Financial reporting is an essential business process across all industries that allows companies to keep track of their overall financial health and maintain regulatory compliance. Accurate and timely financial data is also essential to identify risks such as manual errors, process delays, or inaccurate decision-making, and respond to changing market conditions. However, due to the increase in data amounts and its complexity, financial reporting is becoming labor-intensive and error-prone when done manually and with outdated tools such as Excel.
This is why financial reporting software is playing an increasingly key role in financial reports creation. Such systems speed up and simplify the reporting process while solving lots of challenges during report creation.
Financial reporting challenges & how to overcome them
Depending on the industry and specifics of the operation, companies can face various challenges in handling financial reports. Below, we will focus on the top five most common ones and explore how financial reporting software can help overcome these difficulties.
Challenge 1: Manual errors & data inaccuracies
Many companies still use spreadsheets and manual data entry, which can lead to human error in reports and other financial documents. For example, a wrong piece of data that is manually copied from one document to another can lead to large errors in the report, which can affect further decision-making.
Solution: Financial reporting software streamlines data entry and validation by pulling data directly from integrated systems and reducing the need to handle data manually. As a result, financial teams spend less time looking for errors and can create more accurate reports.
Challenge 2: Slow & inefficient report preparation
Teams can spend hours analyzing data, combining spreadsheets into a single report, and verifying its accuracy. As a result, decision-making or time-sensitive company activities can be impacted by report delays.
Solution: The financial reporting software provides real-time access to analytics data and generates reports in a convenient format. Additionally, a manager can create a reporting schedule and have the dedicated software automatically generate and send weekly reports to interested parties.
Challenge 3: Multi-entity data consolidation
When a company has multiple subsidiaries that can use different accounting systems and standards, report creation can take a lot of time due to the need to bring all data into one format. Different workflows between companies can also make the financial audit process more difficult, as each organization can follow different procedures for recognizing revenue, classifying expenses, or approving transactions. All of this can negatively impact the speed and accuracy of stakeholders’ evaluation of the company’s overall financial health.
Solution: Centralized financial reporting software streamlines the consolidation of multiple subsidiaries’ data into one system, automates data processing, and applies consistent rules for report creation. This way, the software makes the creation of financial audits faster and provides stakeholders with a clearer view of the business’s overall financial health.
Challenge 4: Adapting reports for different stakeholders
Financial reports must meet the diverse needs of multiple stakeholders in the organization. For example, internal teams look for operational metrics in a report, regulators need compliance information, and investors want company insights and strategies. It can be complex and time-consuming to meet all the requirements and adapt the same report to various users manually.
Solution: The financial reporting software can tailor the visualization of financial data to a specific audience: internal teams get real-time access to operational metrics through interactive dashboards; regulators receive up-to-date, automated compliance reports that meet industry standards; and investors gain strategic summaries with key insights and trends. This way, the software helps multiple stakeholders receive reports focused on what they need to know and guarantees that reports stay consistent and clear for all stakeholders while also saving time on report production.
Challenge 5: Forecasting
Forecasting helps companies get ready for what comes next. Without access to accurate, up-to-date forecasts, financial departments can’t plan their operations with confidence or accuracy, identify trends, model scenarios, or respond quickly to changing market conditions.
Solution: Financial reporting software brings together historical data and real-time figures to create financial forecasts using its flexible models. This way, companies can explore different outcomes, test assumptions, and understand how decisions might play out. Whether teams are planning for growth, navigating risks, or planning budgets, the software gives insights needed to make well-informed decisions with confidence.
Wrapping up
Financial reporting is an important business process that can take a lot of time and effort, especially if all the data is collected, processed, and compiled manually. What is more, any inaccuracy or non-compliance with standards can lead to poor decision-making and entail reputational risks.
Financial reporting software solves these problems by automating data handling, simplifying report generation, and supporting accurate, timely reporting across all entities. As a result, finance teams spend less time fixing errors and more time using data to make important decisions for a company’s growth.
