Paving the Last Mile of Finance

The last mile of finance is an idea that has been popularized by Gartner. It addresses the business processes at the end of the financial close. This includes helping the CFO communicate with publishers, the Securities and Exchange Commission, and board members on financial and operational results. Included are reconciliation, close, and disclosure applications.

Deloitte, too, picked up on the idea noting that companies face many challenges with the financial close and reporting process. For Deloitte the last mile covers the processes and activities in between the trial balance and a company’s 10K. In this last mile organizations can experience management reporting and governance issues—including financial and internal control failures—resulting not only in significant inefficiencies but also financial errors and internal control failures.

The solution, according to Deloitte, calls for a holistic approach, which entails developing a road map for improvement to address the process, the policy, the people, and the technology issues, and how they successfully work together to improve the efficiency, governance, and quality of your financial reporting and close. Technology plays a key role.

Even for companies that don’t publish financial statements, and therefore can avoid trudging that last mile, there still are important financial processes that follow the accounting close, according to Ventana Research. These include internal reporting and tax statement preparation.

Finance departments have long needed to automate the assembly of periodic documents that combine words and numbers, essentially eliminating the need to perform repetitive, mechanical functions and reducing the time needed to ensure accuracy and manage the process. These activities, according to Trintech, consume disproportionate amounts of time and resources due to manual, disjointed and complex processes, high-risk activities, and increasing regulatory demands. As a result, organizations are exposed to myriad risks, including delays in data availability, reporting inaccuracy, material errors, restatements, and reduced transparency. This is where financial statement reporting (FSR) technologies can help.

As Ventana explains, FSR automates the document creation process. Manually assembling this information into a document has always been a chore, even after word processing and spreadsheets were adapted to this purpose decades ago. In addition, FSR brings informed workflow that automates the process by facilitating handoffs and reminding participants who haven’t completed their required steps. It also enables managers to track the state of the process and alerts them to hold-ups.

eXtensible Business Reporting Language (XBRL) advanced the state of FSR for companies that must do public reporting, especially when it comes to tagging footnotes. Today, a number of companies offer FSR products, including Trintech, SAP, Oracle, IBM, Fiserv and a host of point solution vendors. There also are hosted SaaS products. Trintech, for example, can be licensed on premise, hosted, or delivered as a SaaS/Cloud service.

With Finance putting the pressure on other departments to work faster and more efficiently, the last mile of finance provides an obvious place where Finance can take its own advice. Through the use of FSR, it can speed things up and mitigate risks. In the process Finance becomes a more strategic asset focusing on value-producing activities around acquisitions and growth while lowering the cost.