Accurate financial reporting is essential in local governments, higher education, and healthcare. Stakeholders are dependent on error-free reports to maintain an organization’s well-being. However, even though accurate reporting is critical, siloed data within departments can lead to a lack of financial visibility.
Additionally, many financial reports are created from incomplete data due to outdated spreadsheets, antiquated systems, and manual processes. This can lead to mistakes that go unnoticed for extended periods and take weeks to fix.
This can all be overwhelming, but it doesn’t have to stay that way. Keep reading to learn more about the impacts of limited financial visibility and how to address this problem.
The Impacts of Limited Financial Visibility
The migration from siloed information to data transparency within your finance team is critical for accurate financial reporting. Here’s how data silos can result in limited financial visibility, preventing your team from producing error-free reports.
Issue No. 1: No Single Source of Truth
Accurate financial reporting is nearly impossible without a single source of truth. Not only does centralized reporting ensure that there is one set of accurate, up-to-date data that is accessible anytime from anywhere, but it also creates an automatic checks and balances system within your team. And yet, 41 percent of CFOs manage data from between three to five systems, and another 30 percent use five or more systems.
Without a universal system for storing and retrieving data for your finance and accounting teams, there’s no way to easily identify and correct inconsistencies in your financial reports. Additionally, using multiple systems prevents any nuances of your spreadsheets and reporting practices from being shared with team members, making precise reporting more difficult.
Issue No. 2: Cumbersome Debt Management
Debt management is complex in and of itself. But having limited visibility into the data compounds those challenges, further complicating this task.
Inaccurate Picture of Your Cash Flow
Your company’s financial reports should accurately reflect the business’ total outstanding and future debt. However, with each team member inputting information from multiple sources and even creating and maintaining different files, spreadsheets, and reports, human error is bound to occur.
One incorrect figure in the report can offset each line on your spreadsheet thereafter. Thus, detailing accurate cash flow and reporting on debt management becomes cumbersome and difficult to manage. An inaccurate picture of your cash flow and the amount owed to each creditor can have long-term negative impacts on your reporting and even potentially impact your rating.
Ineffective Collaboration
Debt management requires significant collaboration with contributors across multiple departments and even external team members. Limited visibility makes shared responsibilities within one team difficult. Add in those additional teams, and debt management can quickly become a nightmare.
However, when each person works with identical data from a single source, it’s easier to align on both a team level and cross-functionally to produce accurate information for your reports.
Issue No. 3: Unreliable Data
Poor-quality data fosters mistrust—especially in industries governed by strict regulations, like finance. Internal and external stakeholders value transparency in all transactions and reporting to help them make informed decisions and ensure financial stability. Using unreliable data in reports can disguise red flags and inaccurately portray the organization’s financial position.
Additionally, business functions and processes are impacted when the data can’t be trusted. Without data standardization, most teams don’t have complete insight into the quality of their reporting practices and there’s the potential for human error, which reduces their confidence in the data. A lack of trustworthy data creates additional opportunities for error as teams come to accept (and even allow) careless mistakes.
How Technology Can Help Overcome the Negative Effects
With technology, you can stop human errors in their tracks by working from one set of accurate, up-to-date, and easily accessible data. Because centralized, cloud-based technology accommodates multiple internal and external users, your team members can see changes and make updates in real time, creating accurate data and complete visibility.
Modern treasury and accounting software, like DebtBook, provides cloud-based tools to ensure your data is stored and accessible to appropriate parties. A debt and lease repository gives your team a centralized database with an organized view of your historical and current debt services and lease contracts that can be filtered, sorted, and expanded for future detail and analysis.
Additionally, the right treasury and accounting solution provides quick and easy access to high-quality financial reporting. Audit reports, payment records, continuing disclosure, and debt and lease schedules may involve manual processes that can take days or weeks to complete. A modern fintech solution can scale your reporting efforts and help you meet and maintain Government Finance Officers Association (GFOA) Financial Excellence reporting standards.
Discover What Treasury and Accounting Software Can Do for Financial Visibility
Maintaining financial visibility is essential for ensuring your teams produce accurate financial reporting. Treasury and accounting software can make this much easier. Discover what DebtBook can do for your organization by scheduling a demo today.
Disclaimer: DebtBook does not provide professional services or advice. DebtBook has prepared these materials for general informational and educational purposes, meaning we have not tailored the information to your specific circumstances. Please consult your professional advisors before taking action based on any information in these materials. Any use of this information is solely at your own risk.
