Financial consolidation is the process of combining financial data (notably assets, liabilities, income and expenses) from multiple subsidiaries’ general ledgers across an organization for the purpose of creating a parent company report. The current reality for financial consolidation and close processes is that many organizations still rely on manual spreadsheets, which can lead to longer closing periods, errors and confusion. According to SVP & Research Director in the Office of Finance Robert Kugel’s Best Practices, “Finance organizations must apply digital technology to reduce time spent on repetitive tasks to accelerate processes, improve data quality and shift focus to forward-looking analytical work.” Luckily, digital finance software companies have come a long way and now offer a variety of different products to significantly improve Office of Finance operations and workflow.
Fluence Technologies is a provider of financial close and consolidation software. In April 2021, it announced the addition of new features that automate the consolidation and close process, which help save time through Microsoft Excel interface and additional pre-built models for cash flow consolidation. Fluence Technologies’ approach is to bring automation and digital technology to the Office of Finance to address increased financial operations complexity as an organization grows. The latest release features pre-built models and templates for cash flow and account reconciliation. Enhancements include cloud-based technology which allows for scaling for customers who experience growth in size and therefore financial operations complexity including adding subsidiaries, global currencies and regulatory requirements. According to Ventana Research, by 2025, two-thirds of organizations will have applied continuous accounting principles to close books within one business week, up from 50% today. This indicates that more and more companies are coming to the realization that bringing digital software and automation to finance departments can significantly improve operations. By improving financial operations, organizations can free up the finance department in order to provide quicker insights and become more of a strategic partner in the business. For many years, spreadsheets have been a go-to for most organizations during the consolidation and close process. Yet, as we all know, spreadsheets are both error-prone and time consuming. With the automation products now available on the market, spreadsheets are becoming a thing of the past.
The Office of Finance and its needs can be vastly different depending on the size of the business. Financial consolidation and closing techniques are relatively easier for mom-and-pop shops compared to a midsize or larger company. Yet, when the mom-and-pop shop sees rapid growth and decides to become a franchise with more than 150 different locations, including overseas, this is when things get complicated, and using old methods such as manual spreadsheets could prove to be largely insufficient. Fluence Technologies has developed software for organizations that may have three or more accountants involved in coordinating task or for users who are noticing that closing the books is taking longer than it should. The more a company grows, the more complicated consolidation and closing can be for the finance department.
Fluence’s latest launch serves as an enhancement to its existing financial consolidation and close software. The technology was created to help midsize organizations that are looking to automate and streamline workflows in their finance department. For any CFO or controller who is struggling to streamline tasks between different departments or witnessing staff workloads escalate during the close process, they should consider adopting modern technology and software to help.
By eliminating full reliance on spreadsheets, the finance department can begin to offer more real-time insight and analytics to decision makers. Finance departments that are too busy managing errors and putting out fires do not have time to sit down with top executives to provide guidance as it pertains to the company's finances. Ventana Research asserts that nine in 10 executives say their finance organization should be a strategic partner to their company but, by 2025, fewer than one-third will evolve into this role, limiting their company’s performance.
Fluence Technologies should continue to expand on its automation capabilities for the Office of Finance. Ventana Research concludes that any steps taken to adopt digital technology will help to improve not only the finance department but also the organization. If your organization is experiencing growth or you are looking to improve your financial close and consolidation performance, consider Fluence Technologies.