Timely, reliable financial reports are the foundation of strategic decision-making, particularly for investor-backed businesses. However, many companies struggle to produce the kind of data that answers key questions:
- Which products, services, or projects are the most profitable?
- Which locations bring in the most revenue?
- Which customers are your most valuable?
- Are financial controls in place to maintain compliance and accuracy?
Through conversations with hundreds of investor-backed CFOs, Consero has found that finance teams continue to face bottlenecks that delay reporting cycles, hindering decision-making and the ability to meet investor demands.
These are the most common financial reporting challenges and how to solve them.
1. Staffing Constraints
Most SMBs lack the personnel with the necessary financial expertise to produce accurate, timely, and investor-grade financial reports. To compensate, finance teams often find themselves pulled away from mission-critical activities to handle time-consuming reporting tasks, leading to delays, errors, and misalignment with investor expectations.
Solution: Invest in training and upskilling finance teams to enhance internal capabilities, reduce transactional processing costs, and afford higher level financial leadership.
Alternatively, leveraging a third-party provider that excels producing board-level financial reporting can free up your top talent from endless multitasking and micromanaging low-value data collection processes.
2. Outdated or Immature Finance Systems
Many businesses still rely on legacy financial systems or entry-level accounting software. QuickBooks, for example, is a great small company accounting package but lacks the scalability, reporting depth, and automation capabilities that growing organizations need.
These limitations, such as the inability to get a detailed view of expenses for multiple projects by location, make it difficult to generate consolidated financial statements, track multiple revenue streams, and integrate real-time data for decision-making.
Solution: Consider upgrading to scalable, cloud-based financial systems that offer advanced reporting capabilities, automation, and multi-entity support to develop consistent, reproducible reporting processes.
Vendors that offer an integrated financial management platform can eliminate inefficiencies and enhance reporting accuracy so you can move away from fragmented spreadsheets and manual workarounds without a massive upfront investment.
3. Data Security Risks
Sensitive financial data is increasingly vulnerable to cyber threats, unauthorized access, and data breaches, leading to compliance risks and potential financial losses.
Additionally, poor internal accounting controls can lead to financial misstatements or fraud, causing inaccuracies in investor reports and damaging trust with stakeholders.
Solution: Implement robust cybersecurity measures like role-based access controls and regular security audits. Companies with SOC 2-compliant financial systems, like Consero, can offer enterprise-level security and regulatory compliance at a fraction of the cost of developing internal controls in-house.
4. Lack of Clarity
When businesses lack sophisticated financial talent or systems, they often scramble to produce financial reports that are difficult to interpret or fail to provide actionable insights. Poorly structured reports make it harder for executives and investors to extract key takeaways.
On the systems side, you need a front-end coding process that provides multi-dimensional visibility. For example, if your chart of accounts isn’t set up to capture the information that’s most useful for decision-making, it will be a challenge to recapture it at the back end.
Solution: Compare your business’s reporting needs to your existing chart of accounts for any discrepancies with the intended end-use. A considerate approach to financial reporting will always beat the ad hoc, knee-deep-in-data approach.
Using an automated financial reporting tool with standardized dashboards and KPI tracking helps structure reports with clear visualizations and standardized formats for digestible insights rather than raw data dumping.
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5. Manual Processes
Often accompanying outdated software are processes that include spreadsheets, manual reconciliations, and fragmented workflows, which slow down financial reporting and increase the risk of human error.
Without standardized processes, financial reporting can become inconsistent across departments, leading to errors, inefficiencies, and difficulties in audit preparation.
Solution: Develop standardized financial reporting procedures with clear documentation. Establishing repeatable workflows promotes consistency and accuracy while reducing reliance on ad-hoc manual processes.
Integrating cloud-based financial platforms will also streamline data collection, reconciliations, and report generation, providing real-time access to financial data while reducing manual work.
6. Consolidating Multiple Entities
Businesses operating multiple entities across different locations or accounting frameworks face significant challenges consolidating financial data, particularly when they lack a unified software system.
These difficulties are amplified for companies integrating acquisitions or preparing for acquisition, where alignment across financial systems, reporting structures, and compliance standards are critical.
Inconsistent financial reporting methods can cause discrepancies in valuation, delaying deal closures or leading to misinformed investment decisions.
Likewise, organizations preparing for an acquisition must present accurate, transparent, and standardized financial statements to maximize valuation and facilitate due diligence.
Solution: Use a centralized, multi-entity financial reporting system that automates consolidation and allows leadership teams to access consolidated reports in real time.
A centralized financial management platform ensures all entities operate under a consistent financial reporting framework, improving visibility for investors and simplifying compliance.
7. Delayed Month-End Close
When businesses struggle with manual reconciliations, fragmented systems, and insufficient automation, they create a lengthy month-end close process that delays financial reporting and hurts strategic planning.
Solution: Our research shows that partnering with a finance and accounting partner significantly expedites the month-end close process. Nearly half of investor-backed CFOs without an F&A partner take at least 21 days to finalize their close, compared to just 35% of those who work with a third-party partner.
By offloading the month-end close to an expert third-party, CFOs and finance teams can also focus on strategic decision-making rather than administrative reporting tasks.
Outsourced solutions for all your financial reporting challenges
If overcoming these financial reporting challenges internally sounds daunting, Consero offers flexible, tailored solutions to transform your finance and accounting department and gain financial clarity.
Our proven Finance as a Service (FaaS) model provides the systems, processes, and people to quickly operationalize your entire finance function to produce reliable, board-level reporting powered by our AI-enhanced platform.
If you prefer your existing technology, Consero’s FlexFinance service enables you to keep your existing system and general ledger while we manage the back-office F&A function from end-to-end process, including closing the books.
If and when you need skilled talent, we can supplement your team with F&A experts via our FlexResources, without you needing to commit to full-time hires.
Request a consultation to learn more about how we can get your finances up and running.
