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Keys for Exercising Financial Control in Today’s Remote Operating Environment

by David Woodworth

4 recommendations on how to exercise financial control even in hybrid environments.

© nensuria/iStock/Getty Images Plus

Prior to 2020, finance teams were already struggling with too many data sources, manual and inefficient processes, and budgets, reports and other materials that were largely based on static, historical data.

This led to a growing focus on the need for digital transformation to consolidate and automate workflows and give the finance teams access to real-time data for strategic analysis, reporting, and planning.

Then the pandemic hit.

Offices were locked down and teams were distributed to their home offices or other remote locations across cities, states, and even countries. Teams that normally collaborated in person were now scheduling Zoom calls and sharing documents through secure cloud services.

While the initial closing process or quarterly earnings report may have been a bit different, the teams figured out new ways to work with each other remotely. As the economy improves and offices open up, hybrid work environments will likely remain in place and be a key driver for accelerating digital transformation efforts to ensure remote finance teams stay connected. 

Based on our experience working with finance teams at enterprises around the world over the past year, here are some recommendations on how to exercise financial control even in hybrid environments:

Enabling decisions with clarity of reporting

As mentioned earlier, many CFOs have embarked on a digital transformation journey to make processes more efficient and connected, and to provide a single source of truth for their data. The reality check is that the need for remote working and secure collaboration highlighted a data gap in most CFOs’ digital transformation strategies.

As a finance leader, joining the necessary data together is very challenging. How do you ensure data consistency across finance, sustainability, and investor relations for your reporting cycle? Even with huge investments in ERP systems for a uniform set of company data, teams still struggle with inconsistencies and errors caused by a manual reporting process based on copy and paste in Excel.

Then you add in the complexity of needing secure collaboration among the remote workers on your team, and the issue becomes even more pressing.

So this becomes the challenge: business decisions are driven by data that increasingly needs to be real time to capitalize on in-the-moment opportunities during very dynamic economic conditions

As businesses recognize the new hybrid environment and move to cloud-based ERPs, they need automated reporting tools that pull the latest financial and operational data in real time, giving distributed finance teams the data they need to create actionable insights to drive the business forward.

Forecasting: new continuous planning approach, using high frequency inputs from the business

In addition to reporting, forecasting has been completely recast over the past year. Historically, it was seen as an annual process of the finance team collecting data from the business and creating forecasts that underpinned the future allocation of budgets or other resources.

From the business unit perspective, the historical finance-driven forecasting process did not give them much visibility into how data was collected and analyzed. Feeling a bit out of the loop, business units often end up creating their own “shadow” forecasts in separate systems, disconnected from the company’s overall financial forecast.

With access to real-time data, the emerging model features a new rhythm to forecasting that shifts from annual or quarterly to monthly, weekly or even shorter timeframes, if needed. For example, we were using an agile, weekly forecasting approach before the pandemic and that insight and visibility allowed us to quickly and confidently assess and adjust our business plans as economic conditions changed.

By connecting all the key data sources across the business’s various units to automate the collection and analysis, it makes the process efficient for distributed finance teams and ensures the leaders in the business units are engaged and able to input updated data more frequently.

A new imperative: operational understanding synced with financial performance

Financial performance is based on a company’s operations, while financial reporting and forecasts dictate future operations. The two are intertwined and dependent on each other.

What we’ve come to realize over the past year is that financial reporting, planning and analysis cannot be done in a silo. As critical as it is to analyze a company’s operations for its financial performance, it’s also increasingly critical to understand not only what happened, but why.

This is where collaborative input from business leads and various points in operations – from manufacturing plants and the supply chain to sales and HR – provides the detail and context that helps finance turn numbers into data and insights.

In this environment, having the tools and cloud-based systems to transform the workflows of finance teams is critical and increasingly a competitive advantage. Not only is it the access to real-time data from across the organization, but also the ability to engage business leaders to provide important context on the operations that produced those results.

Exercising control over the new normal

While we soon may be going back to our offices on some level, how finance teams operate has likely changed forever.

While a key part of that is using new automated technologies to help streamline and transform outdated and manual processes, it also covers who is involved in those processes, the frequency with which a company analyzes, reports and forecasts, as well as how the finance team securely collaborates with each other – whether across a conference table or across the world.

David Woodworth is the CFO of insightsoftware.