Not all finance teams work in a perfect world where they have access to the latest and best technologies. Most have to settle for whatever they can lay their hands on and more often than not, that is their trusted old friend, the humble spreadsheet.
You may think there is no contest between an all singing, all dancing enterprise system and a spreadsheet, but you would be surprised. The downside of these sophisticated systems is that nothing can ever be completely spontaneous and frequently the busy IT team needs to be called in to tackle what the spreadsheet could do in a fraction of the time.
Spreadsheets used to prepare British company accounts worth up to £1.9 trillion
It may come as a surprise to know that spreadsheets are used in the preparation of British company accounts worth of up to £1.9 trillion and as many as twenty per cent of group companies, are reliant on spreadsheets for the Monthly Consolidation and production of Management Accounts.
Group finance teams that depend on spreadsheets to consolidate trial balance data soon become experts in copying and pasting and burn up huge amounts of time.
The problem intensifies if one large spreadsheet is used for the consolidation as adding or removing subsidiaries is time consuming and significant manual adjustment is required. Yet people persist because spreadsheets free them from the meticulous clutches of I.T. and they get the control and flexibility they long for.
So, can finance teams cling on to their beloved spreadsheets and make them robust enough to satisfy regulators and auditors who have already indicated that they consider them, in their existing state, to be a major potential risk?
The answer is yes if they are connected to the Cloud. Users can enjoy the simplicity and comfort of using a spreadsheet as the ‘front end’ with a connection to a very complex (but well-hidden and transparent to the user) cloud ‘back end’ that does all the difficult work. Existing spreadsheets and other disparate data sources (such as MS Access and core ERP) can now be integrated into one solution with none of the large scale data migration issues once experienced and with minimal disruption.
The beauty lies in the fact that it is possible to keep a complete track of every change made to every spreadsheet cell by every user at every point in time since document inception. This is invaluable for forensic audit and for industrial grade security and eliminates all of the risks.
In the finance world, this solves the problem of a lengthy and risky manual consolidation process and speeds up reporting by automating the ad hoc reporting process. This means that it is possible to automate business processes without any disruption and carry on using a familiar tool without any of its’ well- known problems.
By leveraging the power of an industrial database and combining it with the simplicity of a spreadsheet interface, global finance teams can manage the consolidation of multiple entries and automate the production of P & L, Balance Sheet and Cash Flows and analyse, share, understand and gain insights that enable faster and smarter decisions.
Difficulties in ad hoc group wide reporting
One of the biggest problems faced by groups that have acquired new companies or branches over a period of time, is a lack of uniformity of reporting and presentation. Because separate reports are required to meet the requirements of each audience, often, additional resource is needed to produce third party reports and these specialist reporting requirements are not adequately catered for by DMS providers.
We recently worked with a company that had circa 25 subsidiaries and divisions distributed around the world and the group finance team had considerable work to do at each month end to produce consolidated Management Accounts. There was a real reluctance to get rid of the many sophisticated spreadsheets built over the years that defined their process but they realised that a solution needed to be found to automate their monthly financial close.
Spreadsheets were used to consolidate the trial balance data extracted from each of their subsidiaries, which led to multiple copy and paste operations, to data quality risks as well as consuming management time.
The main consolidation spreadsheet was a complex single point of failure. It had been created some years previously, by an accountant who had subsequently left the company and had never been fully understood by members of the current financial team. As new subsidiaries were added the complexity involved meant real pressure to get the monthly management accounts prepared in a timely manner.
Automation of end-to-end Statutory Accounts Production
The company explored a number of alternatives that held little appeal until they discovered they could connect their spreadsheets to the Cloud. The immediate tangible benefit is the management time being saved and the correspondingly faster time to reliable accounts. The plan for 2017 is to implement the automation of the entire end-to-end Statutory Accounts Production process.
All members of finance team are connected to their spreadsheets and to the secure Cloud database so as each member makes a change in their local spreadsheet it is synchronised with every other spreadsheet so that only one version of data is shared. With this new approach, existing spreadsheets are enhanced with auditability, security and data integrity.
Users benefit from an evolution of their current system and no longer have to work with constantly out of date data and collaboration and versioning issues. There is also a lower adoption risk as finance teams are able to stay with their familiar spreadsheet interfaces and everyone sees the same live, up-to-date and clean data on their desktops.
Taking spreadsheets to the next level and connecting them to the Cloud has the potential to reduce the risk of inaccurate accounts, which is regarded as one of the UK’s most pressing business problems.