Each monetary skilled understands that the numbers matter an excellent deal in terms of reporting monetary outcomes. Accuracy, consistency, and timeliness are necessary. Those self same professionals additionally know that there’s substantive that means behind these numbers and that it’s necessary to inform the tales that lend extra depth and context to the uncooked monetary statements.
That is the place narrative evaluation comes into play. The numbers alone can solely present a restricted understanding of how the enterprise is performing. To get the entire image, the reader wants contextual info. Whether or not that’s an investor, an organization government, or an worker stakeholder, the explanatory notes that accompany monetary statements are a vital piece of the puzzle. In some circumstances, narrative evaluation could also be essential to assist authorized or regulatory compliance.
How Narrative Evaluation Is Managed at Most Corporations
Most monetary reporting instruments are targeted on producing monetary statements. That’s necessary, after all. With out the fitting purpose-built reporting answer, straight linked to your underlying information sources, you’ll be left with a set of spreadsheets, resulting in errors, inconsistencies, and time-consuming processes that delay your month-end shut.
Most instruments cease there. They don’t essentially allow customers so as to add narrative evaluation or to collaborate with others throughout the group to refine the explanatory notes that add depth and that means to the numbers.
In consequence, most organizations resort to handbook strategies of mixing their uncooked monetary information with narrative evaluation. To complicate issues additional, most firms must current monetary outcomes to a wide range of completely different audiences, normally in several codecs. This results in a extremely fragmented method to growing experiences. The “final mile” typically consists of hours spent manually copying and pasting information from supply techniques or disparate spreadsheets, after which passing these recordsdata forwards and backwards over insecure channels, comparable to e mail, till the experiences are full.
Think about a situation wherein your accounting crew has produced draft monetary statements. The CFO has requested for a slide present presentation at subsequent week’s assembly of senior executives. You copy and paste the numbers right into a abstract P&L slide, adopted by a couple of slides that spotlight gross sales developments for the quarter, one other for money circulate, and a collection of detailed slides that present bills. The CFO provides a set of explanatory bullet factors alongside the numbers on every slide.
Whereas that is taking place, one other crew member begins to compile the identical info for an investor relations internet web page. This time they’re formatting the experiences utilizing an HTML editor, and the narrative evaluation is a bit much less detailed. In the meantime, a 3rd copy of the monetary statements (additionally with commentary) is being developed in Adobe InDesign, in preparation for a graphical PDF report back to be shared as a part of a brand new investor package deal.
Now comes the unhealthy information: the accounting crew has discovered that they should make a couple of adjusting entries that may influence each P&L and steadiness sheet accounts. You’ll want to regulate the narrative notes accordingly. You’re already coping with (no less than) three completely different copies of the identical info, however as a result of there’s nothing linking your supply system and your narrative evaluation to these three (or extra) output paperwork, you’re left with just one alternative. Each doc must be edited individually.
That is the place inaccuracies and inconsistencies can simply emerge, should you’re not very cautious. Contemplate the truth that a single monetary report can have tons of of particular person information factors, a few of which is perhaps buried inside the narrative evaluation itself. It takes a substantial amount of consideration to element to just be sure you report any ensuing adjustments precisely on each web page of every of these paperwork.
Now take into account what occurs when the form of last-minute change described above happens three or 4 occasions (or extra) throughout your month-end closing course of. Once more, you have to edit each report back to replicate these adjustments, and with every of these edits the probability of errors and inconsistencies grows greater.
Monetary reporting is a high-stakes endeavor. Senior executives, traders, and regulatory businesses are all relying on this info. Even a minor error can result in a drop in confidence, or worse. This is the reason conventional handbook strategies of manufacturing and publishing monetary outcomes merely don’t work effectively. They’re tedious, time-consuming, and dangerous.
Automating Monetary Storytelling
By automating these processes, firms can dramatically scale back their publicity to danger, get rid of wasteful effort, and produce correct, constant monetary experiences and displays in far much less time than it takes utilizing handbook strategies.
Let’s take one other have a look at the instance cited above, contemplating how this would possibly work at an organization that makes use of an automatic inside reporting and disclosure administration answer. Somebody on the accounting crew enters that last-minute adjustment within the common ledger. The monetary statements instantly replicate that change within the earnings assertion, steadiness sheet, and assertion of money flows.
The manager slide presentation, likewise, is routinely up to date with the brand new numbers. Adobe InDesign displays the adjustments, too. No effort was required to make these changes as a result of they flowed routinely from the disclosure administration system.
Now think about that a number of of the explanatory notes that accompany the present monetary statements require some small changes because of the brand new numbers. A crew lead within the accounting division makes the adjustments, sends them to the CFO for approval, and the updates circulate routinely to every of the output paperwork, with out additional human intervention.
It’s additionally comforting to know that the corporate has a whole audit path displaying who has edited the narrative evaluation that accompanies the monetary statements, and when their adjustments have been made. There’s an approval course of in place to make sure that the fitting persons are absolutely knowledgeable of each edit and have a chance to just accept or reject the proposed adjustments.
The CertentCDM Platform
Automated monetary reporting, with narrative evaluation allows firms to streamline and improve just about all facets of the interior efficiency reporting and exterior disclosure administration processes, dramatically lowering the related dangers and prices.
Certent Disclosure Administration is a safe, collaborative, enterprise-scalable reporting and course of administration platform for producing recurring multi-author experiences and displays. It centralizes enterprise information from a number of sources right into a single system of report, dynamically integrating numerical information with narrative evaluation in a managed and absolutely auditable atmosphere. Experiences replace routinely when the supply information adjustments throughout all tabular, graphical, and narrative parts of the report.
To be taught extra about how Certent Disclosure Administration allows organizations to automate their monetary narrative, obtain the e book entitled “Automate Your Monetary Narrative: Inform the Story Behind the Numbers”:
Automate Your Monetary Narrative: Inform the Story Behind the Numbers
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