manner. 

To streamline your financial reporting process and reap the benefits of analytics automation, contact us today!