The following is an extract of a discussion between Richard Bezuidenhout of e-magination InfoSolutions and Elzaan Rohde of Semaphore Communications about how financial managers should start automating their critical reports for real-time insight into how business is doing, instead of spending days to combine and update data every time month-ends are due.

Elzaan Rohde (ER): What does the typical month-end reporting nightmare for the financial manager look like?

Richard Bezuidenhout (RB):
From our understanding and experience of what a month-end process looks like for the financial manager, it normally starts a bit before the last week when the nerves start to kick in because the reporting period is coming. The financial manager will start to prep all the activities that need to happen. The experience of the business dictates the process that takes place - it might be easy, but the ones we focus on is not so easy. You can take the maturity of the systems out of the equation which is normally not the issue.

The reporting nightmare starts when financial managers need to prepare a management pack for their manco meetings. If they have a holding company that they need to report into they need to do another, different reporting pack. It just depends on the nature of the company. The typical things they’d need to do is your standard financials statements: balance sheet, income statement/ pair-down, trial balance. For this process they would go into the accounting system and pull the information for the period under review. So in October you’d pull your reports for September if it’s just for particular month.

The issues you encounter is that your standard systems never present the statements in the format that the business actually wants it in. There’s always a bit of manipulation required to it. So the financial manager takes the data, brings it into Excel, and adds maybe a few columns, like variance columns if the report doesn’t produce that automatically. They might group things differently. The code of accounts might be set up a specific way for the system for accounting practice but from a business management point of view they might want to see their code of account groupings slightly differently - so not changing them but organising it differently.

So for example in your accounting systems you might have operating expenses with your cost centres broken up into areas where they cross over. But you might say the cost for advertising is a percentage split between different cost centres and mustn’t just be captured as one value. So those are the type of things that financial managers or the financial team will then go into, saying: “if we have department A and B the cost will be a 50/50% split between the two departments.”

Where you can get more complicated is if you have department A, B and C and the percentage split is different say 50%, 25%, 25%. The accounting systems generally don’t do this very well and just gives you one number because the rules are so varying and changing, but as a business expert you know that it needs to be split up into three numbers. Or the reverse, you’ve got three numbers but you want it grouped at a higher level and just see one number. So this is what the financial folk get involved in to make sure the information is put into a format that’s fit for their business.

In what we’ve seen with clients and people we talk to, they’ll have this workbook or, call it the September management pack, so it’s either one workbook with lots of sheets or a few workbooks, like three or four workbooks with a varying number of worksheets in it with different information - the size of the company is also quite important and will factor into it. What happens is that they actually become very efficient at doing this but it is still very, very manual.

The different time of the financial period will determine the amount of effort that goes into it so a quarter-end is more effort than a month-end, half-year is more effort than a quarter-end because there is additional reporting from a half-year perspective if the reporting systems doesn’t allow you to bring in last year’s numbers or comparative information. It’s also very static - once it’s done it’s done.

If you change your questioning that workbook won’t be able to answer your new question. If you say I actually want to do a cumulative analysis of costing for a certain cost centre over a five-month period you can’t do that. You’d have to rerun an accounting report, and do the manual process all over again for that five-month period. Or you’re looking to move your code of accounts around, or you’re restructuring your business and want to see what will things look like in a new structure with different divisions or business units or a different group of account to see, if you change things, what will the effect be. It’s very difficult to do this in a normal accounting system so you have to do that work manually.

ER: How easy it to set up streams of data from different systems into your Excel sheet?

RB: The way we approach problems is that when people talk about a system they think that all the solutions can only live in that particular system or it’s a massive piece of work to enable what they need to do because the work they’re doing is very important and it is a lot of work. So they equate the work on the solution to be equal to the amount of effort they put in. The kind of stuff we build for our customers is the reverse. You don’t need to modify your system. We don’t think your accounting system is bad either - they’re very good systems and there’s nothing wrong with them. It’s just that your reporting needs to change and the very nature of being human is that we’ll always be different.

That’s why you have different businesses that do very similar things, existing because they address a specific market, but is run in a particular way that’s very different to the business next door to them doing the same thing. We’re not trying to change these very powerful accounting systems. They need an adapting tool for your reporting needs. We find Excel is still a very good tool to do that with and you don’t need it to be complicated.

Business users already understand this data flow and how information connects together. If you’ve ever used a Vlookup function they take data from one worksheet and look up a value in another worksheet, that’s a form of data modeling, a form of creating relationships from one piece of data to another. We use some of the smarter tools in Excel around PowerPivot. It doesn’t always require an Application Programming Interface connection - an API is needed if it’s an online system like Sage Online, online CRM, or Zoho invoices. If you have everything in your office environment that the IT team manages there’s probably a database that’s local so we just use a normal database connection in which we can pull the data into Excel.

There are instances where people still have files from other systems that they get so they don’t even need a local database connection. So as a first step we say you don’t always have to talk to the IT people, you can just start off using what you get now and building a solution that you can test as well, we can bring in flat files, create a repository of information, just using the things you’d get normally anyway.

Generally the financial manager does not need to ask IT for help. If they’re currently in a process, let’s say they get a few files every month that’s stored in a certain location on their network drive or it’s emailed to them (whatever the delivery mechanism is). If they’re already getting that then there’s nothing else they need to do. They don’t need to ask for special permission. We’d be able to replicate every step they do manually, except the actual physical capturing of data in a worksheet. But we can create a linkage between it once it’s captured to the rest of the information they are using.

But even activating an API is not hard (especially because we know where to look and what to look for). The first step is where we engage with you and learn what it is that you know by observing what it is that you’re doing and then we ask questions and then we have a look and find out what it’s using. Because most of the time you already have these things set up - people just don’t know the technical stuff behind it (like we do).

ER: What are some benefits of reporting automation/ business dashboards?

RB: The biggest benefit is peace of mind. There are a few things we are insuring. We are replicating your dedication to accuracy - so we don’t take it lightly as it’s probably one of the most critical things that contributes to your peace of mind. You know you get accurate information you can trust. We are also able to build in checking mechanisms for you - if there are certain checks and processes you go through to validate your numbers we can replicate those as well. “Is the balance sheet in balance,” would be a typical one.

People don’t mistrust technology but they are sceptical of technologists because somewhere down the line they’ve gone to an IT person to help them with this issue, but were let down. IT people are drifting away from solving problems for business. They’re getting too caught up in jargon and processes that cause delays.

Even in the case of this production company, where their code on accounts changed every month because of varying specs that necessitated manual work from an expert in the business that had to allocate data, we were able to automate 60% of the process and then gave them advice on how to structure their workbooks for the other 40% which shaved another 1.5 hours off the total effort.

ER: What are some of the challenges/ building blocks? How should you go about it?

RB: When we present financial managers with the options they try to do it themselves because they’re Excel experts. That’s great, but we also do think that it defeats the original purpose - focusing on their actual jobs. Our solutions are built for life (unless something radical changes in the business), and we show you how to change some things (views, periods etc). The process we go through is to identify your biggest pain point - what is the thing that you’re really challenged by now, what is the thing that’s taking you the most time, that’s necessary to do but not the most productive use of your time.

Comparing financial statements is normally the biggest area for financial managers. So we say let’s focus on the pair-down or income statement and doing just that for you and let’s build and automate that process. It’s a relatively quick delivery cycle so within the first week or two you already know what you’re getting because we work with you to show you this is what it’s going to look like, this is the behaviours you’re going to see, and ask “did we capture all your ideas?”

So you can almost immediately start exploring the tool and provide feedback on areas that need improvement. We do understand the financial world pretty well but like to leave room for creativity and special requests. We build fully-automated systems with one-button refresh of everything.

ER: At what point should you consider automating reports or upgrading to a dashboard scenario?

At any time you’re doing manual work, you’re ready for this. The technology is there and available for you if you tap into it. The feedback we generally get from financial managers is that they didn’t know it was this easy and could work as well as it does. Some people also describe the technology incorrectly which leads to misconceptions. We solve the biggest itch and give them some time back in their day to think (and don’t overwhelm people).