There has been an increasing buzz in the market in the past 12 months around the topic of environmental, social, and governance (ESG) reporting.  What’s driving this and why should CFOs and Finance executives care about it?  Read on to learn what ESG reporting is, what’s new with ESG reporting standards, why Finance teams should care, and the five benefits of aligning ESG reporting with financial reporting.

ESG Reporting is Rising in Prominence

ESG reporting (a.k.a. Sustainability Reporting) refers to the disclosure of data covering a company’s operations in three areas: environmental, social, and corporate governance. It provides a snapshot of the business’s impact in these three areas for investors, customers, and wider stakeholders. The value of ESG reporting is that it ensures organizations consider their impacts on sustainability issues and enables them to be transparent about the risks and opportunities they face.

For many years, ESG reporting was an annual, voluntary disclosure by public and private companies to their stakeholders about the impacts of their enterprise on the environment and society and how they are managing these programs.  With an increasing amount of capital (now roughly $35 Trillion) flowing into “sustainable” mutual funds and ETFs, there is increasing stakeholder interest in ESG reporting and increasing demand for more detailed and frequent disclosures from public and private enterprises.

As a result, corporate sustainability and climate change efforts are fast transitioning from voluntary to mandatory in many countries, and even the US SEC is moving towards defining clear disclosure guidelines for public companies.  Based on this inertia, there is a clear driver for companies to develop robust sustainability and ESG strategies with transparent reporting to stakeholders.

Converging ESG and Sustainability Reporting Standards

There are several competing standards for ESG/Sustainability reporting including the Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), Carbon Disclosure Project (CDP), and others.  However, there is now a movement towards a global standard coming out of the recent COP27 conference in 2022.

The IFRS Foundation, which oversees accounting standards in more than 140 nations, mostly in Europe and Asia, announced the creation of the International Sustainability Standards Board (ISSB) at COP26. The foundation will oversee the ISSB as it does the International Accounting Standards Board, formed two decades ago. It expects to release two reporting protocols on disclosures in the second half of 2022.

The main driver for the ISSB creation at COP26 (see figure 1) was the fact that current ESG data is lacking clear standards. The data provided is hard to audit and there is no alignment to the financial statements. This makes it extremely hard for investors and other stakeholders to determine the true risk exposure from the data provided.

CFOs and Finance Teams Paying Attention

While thousands of organizations around the world have already been reporting on ESG and sustainability, the data collection and reporting is often handled by Sustainability teams, Facilities, Human Resources, or other groups.  But CFOs and Finance teams are now paying more attention. Why is this?  Because as this type of reporting transitions from voluntary to mandatory it will require the same level of governance, control, accuracy, and auditability as financial reporting.

But there are other factors driving increasing CFO engagement in ESG reporting.  According to a recent Accenture survey, “the ability of companies to raise capital will increasingly be tied to sustainability objectives.”  Yet “deficiencies in the ability of companies to target, manage, measure and report sustainability performance still hamper the ability of businesses to effectively deliver on their sustainability commitments.”

According to the survey, fewer than half (47%) of large companies have identified how to gauge the sustainability of their operations despite rising pressure from investors, regulators, and lawmakers for disclosure on environmental, social, and governance (ESG) performance.

Here are some other key points from the survey:

• Meeting demands for sustainability data will be integral to company performance – ESG matters to the market, and therefore to business value.
• Companies with high ESG performance from 2013 until 2020 generated 2.6 times higher total shareholder return than medium performers.
• Making a CFO responsible for sustainability is essential for ensuring a company meets its ESG goals. Companies are much more likely to extensively embed ESG in core management processes when the CFO has accountability for ESG metrics.
• Yet only 26% of finance leaders said they had clear, reliable data to back up their ESG metrics.

ESG and Sustainability Reporting Technology

As with any new data collection or management process, spreadsheets and email are often the initial tool of choice due to their accessibility, ease of use, and low cost.   But if control and accuracy are required, the spreadsheets and email approach to ESG reporting quickly suffer from the same shortcomings faced when these tools are used for financial reporting – they don’t deliver.

There are a growing number of purpose-built ESG/Sustainability reporting tools available in the market that can replace spreadsheets.  And while these tools can provide value to the process, they create a data collection, consolidation, and reporting process that’s separate from the financial reporting process. And if ESG metrics need to be reported alongside financial metrics, wouldn’t it be better if this data was collected in the same system and processed as financial data?

The answer is yes, and that’s why a growing number of organizations are looking to extend the financial close, consolidation, and reporting capabilities of their corporate performance management (CPM) platforms to handle their ESG Reporting. This can be a viable approach for aligning ESG reporting with financial consolidation and reporting – provided the application has the required features to support the efficient collection, consolidation, and reporting of ESG metrics. These features should include the following:

• Collecting financial and non-financial data from a variety of internal systems.
• Support for forms-based data entry of ESG metrics
• Support for complex conversion calculations for ESG metrics
• Ability to support multiple ESG reporting frameworks and metrics across industries
• Consolidation of ESG metrics and textual commentary across multiple hierarchies
• Extensive data validations, controls, and audit trails
• Ability to capture ESG targets and goals for comparison against actual results
• Produce a variety of output types including standard reports, interactive dashboards, and Excel-based analysis of ESG metrics

Five Benefits of Aligning ESG Reporting with Financial Reporting

ESG and Sustainability reporting is rapidly moving from a voluntary to mandatory process.  CFOs and Finance teams need to get engaged to ensure the accuracy and integrity of ESG and sustainability reporting to a variety of stakeholders.  Aligning ESG reporting with the financial reporting process and system can yield several benefits to organizations.  These benefits include the following:

1. Eliminates duplicate data collection, consolidation, and reporting processes.
2. Improve the accuracy and integrity of ESG and Sustainability Reporting.
3. Align ESG and Sustainability metrics with financial results.
4. Establish high-quality controls and audit trails over ESG and Sustainability metrics.
5. Compare actual ESG and Sustainability metrics with goals and targets.

To learn more about the value of aligning ESG reporting with financial reporting, download our white paper titled, “The New CFO Imperative: Unifying ESG & Financial Reporting.”

Download the White Paper

This year has been truly unprecedented.  While there’s no need to name some of the events, suffice to say they’ve been significant and life-changing for many people, companies and even countries!  The many organisations closing out the year thus have a lot to be positive about.  And now is a good time to not only reflect on the past year but also look ahead and determine what actions today will help the organisation streamline financial close and consolidation processes to weather the storms ahead.

Year-End Challenges

Many Finance organisations are still bogged down by inefficiencies in routine processes within the period-end financial close and reporting cycle.  And that situation makes it difficult to shift time to value-added analysis and decision support.  In fact, many organisations are still closing the books much in the same way they did 10-15 years ago.  Even those organisations that have changed and updated over time can still struggle with routine period-end processes.

Here are some of the reasons organisations are still struggling with financial close and consolidation processes: 

• Outdated Finance Processes – Too many manual activities and not enough automation
• Increasing Complexity – More regulation, including ESG, growth and a changing competitive environment
• Management of increasing volumes of data – Data-driven decision-making, now critical, requires more granular details and increased focus on cost containment to drive deeper analysis
• Shifts in business strategy – M&As or leadership changes that impact reporting and KPIs requires accommodating strategy shifts
• People Management – Retaining talent and motivating people to be more efficient are both becoming increasingly challenging
• Silos of Systems and Tools – Lots of moving data around, investing in multiple software tools and synchronising/aligning creates fragmentation (see Figure 1)

Collectively, the above aspects dilute the ability of Finance teams to focus on driving performance and supporting critical decision-making.  These problems are then only further compounded when key functionality isn’t in place to deal effectively with the increasingly complex requirements and common challenges across the financial close process.

An inefficient financial close process can have a material impact on Finance team members or – worse – negatively impact organisational performance.  How?  Here are just a few examples:

1. Delays in the release of financials
2. Issues identified during internal or external audits that must be resolved
3. Finance staff working very long hours and/or weekends
4. Significant manual activities (journal adjustments, moving data or copying/pasting to reports)
5. Lack of adherence to any kind of financial close calendar
6. Lack of a standard chart of accounts across divisions/business units
7. More time spent on talking about the past than the future
8. Continued discussion about the prior month close to the end of the current month

And the best way for organisations to avoid those pitfalls year after year? 

Make New Year’s resolutions related to financial close and consolidation processes.

New Year’s Resolutions

A good way to define such New Year’s resolutions is to focus on the desired outcomes.  These outcomes could include the desire to react faster to changes, increase visibility and transparency, save time through automation, or reduce the cost to report.

While those outcomes can change from one organisation to the next, successful organisations will have adopted many of the following outcome-based New Year’s resolutions:

1. Define a close calendar to orchestrate and monitor the process on a day-by-day basis
2. Provide clear audit trails and visibility to ensure accuracy and consistency
3. Focus on an efficient repeatable process to eliminate risk by reducing manual movements of data and automating data feeds/validations
4. Eliminate errors and drive standardisation by fully automating processes & reporting
5. Take advantage of built-in financial intelligence to handle complex financial consolidation (e.g., intercompany eliminations, foreign currency exchange [FX], accounting for partial ownerships)
6. Improve resource management by keeping a close eye on people-related issues and avoiding burnout by reducing and evenly distributing workloads
7. Reduce silos of systems by adopting a modern, cloud-based solution such as OneStream for the financial close

The benefits of such New Year’s resolutions can be significant.  How?   Well, when more reliable financial information is available earlier, management can make prompt, informed and effective decisions.  The early, effective external publication of financial results also indicates strong financial management and positively impacts the external stakeholder view of the organisation. 

With a streamlined financial close and consolidation process, organisations can then better align Finance and the business with actual results and forward-looking strategies – opening-up significant new opportunities.

Organisations that successfully automate their financial close, consolidation and reporting have, in turn, been more successful at driving financial performance and delivering value.  And perhaps most importantly, such organisations have gained the agility required to lead at speed, adapt to changing business and industry requirements, and weather whatever storms lie ahead.

Learn More

To learn more about how organisations are conquering the complexity in their financial close and consolidation processes, click here to read our whitepaper.  And if you’re ready to take the leap from spreadsheets or legacy CPM solutions to start your Finance Transformation, let’s chat!

Download the White Paper

Many organizations rely on Microsoft Excel® to support critical financial processes such as financial planning, consolidations and reporting.  This approach can work for smaller enterprises with a few users and simple business requirements. But as organizations grow in size and complexity, they often outgrow the capabilities of Excel, which then bogs down the processes and leads to errors and omissions.  Read on to learn how Orchid Orthopedic Solutions replaced Excel and Infor EPM with OneStream to unify and accelerate financial planning, consolidations and reporting.

Reconstructing Financial Planning and Consolidations

Orchid Orthopedic Solutions is a world leader in orthopedic medical device solutions, providing manufacturing services globally. Orchid specializes in implants, single use instruments and innovative technologies within joint reconstruction, hips, knees, spine, trauma, extremities and dental.

The Finance team at Orchid had been using Excel and manual processes to support their annual financial planning process and was using Infor EPM for financial consolidation and reporting.  I recently interviewed Josh Thompson, VP of FP&A at Orchid to learn about their journey from Excel and legacy software to OneStream’s unified CPM software platform.

According to Mr. Thompson, “I realized we needed a better solution for our planning process at Orchid when we kept having just really blatant errors in the financial projections. They were missing really easy things like bonus percentages and FICA taxes and things like that. And there was really no common way that any of our facilities were planning.”

Like many organizations relying on Excel for planning, everyone had their own disparate Excel models, with different kinds of functionality.  The Finance team collected these Excel worksheets and rolled them up into a common Excel model, and then loaded the results of that into their legacy CPM platform, which was Infor EPM.

Mr. Thompson and his team evaluated several alternative solutions, including Host Analytics (now Planful), Adaptive Insights, OneStream and several others.  Based on the capabilities of the platform, the support of the sales team, and feedback from other customers – the Orchid team selected OneStream to unify their CPM processes.  Said Mr. Thompson, “I went on visits with existing OneStream customers, and it was just fabulous. They were so open, and they had us in for lunch and walked us through how they were using OneStream and it was all just Finance people. So we felt really comfortable that we wouldn’t need IT to run this thing.”

Implementing OneStream at Orchid

According to Mr. Thompson, “The implementation of OneStream was absolutely fantastic. We kicked it off in March and by October of that year, six months later, we were live on OneStream with both the consolidation as well as the planning that we built from scratch.”  The Orchid team worked in parallel on both the planning and financial consolidation implementations of OneStream so they could go live with both at the same time. 

Several months after going live, they added People Planning from the OneStream MarketPlace. Said Mr. Thompson, “We really want to have this as part of the planning process. And that’s worked out really well too. We’ve actually connected that to Workday, so we have a live feed from Workday that just feeds in the census information into People Planning and it makes it really easy to tell what’s in your plan and to adjust it on the fly.”

Future areas of interest for extending their investment in OneStream include profitability by product SKU and customer as well as long-range planning. Said Mr. Thompson, “We’re constantly re-rolling a 3-to-5-year plan in Excel, but I’d love to start building out a model for that in OneStream in the near future.”

Eliminating the Pain – Seeing the Gains

Like a patient whose years of pain are alleviated through a knee or hip replacement, the Finance team at Orchid Orthopedics is now seeing the benefits of a unified CPM software platform.  Life is much easier for the users and admins with one system to learn and maintain and they now have one source of the truth for actuals, plans and forecasts.  Said Mr. Thompson, “You never doubt what’s feeding your plan in terms of actuals. We have a lot of drivers that are based off of the last three months, or six months of actuals. So you just know that those actuals that are featured in the plan are the actuals because they’re in the same system.”

The Orchid Finance team has also seen efficiency gains in their planning and reporting processes with OneStream.  Said Mr. Thompson, “I would say the first thing that’s really measurable is just the time for close process. I have a counterpart that’s in charge of financial reporting, all the accounting for the organization. And he would have to wrap up the close on the weekend after close. He was always working Saturday to get the close done. And now we’re done, close of business on Thursday.”

Mr. Thompson continued,” I think the intangible part of the benefit is it just allows everyone to work on a lot more interesting things, because the basics are covered, and they’re covered fast. It’s allowed us to retain our staff. They’re able to go on to bigger and better things.”

Learn More

To learn more, watch the Orchid Orthopedics video testimonial and contact OneStream if your organization is ready to make the leap from Excel and legacy applications that may be holding you back from unleashing the true value of your organization.  

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The financial close process has long been a critical activity for organisations to accurately record and report on past performance.  The process allows organisations to understand what has happened historically and the organization’s current financial position, but legal requirements also dictate how this analysis is performed and published.  For this reason and more, the financial close is viewed by many CFOs and Finance leaders as the backbone of effective Finance Transformation.

At the same time, change comes at organisations from all angles – at any time.  Unprecedented recent impacts from the global COVID-19 pandemic and the war in Ukraine are just a few examples.  Other similar events likely await in the future.  And whatever comes about, Finance and Accounting teams must have the tools to conquer complexity, lead at speed and drive performance.

For Finance and Accounting teams still reliant on manual processes or ‘connected’ corporate performance management (CPM) software, the financial close, consolidation & reporting processes – such as statutory, risk, or environmental, social & governance (ESG) reporting processes – add even more complexity.  Why?  Because every financial close solution or departmental and corporate application must be connected.  And that adds risk, cost, and complexity to already-taxed Finance teams.

If your organisation is evaluating whether you’re ready for Finance Transformation, here are 5 best practices to conquer the complexity of the financial close.

1.   Focus on Using Time Wisely

If your financial close and consolidation process is largely manual, it’s time to use your time wisely and start transforming your process and system.  Still, using Excel?  Then that especially applies to you.  Manual processes mean spending too much time moving data between CPM processes and/or working too hard to achieve results.  Plus, valuable resources get tied up with data gathering rather than being applied to understand the results, and you’re likely spending (too) little time analysing the data to make better-informed decisions.

And that’s damaging to not only your people but also your organisation.

Key CPM processes (e.g., tax, ESG, etc.) should now be automated to save time by identifying and reducing repetitive manual tasks – which means no more laboriously moving data between multiple CPM solutions.  What features help you save time?  Here are just a few:

• Guided workflows that protect business users from complexity by guiding them through all data management, verification, analysis, certification, and locking processes.
• Ability to speed up the close process with pre-and post-load validations, immediate identification of errors, and quick resolution of data quality issues.
• Automated transaction matching capability to help resolve differences and accelerate the account reconciliation process by providing the ability to quickly match transactional data from multiple sources.

What’s the result?  The simplification of business processes and a reduction in errors and inefficiencies across your enterprise.

2. Use Extensibility to Unify Processes

Having to deploy multiple solutions to allow divisions, business units, and departments must plan and report at a lower level of detail vs. corporate is no longer necessary.

Instead, a modern unified, and extensible CPM software platform houses everything you need in one system – streamlining processes and giving you the ability to reuse core components of key processes.  For instance, a calculation can be replicated in multiple processes, or an account can be shared or be visible across multiple hierarchies.  The group reporting model should also be extendable for more detailed management reporting in business units, while the budget model should allow for a more relevant budgeting process – all in the same application.

Plus, the structures must be automatically inherited, and the central model must always remain intact.  There should be no concern when a business unit extends an account or user-defined dimension (e.g., product, customer, or region) because the integrity of the model is handled automatically.

Why is all this so important?  Well, you no longer need to deploy multiple products or applications that might force additional integrations, validations, and reconciliations.  No more having multiple instances of the same solutions for actuals, budgets, forecasts, plans, reconciliations, profitability analysis, and more.  No more juggling multiple technologies and managing many types of integrations.  Ultimately, unified processes mean less time, less cost, less risk, and fewer errors compared to using multiple solutions.  A unified CPM also supports the complexity involved in the modern Office of Finance.

3. Strive for High User Acceptance

If your users are frustrated with the current tools and the level of service/resolution from vendor support, then change is clearly needed.  That’s especially true if you’ve lost staff due to such issues.  Why?  Well, if your users aren’t happy with the interface, then it can (and usually does!) breed unhappiness in their teams or departments.

Modern interfaces are everywhere today – from mobile phones to televisions or even fridges.  People expect the same simplicity and ease of use in business applications.  If applications instead cause frustration, some users become less engaged in their work.  Many will even consider changing roles and/or companies for this very reason.

How can user acceptance of the system help?  Most Finance resources are qualified and ambitious – wishing to be strategic business partners and use their expertise to help the organisation.  Accordingly, the right system will use efficient processes that minimise manual tasks, such as performing allocations or calculating depreciation.  Efficiency means users will have more time and scope to make a difference – elevating overall organisational performance.

Why is user acceptance so crucial?  Well, a CPM solution will holistically guide the strategy and management of your organisation.  So the higher the user acceptance – meaning those using, referring to, and fully trusting the solution – the better.

4. Choose the Most Complete Functionality

If you’re missing some key capabilities that hurt around the periphery of the financial close process, change is likely required.  Here are just some of the potential problems if no changes occur:

• Storing data in Excel files, notes, manual folders or post-its raises major functionality concerns.
• Limited access to real-time information before the close is a high-risk strategy.
• Lack of functionality makes it difficult for users to effectively keep track of the close process.
• Multiple potential points of failure exist, and valuable information could be lost.
• The wrong version could be used, resulting in reporting errors.

How can you avoid those pitfalls?  By eliminating spreadsheets, point solutions, and other manual data stores across multiple business units.  The result?  Standardisation across the organisation – creating a single version of the truth for financial and operating results.

This functionality supports increased insights and improved decision-making.  Your corporate staff can also drill through from summarised corporate data right down into the underlying operational details – all in one system.  The right CPM solution should provide the functionality to ‘future proof’ the organisation.  You need the confidence that your requirements can be handled – no matter what changes await today, tomorrow, or well into the future.

5. Only Accept the Best Data Quality

Even the smallest concerns around the data/process quality and/or known reporting errors mean change is necessary.  Frequent disagreements over data are also a sign to take action.  Why?  Well, constant errors in the key data or KPIs are obviously problematic when presented at the board level.  Requiring regular restatements due to errors found after the close is not ideal, either.  Both types of errors can cause unnecessary stress.

Plus, having good financial data quality isn’t an option with modern corporate reporting – it’s a requirement.  Errors or omissions in financial statements can cause compliance issues or penalties, loss of stakeholder confidence, and often a reduced market value.

How can you ensure you’re working with high-quality data and processes?  By fully integrating your CPM solution with all source systems.  Then data quality risk can be managed using fully auditable system integration maps.  Validations can also be used to control submissions from remote sites.

And with a fully integrated CPM solution, your organisation will gain the following benefits:

• Reduced internal control risk and better audit trails
• Better drill-down and drill-back to data sources
• Better (and complete) process and change visibility
• Reduced costs of compliance, internal controls, and audit requirements
• Improved confidence in financial results for internal and external stakeholders

Conclusion

If your organisation is struggling to effectively manage your critical, enterprise-wide financial close, now is the time to tackle and conquer the complexity in your financial close.  That journey starts with you setting a new foundation for change and performance management with a fully unified platform from OneStream.

Learn More

To learn more about how organisations are conquering the complexity in the financial close, click here to read our whitepaper.  And if you’re ready to take the leap from spreadsheets or legacy CPM solutions and start your Finance Transformation, let’s chat!

Download the White Paper

En el típico período financiero, las conciliaciones de cuentas se realizan después del cierre. Los contadores primero revisan cada cuenta en los estados financieros para luego verificar la precisión de cada saldo enumerado. Este proceso a menudo implica comparar el saldo del estado financiero con otra fuente de información; por ejemplo, comparar el saldo de la cuenta de efectivo con un extracto bancario externo. Otros ejemplos de cuentas críticas que requieren conciliación incluyen Cuentas por pagar (en comparación con el libro auxiliar de AP) o Cuentas por cobrar (en comparación con el libro auxiliar de AR).

Las conciliaciones de cuentas se realizan principalmente para garantizar la coherencia y la precisión de los reportes financieros. Y para las empresas que cotizan en la bolsa que necesitan reportar los resultados financieros a las partes externas interesadas, las conciliaciones de cuentas son una forma de control interno clave, en el que deben estar disponibles los registros de auditoría detallados para respaldar todos los saldos de las cuentas.

¿Qué sucede cuando las conciliaciones de cuentas no están alineadas?

Para muchas organizaciones, el proceso de conciliación de cuentas no solo implica un trabajo manual que requiere mucho tiempo, sino que también provoca retrasos significativos en el proceso de cierre financiero. ¿Por qué? Bueno, la mayoría de las empresas globales medianas y grandes deben conciliar cientos o miles de cuentas durante el cierre de trimestre o fin de mes en la empresa matriz y varias subsidiarias. Algo más que también se relaciona con este proceso: la necesidad de reconciliar datos entre múltiples aplicaciones de software que se utilizan para administrar el negocio. Cuantos más sistemas, más conciliaciones se requieren.

Los principales departamentos financieros están intentando eliminar los riesgos de los procesos manuales. Estos riesgos pueden incluir conciliaciones faltantes o perdidas, cuentas no conciliadas, uso inadecuado de transferencias y justificación o documentación insuficiente, y eliminarlos ayuda a proteger a las organizaciones contra errores costosos. Por lo tanto, muchas organizaciones han adoptado aplicaciones de software de conciliación de cuentas independientes para hacer frente a estos problemas.

Sin embargo, esta solución no siempre es la respuesta correcta. ¿Por qué? Bueno, con las aplicaciones de conciliación de cuentas independientes, existe una “brecha de integridad de datos” (consulte la Figura 1) entre las conciliaciones de cuentas y los estados financieros. Cuando las cuentas se concilian en un sistema separado del proceso de generación de reportes financieros, es fácil que se produzcan datos desincronizados, lo que provoca retrasos en el proceso de cierre y problemas con la integridad de los datos.

Figure 1: Standalone Account Reconciliation Applications

¿Por qué Alinear las Conciliaciones de Cuentas con los Reportes Financieros?

Alinear las conciliaciones de cuentas y los reportes financieros, en última instancia, mejora la integridad de los resultados financieros y brinda a Finanzas y a las partes interesadas una mayor confianza. Pero incluso más allá de esos beneficios, se pueden obtener importantes beneficios de tiempo y costo. También se pueden obtener mayores niveles de visibilidad y control.

¿Aún no está convencido de los beneficios? Aquí hay 5 razones clave para alinear las conciliaciones de cuentas con los reportes financieros:

1. Elimine las cargas de datos duplicados: Al combinar varias fuentes de datos en una única conexión directa y luego reutilizar los datos para múltiples procesos, se eliminan las cargas de datos duplicados. Los equipos de finanzas pueden cargar los balances de prueba del libro mayor una vez en un solo sistema para consolidaciones financieras, informes y conciliaciones de cuentas: los datos siempre estarán sincronizados y el proceso de cierre será más rápido y eficiente. Los usuarios reciben una alerta de verificación de estado de conciliación inmediata si un saldo previamente conciliado ha cambiado debido a una importación de saldo de prueba actualizado.
2. Ahorre tiempo – comience las grabaciones antes de que finalice el cierre: Los usuarios pueden comenzar las conciliaciones de cuentas tan pronto como se envían los balances de prueba, ya no es necesario esperar a que se complete el cierre corporativo. La recopilación de datos debe facilitarse con flujos de trabajo que guíen a los usuarios a través de sus tareas. Por lo general, los usuarios pueden cargar los balances de comprobación por su cuenta en lugar de enviarlos a la empresa, lo que acelera el proceso y garantiza una mejor calidad de los datos.
3. Entregar reportes de gestión de riesgos en el balance general:  Los usuarios deben tener acceso a una vista inmediata (consulte la Figura 2) del estado de todas las conciliaciones de alto riesgo en relación con los reportes financieros. Como resultado, los usuarios pueden comprender fácilmente el puntaje de calidad de los reportes financieros, obtener una mayor confianza en sus resultados y lograr una verdadera gestión de riesgos.
   
   

   Figure 2: Balance Sheet Risk Management

4. Benefíciese de alertas en tiempo real – señales financieras: Las alertas automáticas de cambios en los estados de saldos de cuentas conciliados (consulte la Figura 3) garantizan la confianza de que los reportes siempre están alineados con las conciliaciones. Con información semanal o diaria sobre las tendencias y señales inherentes a las conciliaciones, los usuarios pueden tomar medidas de inmediato para impactar proactivamente los resultados y limitar cualquier retraso o error.

Figure 3: Automated Alerts for changes to Reconciled Account Statuses

5. Obtenga una línea de visión: profundice desde los reportes hasta las conciliaciones: La capacidad de profundizar y auditar desde los reportes hasta los detalles de apoyo proporciona una única “cadena de valor de datos”. Las organizaciones pueden moverse sin problemas a través de los procesos de conciliación y atestación, a los reportes de gestión y, finalmente, a la consolidación y los reportes financieros, todo con una sola línea de visión de regreso a las transacciones. Es importante destacar que los usuarios deben poder acceder directamente desde el balance general a los detalles de las conciliaciones de cuentas.

OneStream realmente alinea las conciliaciones de cuentas con los informes financieros

La clave para conciliaciones de cuentas más efectivas radica no solo en automatizar el proceso, sino también en unificarlo completamente con el cierre financiero y los reportes. Si los balances de prueba del libro mayor se cargan en un solo sistema para la consolidación financiera, los reportes y las conciliaciones de cuentas, los datos siempre estarán sincronizados. El proceso de cierre también será más rápido y eficiente. Es importante destacar que una sola carga de balance de prueba puede, en paralelo, alimentar todos los procesos de reportes, incluidas las conciliaciones de cuentas, desde la misma fuente. Esa habilidad reduce el riesgo de diferencias y acelera el cierre.

Si el proceso está completamente automatizado y unificado, los beneficios de aprovechar los mismos balances de prueba en los procesos de cierre y cumplimiento se vuelven muy claros. ¿Cómo? Bueno, los datos a menudo cambian constantemente en el proceso de cierre debido a eliminaciones y otros ajustes. Dichas actualizaciones, en un sistema automatizado, continúan reflejándose en todos los procesos sin tener que mover físicamente los datos entre soluciones financieras conectadas separadas. Y esa automatización elimina la brecha de integridad de datos (consulte la Figura 4).

Figure 4: The Unified Approach – Eliminates the Data Integrity Gap

OneStream es la ÚNICA solución que puede proporcionar un enlace desde los saldos reportados hasta las cuentas conciliadas. Los usuarios pueden acceder instantáneamente a la conciliación de los reportes financieros en un sistema unificado. Esta capacidad proporciona una visibilidad del 100 % desde los reportes hasta las fuentes de datos, lo que significa que todos los datos financieros y operativos son claramente visibles y fácilmente accesibles.

Clientes 100% satisfechos

La capacidad de unificar los procesos de cierre financiero en paralelo y sin complejidad le da a OneStream la capacidad de reemplazar varias hojas de cálculo y aplicaciones financieras heredadas o conectadas. Y es una gran oportunidad para que las organizaciones impulsen ahorros en el costo total de propiedad y generen retorno de la inversión en OneStream.

A continuación, se muestran algunos ejemplos de clientes con los que hemos trabajado y los beneficios que han logrado con OneStream.

TerraForm Power decidió adoptar un nuevo enfoque de “nube primero” para su estrategia de implementación de software. El panorama de su sistema incluía múltiples aplicaciones heredadas que eran engorrosas y creaban desafíos para los equipos de TI y finanzas de TerraForm Power. También se dependía mucho de Excel®, que carecía de pistas de auditoría y planteaba riesgos para la empresa.

Después de implementar OneStream, la obtención de beneficios ha sido significativa. Tener reportes estandarizados ha ayudado a TerraForm Power a cerrar los libros de manera más rápida y precisa mientras supera las auditorías de manera más confiable. Las interacciones en todo el equipo se mejoran con una sola versión de la verdad. Al llevar las conciliaciones de cuentas a OneStream, la cantidad de cuentas se ha reducido de 700 a 150. Como reemplazo de Blackline, TerraForm Power ahora está ahorrando aproximadamente $100,000 por año en licencias.

West Bend Mutual Insurance (WBMI) utilizaba anteriormente hojas de cálculo de Microsoft Excel® como herramienta de recopilación de datos y generación de reportes para su proceso de cierre de fin de mes. Las asignaciones se realizaron en una herramienta de software diferente que tenía restricciones de procesamiento de tamaño. Las inconsistencias en la recopilación de datos a través de hojas de cálculo de Excel® crearon un proceso de cierre laborioso y propenso a errores. Además, la transparencia de las operaciones al detalle financiero era limitada.

WBMI ha experimentado muchos beneficios al implementar la solución unificada de OneStream™. El mayor beneficio viene en la forma de un proceso de asignación consistente y estable que elimina el tedioso tiempo que tomó hacer las conciliaciones. El ahorro de tiempo combinado para estas actividades asciende a más de dos días por mes. Los ahorros de dos días fueron el resultado de la reducción del tiempo de espera para las cargas de datos y la actualización de los informes a lo largo del mes.

Al igual que TerraForm Power y WBMI, su organización también puede alcanzar un nuevo nivel de riesgo, conquistar la complejidad y mejorar la integridad de los resultados financieros al alinear las conciliaciones de cuentas con los reportes financieros. ¿Cómo? Reemplazando sus hojas de cálculo o soluciones de software de conciliación de cuentas independientes con una plataforma de software CPM unificada.

Aprende más

¿Desea obtener más información sobre cómo las organizaciones están adoptando con éxito soluciones modernas basadas en la nube para el cierre financiero, la consolidación y la generación de reportes? Haga clic aquí para acceder al documento técnico “Conquistar la complejidad en el cierre financiero” de OneStream.

Intercompany (IC) eliminations are often described as a headache.  Why?  Well, they make up one of those recurring processes which is vitally important but very difficult and cumbersome if the wrong tools are being used.  When you have an actual headache, of course, a short-term fix is always available.  A simple painkiller could give some relief, allowing you to carry on with your day.  But unfortunately, for many Finance teams, intercompany eliminations don’t just cause small headaches.  Why?  Because if the “headache” isn’t treated correctly with a long-term solution, relying on manual processes or spreadsheets for intercompany eliminations can disrupt the financial close and reporting processes – directly impacting Finance’s ability to share reporting and insights across the business.

The Causes of the Pain

Why does pain exist so often in the intercompany process?  It’s simple, really – organisations find themselves facing many common challenges.  The result is a process that takes longer than it should and has a higher margin for error.

Here are a few challenges many Finance and Accounting teams face with intercompany eliminations:

• Complexity – The intercompany eliminations process often requires a heavy time investment, lacks consistency, and suffers from a lack of visibility to explain any differences.
• Manual Processes – Too much reliance on time-consuming manual processes – such as uploading data from multiple accounting systems, tracking on spreadsheets or exchanging emails with colleagues – leads to errors, inaccuracies, and inconsistencies in dispute resolution.
• Volume of Transactions – Continually increasing amounts of data and documentation results in a high volume of transactions. Some organisations have millions of intercompany transactions to manually reconcile.
• Disparate Systems & Data Issues – Multiple data sources requiring manual intervention to extract and load transactions, often with data in different formats, results in a lack of alignment. Data missing details on transactions (e.g., invoices with no link to the underlying transactions) can be the result of limited or no validation checks.
• Regulation – Evolving regulatory considerations can and will continue to bring change to the intercompany eliminations process.

Like in many other corporate performance management processes, not addressing these challenges can compound and prove devastating to Finance teams.  Yet the challenges also offer an opportunity for change and transformation.  In fact, a long-term innovative solution exists which can significantly relieve the pain for Finance teams.

Relieve the Long-Term Pain

Enterprise-class financial consolidation software applications such as OneStream provide powerful intercompany eliminations that can handle sophisticated business needs yet allow for easy reconciliation.

OneStream has developed the most advanced financial consolidation, reporting, and data quality solution in the market.  This solution provides comprehensive intercompany elimination capabilities that can handle sophisticated business needs yet allow for easy reconciliation.

Using OneStream Intercompany, eliminations automatically occur at the first common parent in every alternate hierarchy.  That means the eliminations are calculated at every consolidation point.  In other words, each intercompany item has an “in and out” – for example, when matching a receivable and payable, they both offset through a common account.  This powerful approach greatly improves insight and seamlessly handles the impact of major business changes (e.g., reorganisations).

Here are just a few of the benefits OneStream Intercompany offers:

• Automatic IC eliminations at the first common parent for all hierarchies without complex rules.
• Each intercompany party and counterparty simultaneously view local, counterparty, and reporting currencies to instantly collaborate and resolve IC discrepancies.
• Corporate can always see resolution state with pre-built intercompany management reports that provide visibility to IC status.

The advanced architectural design of OneStream, combined with its reporting and the ability for users to drill down into transactional details, provides an unmatched ability to see and resolve intercompany balances and rapidly close the books at period-end.

Learn More

Does your organisation need help to manage the complexity of intercompany eliminations?  Do you want to avoid recurring headaches by using a robust financial consolidation and reporting platform for the long term?  Read our e-book on Conquering the Complexity in the Financial Close, or hear how one of our customers is benefitting from these advanced capabilities in this video about Victaulic.

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During July we ran another hugely successful OneStream Platform Power Hour.  What’s a Platform Power Hour?  This event is part of a NEW dedicated series of webinars specifically for OneStream customers.  The goal is to arm our customer community with the latest information on the OneStream platform, capabilities, MarketPlace solutions, product roadmap, and more.

The focus for this Power Hour was using the Account Reconciliations MarketPlace solution in the context of the financial close and consolidation.

To kick off the session, we ran a quick poll of the audience to find out what they’re currently using to manage Account Reconciliations.  The results were interesting:

These survey results closely match the dynamics we regularly see with most organisations.  At 57%, Excel and email continue to be the predominant tools used.  But with a combined 28% already using OneStream Account Reconciliations or another solution, 57% still using Excel and email demonstrates that there is still a significant number of organisations who need to recognise the importance of adopting a specific capability.

Account Reconciliations

Next, I explained how OneStream supports virtually all financial close and statutory reporting needs, including US GAAP, IFRS, and Multi-GAAP and local requirements, in a single unified solution.  OneStream provides capabilities for complex organisations to handle sophisticated requirements, such as intercompany transaction matching and eliminations, financial signaling to help shorten the financial close, variance and flux analysis, and more.  And even more importantly, we do it all with a complete audit trail and drill-through capabilities – providing users with insights into every single number in every report and analysis.

I followed that explanation with an introduction to Account Reconciliations, a specific OneStream MarketPlace solution many customers are leveraging.

OneStream allows customers to attack the challenges in Account Reconciliations in a unique way with a solution that is completely unified with the financial consolidation and reporting processes.  Account Reconciliations can therefore be integrated into the financial close workflow and leverages data that already resides within the consolidation application.

One key feature is that OneStream provides a direct link from reported balances to reconciled accounts.  Ultimately, Drill-to-Reconciliation gives users the ability to instantly drill down from financial reports in one unified system.

Product Expert Discussion

At this point, I handed the session over to Jessica McAlpine, Group Product Manager Close & Consolidation, and Kelly Darren, Director of Global Domain leads and Financial Close expert.

Jessica started out explaining what was new in Account Reconciliations in the April 2022 release.  Then, she explained that the new features were focused on enhancing controls and auditability.  Jessica also highlighted that Account Reconciliations and Transaction Matching are now part of a single download from the MarketPlace titled Financial Close Solution (OFC).

Digging more into the release, Jessica then explained the following updates:

• Easily Update Reconciliation Attributes – A new user-friendly dialog now provides an easy and intuitive way to update multiple reconciliations at once with real-time transparency regarding what changes can and can’t be made. Admins will continue to be able to mass update via import templates too.

• Account Groups Page – Now when clicking on an Account Group on the top dashboard, users will see all Child Recs from that Account Group in the dashboard below. Previously this functionality involved having to switch back and forth between two screens (see Figure 1).

Users can also create a new Account Group or use the Clone option to create a new Account Group to avoid creating one from scratch

• Security Is Now More Granular – The Primary Preparer and Approver 1-4 are now assigned at the reconciliation level, which results in less maintenance and fewer access groups. Platform security groups have also now been added to both access groups and individual users so that setting up security groups does not have to be done twice.  Instead, users can now piggyback off what already exists.

• User-Friendly Reconciliation States – ‘State’ categories have been updated throughout all areas of Account Reconciliations to provide greater transparency into where the reconciliation is in the preparation and approval process.

• New Audit Functionality – A new Auditor role allows organisations to have auditors only see fully approved reconciliations. Audit logging has also been enhanced to ensure users can see what changes were made, which user made each change, and at what time each change was made.

• Detail Item Enhancements – Reconciliation preparers now have the option to pull or copy detail items. Feature preparers can also now use the prior detail item as a base or template to create a new item for the current period.

Account Reconciliations Demo

Next up was Kelly, who demonstrated as many of the new updates to the solution as possible.  Kelly started by showing where to access the Financial Close Help Guide, which is a useful resource for learning how things work.  Next, Kelly looked at the admin aspects and explained how OneStream is ensuring the administration side remains as easy as possible to manage and make changes.

Kelly then showed the scorecard capability (see Figure 2), which offers a visual of reconciliation statuses.  The scorecard includes the prepared statuses, the approval statuses, the due dates, and the top unreconciled entities.  Through that information, users can drill down into the details at any point to see how balances changed and when.

While Kelly was demonstrating, the questions from the audience were coming in, and there were plenty!  Jessica and Kelly answered as many questions as possible – and quite a few focused on the best setup and use of the solution.

In addition, the New OneStream Financial Close book featuring five different authors and covering all things Account Reconciliation and Transaction Matching was mentioned.  Keep a look out – the book will be released very soon.

Learn More

Interested in learning more about Account Reconciliation?  Watch the replay of the webinar, or visit the OneStream website – and don’t forget to check out OneStream Champions and our events page for future sessions!

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In a recent webinar with our partners at KPMG, we explored trends in the financial close and how organisations are increasing the organisational value and guidance their teams provide while driving increased performance.  We were joined by KPMG Partner for Finance Transformation Brian Yeager, who examines various causes of disruption and shares the details of two recent KPMG surveys of leading Finance organisations.  Cara Peterson, Director, Finance Transformation, KPMG was also on hand to explain how to make the financial close more digital.

To kick off the webinar, I focused on market trends relating to the pace of change and the need for speed within organisations.  We highlighted how the expectations of the Finance function are evolving and moving up the innovation curve (see Figure 1).  From the ‘foundational’ book-of-record, we’re seeing more forward-looking requirements, operational modeling, and the need for real-time information and data.

Organisations today must, now more than ever, continue to drive the Finance role as a strategic advisor to the business by empowering Finance with new capabilities, including the following:

• Spending more time on the forward-looking analysis
• Combining financial, operational, and transactional data
• Ensuring accuracy and auditability across all financial data
• Creating and sharing dashboards with executives and managers

We then shifted gears to explain that the financial close still has plenty of room for improvement – especially for those organisations using spreadsheets or legacy technologies and cited research by Ventana.  In fact, the financial close process is one area for continuous improvement for two reasons: constant change is experienced, and the level of complexity only increases.  Ventana’s research showed that more than half the organisations surveyed are taking more than a week to complete the quarterly close (see Figure 2).  This number has increased compared to the 2019 survey.

Many organisations, even those who have purchased software, have been struggling to simply maintain the status quo given the constant change caused by the fragmented nature of the previous generation and the existing cloud CPM tools.

As a result, high risk, cost, and technical debt are still very much a reality with many of these products.

Finance Survey Results

Mr. Yeager then spoke about how ‘disruption is guaranteed.  Setting the scene, he gave a more detailed view of the different types of disruption – many of which have frequently been used as a vehicle for Finance Transformation.  Next, Mr. Yeager highlighted two recent KPMG surveys.  He specifically focused on how leading Finance organisations are not only handling disruptions but also prioritising investments in digital, data, and people.

The survey results (see Figure 3) showed that leading Finance organisations are leveraging data – both internal and external data – as a competitive advantage.  These organisations are elevating their digital fluency and raising their teams’ skill levels.  In other words, people are doing less compiling of numbers and more analysing of data for forward-looking decision-making.  Digital centres of excellence (COEs), which are staffed with digitally skilled people, are also becoming more common.

As data technology and processes are advancing over time, leading Finance organisations are automating 70% or more of their transactional processes and reporting.  These efforts include automating upstream processes and other key areas, such as journal entries and report delivery.  Self-service reporting models are becoming more typical as well.

Mr. Yeager also touched on the benefits of automating account reconciliations.  Notably, he shared how many leading Finance organisations are integrating non-financial and external data into financial decision-making.

Digitising the Financial Close

Ms. Peterson focused on what types of initiatives organisations can undertake to ensure the close process is not extended given the levels of disruption.  For many, the close process is already a long one.  Finance teams are thus interested in initiatives to make the process occur more in real-time, ensuring the teams themselves are better prepared to handle any future disruption.

Ms. Peterson discussed two key terms that help make such initiatives possible:

1. Digital close – Identifying technology improvements to remove manual steps in the close process.
2. Continuous close – Achieving a high level of automation, meaning the Finance team can close at any time and provide information that helps drive key business decisions.

The key message from Ms. Peterson is that ‘it’s never too late to start’.  She went on to explain some key areas where organisations can achieve immediate gains.  These areas included replacing on-premise applications and Excel, moving towards advanced capabilities in the cloud, concentrating on data quality, and replacing integrations where possible.

Next, Ms. Peterson explained automation in more detail and outlined a few steps organisations can take to achieve a more automated close process.  She explained that, as organisations bring technology along, they must also bring the people and shift their skillsets by investing upskilling, right skilling, and building data literacy.  These shifts drive efficiencies in the close process.  Especially, digital fluency is critical because people must understand the technology, how it all works together and the benefits the organisation achieves as a result.

Finally, Ms. Peterson shared a few points on how organisations can tactically advance to a digital close (See Figure 4).  A few foundational aspects are still important to implement for any close process, such as using a close calendar, introducing thresholds/tolerances, freeing up resources, and moving account reconciliations activities outside the close cycle.  However, some key digital concepts must be considered.  These concepts include moving towards using real-time data, getting to an exception-based approach, and examining areas of delay in the process – all of which take time.

Conclusion

The KPMG survey results highlight some interesting trends which leading Finance organisations are following to increase the organisational value and guidance their teams provide while driving much-desired increases in performance.  In sum, organisations can take positive steps right now to digitise the close process and reduce the technical complexities of the past.

Learn More

To learn more about how OneStream empowers organisations to lead at speed in Office of Finance Transformations and how KPMG guides organisations on that journey, watch the webinar replay of ‘Trends in Financial Close with KPMG’.  And if you’re ready to conquer complexity in your own Office of Finance Transformation, contact OneStream today.

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Managing the reporting requirements for a conglomerate company can be a daunting and overwhelming task, as there are many moving and ever-changing factors. It is essential that conglomerate companies incorporate modern financial applications so that Group Finance can produce effective and accurate work and keep all independent businesses operating smoothly.

Wesfarmers comprises some of Australia’s most notable retailers such as Target, Bunnings, and Kmart, who each have their own form of self-governance and enterprise reporting methods. The company’s existing financial management system, could not efficiently manage their enterprise reporting, which encouraged their Finance team to heavily rely on offline spreadsheets. A change to their financial reporting system was prioritized, and the company’s leadership knew that the sooner it found a solution for Group Finance, the quicker the Finance team could optimize the software to their needs. Read on to learn about Wesfarmers’ finance transformation journey and the successes they have seen by replacing their existing finance management system and offline spreadsheets with OneStream.

Founded in 1914 and headquartered in Perth, Australia, Wesfarmers has operated Australian businesses that sell merchandise such as office supplies, fertilizer, and energy. Wesfarmers is known as one of the most successful and influential businesses to come out of Australia, ranking at 195 on the Fortune Global 500 and having over 100,000 employees. It has also had ample financial success, as its 2021 annual revenue was 33.94 billion Australian dollars, an increase of 43.5% from the previous year.

A Modern CPM Solution is Realized

Wesfarmers needed a solution for Group Finance that would be capable of handling non-standardised data outputs and inputs, streamlining data collection, managing complex consolidations, and handling advanced group reporting. Wesfarmers utilized Oracle’s Hyperion Financial Management (HFM) suite as part of the financial reporting process, but frequent reporting requirement changes were often through offline spreadsheets. Further, the situation became even more problematic when it was announced by Oracle that the version of HFM they were using would cease to be supported after December 2021.

Therefore, Wesfarmers sought a new system for Group Finance, prioritizing reliability, safety, and utility in their search. Representatives engaged in discourse with possible candidates such as CCH Tagetik, and Oracle. Still, they became mainly intrigued with OneStream’s Intelligent Finance platform after learning about it from consultants at Taysols, a prominent Australian service provider and partner of OneStream. OneStream’s platform provided a solid foundation against which the financial reporting process was significantly improved, as it allows conglomerate companies to efficiently address group reporting and monitor group performance data. After coming to an agreement with Wesfarmers, Taysols aided in the company’s transition from their Oracle HFM system to OneStream.

All-in-one Financial Solution

Wesfarmers immediately recognized benefits from partnering with OneStream, as group reporting became mainly automated, consolidation processes were significantly improved and their group reporting pipeline was modernized. The demand for spreadsheets diminished.

Following the implementation of OneStream, Wesfarmers’ senior executives could receive answers to their questions in minutes, rather than days. The outdated approach to the presentation of information was also replaced with modern and streamlined dashboards and reports.

OneStream provided Wesfarmers staff with detailed monthly progress reports concerning its subsidiaries. Previously, Wesfarmers’ subsidiary reports were audited in hundreds of offline spreadsheets; reports under OneStream are audited in the cloud.

Partnering with OneStream armed Wesfarmers with an all-in-one financial solution. Tedious manual processes became automated, data management became more organized, financial analytics were presented with more intricate details, and subsidiary performance reporting was simplified. Group Finance has never been easier for company leaders under OneStream.

Learn More

To learn more about Wesfarmers’ unique OneStream journey, we invite you to read their Customer Success Story. And if your organization is ready to begin your finance transformation journey, contact OneStream today!

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Ever since CPM applications came to the market, discussions around the performance of the financial consolidation processes have flourished.  Different vendors have often claimed their systems can run faster, complete multiple consolidations in parallel or reduce the time from hours to minutes.  All of that is great since time can obviously impact the overall reporting process, but the actual functions included in the financial consolidation must be considered before making any kind of comparison.

Still, we’re often asked the same question: Will my consolidation be quicker in OneStream than it was in Hyperion Financial Management (HFM)?

Sounds like a perfectly reasonable, simple question.  And the short answer is obviously YES.  Otherwise, why would hundreds of companies have migrated from HFM and other legacy CPM applications to OneStream’s unified CPM software platform?

Your follow-up question, of course: ‘Okay, how much faster?’

We get this question a LOT too – but it’s not an easy one to answer.  Why not?  Well, despite first appearances, we’re not really comparing apples with apples.  OneStream is architected as a unified CPM platform and does things differently from legacy CPM point-solutions such as HFM.

Let’s look at some of the differences.

(We promise to avoid getting overly technical!)

Performance Gains

Despite the above promise, we do need to talk a little about systems architecture and servers in Financial Consolidation software since both play a role in performance.  Even ‘in the cloud’, all our numbers are still ultimately processed on real computers – with real processors, memory, disk drives and network links.  Thus, the architecture and servers matter.  We must make the best use of what we’ve built and paid for (directly or indirectly).

Given that, let’s unpack the performance differences between HFM and OneStream.  HFM uses multiple processors/cores to run parallel calculations by entity.  OneStream does the same but for Member Formulas (rules) within the same entity.

Why the difference matters will become clear in the following example.  Pretend a server has 8 processors/cores.  HFM will use all 8 because it’s still simultaneously processing 8 entities.  That parallelism is fine at the bottom of the consolidation, assuming the parent has at least 8 children (not always the case), but not so great at the top of the entity hierarchy where the top-level holding company is being processed by only 12.5% of the available computing power.  Worse, that top-level entity probably holds the most granular data and will therefore take longer to process anyway.

Alternatively, OneStream uses all the available processing power for all the entities, bottom to top, and that makes a difference.  How much of one?  Well, it depends on your exact entity structure, the shape of your data, the details of your rules and a host of other variables – which means we’d be doing you a disservice to simply quote a meaningless percentage.  But the difference in performance is considerably more than nothing.

Architecture

The OneStream platform has also been architected to better use the available processing power.  Specifically, OneStream not only has sophisticated processes to move jobs to the server with the most available capacity but also has plenty of features that allow for separating different jobs (e.g., data load, consolidation, user interface, etc.) to different server groups.  That functionality ensures users don’t suffer a degraded experience during a consolidation or scheduled data load process (See Figure 1).

Data Granularity

The level of data granularity ultimately impacts performance.  Some customers, for instance, had massive entity structures in their legacy application that included both legal entities and a lower level of detail splitting the numbers by organisation – at the segment level or, in some cases, even down to cost-centre level. And the cost centre level data doesn’t exactly seem like a logical application of ‘consolidation’ accounting – that only happens at legal entity level.

So why slow things down by running a process that’s unnecessary at that level?  OneStream applications can instead be designed in various ways to avoid all that unnecessary effort.

One option is to recognise that the lowest level of data granularity doesn’t even need to be in a ‘cube’. Via OneStream’s Relational Blend technology, the detailed data can be loaded into relational tables in a single OneStream application and presented through multi-dimensional hierarchies.  Only the entity-level summary of that data needs to be presented in a cube, making the data set for consolidation appropriately smaller.  Of course, you can still drill down to see the detailed data within the same application – but most users won’t even realise a ‘difference’ exists in the structure.

 

Consolidation Approach

The traditional approach to financial consolidation (e.g., in HFM) involves writing all the accounting logic (for eliminations, ownership adjustments, equity pickup, etc.) in Business Rules.  Those rules are simply coded logic that gets run against the data for every Entity, sometimes multiple times in the same consolidation run.

Many of our customers use a similar approach in OneStream – in which numerous detailed differences exist around how those rules are structured, how they perform or how easily their performance is tested.  In fact, many of the rules aren’t even needed or are much simpler due to the many consolidation-specific built-in features of the OneStream platform.

However, an alternative approach to consolidation exists that’s simply not available in HFM: the Investment Register approach (see Figure 2).  Some of our European customers with highly complex consolidation requirements particularly favour this approach, but it can be applied anywhere.

The Investment Register comprises a list of investments and key related details (e.g., acquisition date, acquisition cost, reserves and exchange rate at date of acquisition) maintained in a relational table.  In a process separate from the ‘main’ data-driven consolidation, we then utilise the Reporting Compliance Marketplace solution to generate detailed consolidation adjustments as Journals.  Most rule complexity is therefore eliminated, so the consolidation itself is little more than a ‘translate and aggregate’ process.

As a result, the register approach makes consolidation a whole lot faster – but better still, think about the complete close process.  How often does the data you’re consolidating change during the month-end close?  Quite a lot, actually.  Every time another entity has submitted.  Every time an entity submits late adjustments or supplementary detail.  Every time an inter-company balance gets sorted out after month-end because the process isn’t in place to fix it beforehand.

Now think about how often the group ownership data changes during the close.  Rarely.  Thus, if already created using the Investment Register, the consolidation journals don’t need to be recalculated every time we re-run the consolidation.  In fact, we can usually even get this bit of the close done before Working Day 0, altogether removing them from the busy close period.

 

Summary

Financial Consolidation is ultimately a business problem to be solved.  For many of our largest, most complex customers, consolidation is one of the most immediately obvious ‘big picture’ performance topics.

How that problem gets solved varies depending on the system being used.  But making comparisons between those systems is not always straightforward, so we can’t (and won’t) answer the ‘Okay, how much faster?’ question with a universal percentage.

Consolidation also isn’t an isolated problem amid the many other challenges facing the Finance function. And that’s why OneStream makes a difference.  It’s a unified CPM platform that allows for innovative and highly performant solutions to many different business problems, within and beyond the Finance function – and the entire OneStream community is dedicated, as it is with all our customers, to ensuring the success of your implementation.

 

Learn More

To learn more, download our whitepaper on Conquering the Complexities in the Financial Close.

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In the world of accounting, and specifically when it comes to the consolidation of financial results for multiple companies that are owned by a parent company, the equity method of accounting is used to value a company’s investment in another company when it holds significant influence over the company it is investing in.  There are no consolidation and elimination processes like in the consolidation method, instead the investor will report its share of the investee’s equity as an investment. The threshold for “significant influence” is commonly a 20-50% ownership.

Under the equity method, the investment is initially recorded at historical cost, and adjustments are made to the value based on the investor’s percentage ownership in net income, loss, and dividend payouts. However, in some countries, such as the Nordics and the Netherlands, there is a twist on this method. While the rest of the world often values their investments at cost, the Dutch and others have the habit of valuing their investments at equity. The remeasurement of the investment value in the investor’s financial statements to reflect equity changes of the investee is called Equity Pickup. Read on to learn more about the Equity Pickup approach and how we have solved the problem using OneStream’s Intelligent Finance Platform platform.

What is Equity Pickup?

Usually, holding companies will report the value of their investments at cost. However, the Dutch decided to do this differently. Statutory requirements demand a Dutch entity or group to report the current ‘Net Asset Value’ (NAV) of the investment. The process to pick up the equity value of investments instead of the cost price is called ”Equity Pickup’.

At least, all corporations with Dutch owners or a Dutch subgroup face this requirement. Equity Pickup has often been embedded in a cumbersome manual process though, as no software solution is prepared to support it. Until now! Using OneStream’s unified CPM Software platform we were able to eliminate this manual process. This resulted in a technique that can be implemented once, then integrates and automates Equity Pickup in the financial consolidation process with one click.

Equity Pickup Automation Until Now

What we have seen in working with clients is that many software solutions only pick up the retained earnings and losses from the subsidiaries. They don’t track any other changes in equity. This means you additionally have to post annual net asset value (NAV) journals so they can report a proper statement of changes in equity. The systems are not able to split out the required detail because they do not have such detailed information. The result, however, is still not very automated.

Fully integrated Equity Pickup

A complete implementation of Equity Pickup takes into consideration that the change in equity (of the subsidiaries) occurs not just because of earnings or losses but also from other genuine movements in equity, such as FX translations, dividend payments (which reduce the equity), issue of new share capital (which increase the equity) or revaluations.

OneStream’s unified solution enables you to fully integrate Equity Pickup as part of a one-click consolidation process. The way AMCO Solutions (formerly Agium EPM) implements Equity Pickup, also accommodates for sub-consolidation and multiple consolidation passes.

Learn More

To learn more about the solution, and how we deal with maintenance and dashboard possibilities related to Equity Pickup, read Agium EPM’s whitepaper titled “Equity Pickup: A View on Automation” or contact us.

Download the White Paper

Friday, 18th February saw the kick-off of the first OneStream Platform Power Hour.  What’s a Platform Power Hour you may ask?  This event is one of a NEW dedicated series of webinars for OneStream customers.  The goal is to arm our customer community with the latest information on the OneStream platform, capabilities, MarketPlace Solutions, product roadmap, and more.

We’re varying topics by month, and all topics will be decided based on actual feedback coming in from the OneStream “Champions” customer advocacy  and partner community Task Manager Streamlines the Close

The focus for this first session was using the Task Manager MarketPlace solution in the context of Financial Close and Consolidation.

In the session, I introduced the presenters and gave an overview of the OneStream Champions customer advocacy program.  I explained how customers can earn points for special rewards, such as gift cards, OneStream SWAG items, and charity donations.  Champions are also invited to ask questions and network with other power users through the OneStream Champions Discussion Board.

We then ran a quick poll of the audience to find out what they’re currently using to manage their financial close task lists.  The results were interesting:

A. Mostly Excel and Email                47%
B. OneStream Task Manager           20%
C. Other/Custom Solution                20%
D. Not Sure                                         13%

The survey results are very similar to the dynamics we regularly see with most organizations.  At 47%, Excel and email continue to be the predominant tools used, but with a combined 40% already using OneStream Task Manager or another solution this demonstrates strong recognition of the need to adopt a specific capability.  We may even see an increase in users of OneStream Task Manager following the webinar!

Task Manager

Next, I explained how OneStream supports virtually all statutory reporting needs including US GAAP, IFRS, and Multi-GAAP and local requirements.  OneStream provides capabilities for complex organisations to handle sophisticated requirements, such as intercompany transaction matching and eliminations, financial signals to help shorten the financial close, variance and flux analysis, and more.  And even more importantly, we do it all with a complete audit trail and drill-through capabilities – providing users with insights into every single number in all reports and analysis.

I followed that explanation with an introduction to Task Manager, a specific OneStream Marketplace solution many customers are leveraging.  It’s easy to see why since, as I pointed out, ‘it walks you through your close process’.

This process management solution enables Finance teams to organise and manage workflows – both inside and outside of OneStream – and really adds to the user experience.  It guides users to the right place, at the right time and keeps them focused on the next task in the close process. (See Figure 1)

At this point, I handed things over to Jessica McAlpine, Group Product Manager Close & Consolidation, and Kelly Darren, Global Domain lead for Financial Close.

Jessica explained that, as a topic, Task Manager was chosen by the most customers through the Champions program.  Customers were especially interested in shortening the financial close process through Task Manager.

As a customer, Jessica first saw OneStream’s Task Manager and loved the power and process it offered, but she also talked about being asked to put together the business justification to implement Task Manager.  After leaving her role to join OneStream, she now regularly hears the same question: ‘How can we build the appropriate business value case to add this capability?’  In other words, Jessica stressed how more customers would implement the solution if they knew how simple the setup would be.

Demonstrating the Power of Task Manager

Next up was Kelly, who started to demonstrate the solution – including a setup from start to finish within the 50-minute webinar.  Here are some additional features she covered:

• Different views for users to see their tasks, including the highly popular Gantt chart view which displays the start and end dates and gives visibility into dependencies.
• Segregation of duties, ensuring that one user cannot complete and approve specific tasks.
• Task instructions, which enable detailed documentation to be uploaded to a task for users to learn and understand the process – a capability that’s particularly useful for new employees.

As Task Manager is a MarketPlace solution, Kelly also showed how to access the MarketPlace from the OneStream website (See Figure2).  Task Manager is listed as a financial close solution but can be used for multiple purposes across the platform.  Here are a few:

• Financial Planning & Analysis (F&A)
• Other operational planning scenarios (e.g., HR, IT, Sales)
• Any task – even non-financial ones

Jessica and Kelly then shared various best practices – including how to get the correct time dimension dropdown to show by default, which saves time, and how to use event-based email notifications.  The notifications can be used to alert users on past-due and upcoming tasks.  This capability really helps to keep the close process moving and meet deadlines.

Here are a few additional best practices highlighted in the webinar:

• Task Scheduler helps streamline the close by offering different types of schedules to meet the needs of organisations, and tasks can be tracked down to the hour if required.
• Holidays offer great capability to deal with the different country holidays around the world.  Multiple profiles for different regions can be set up, giving international companies everything needed to manage the close process amid a geographically dispersed footprint.
• Templates help make the management of tasks less daunting since users can find a template example to help them set up whatever they need.

Kelly concluded the demonstration section with the power of OneStream dashboards and reporting.  The scorecard is excellent for visualisation and displays all tasks.  Users can immediately see the preparers, the approvers, and all-important due dates.  And another great feature?  The ability to see all comments that have been entered throughout the process.

The final part of the webinar was dedicated to questions from the audience, and there were plenty!  Jessica and Kelly answered as many as possible – and quite a few focused on the best setup and use of the solution.

Learn More

Interested in learning more about Task Manager please watch the replay of the webinar or visit the OneStream website – and don’t forget to check out OneStream Champions and our events page for future sessions

Visit the Financial Close & Consolidation Page