Relevant, current and comprehensive financial, treasury, and tax reports are essential to support good decision-making and regulatory compliance. So why are many companies using outdated methods that often achieve neither goal and create additional problems?
Manual maintenance and validation of data sources result in dated reports that can lead to faulty decisions—and the problem is compounded when each unit or division within a company requires individualized reports. If your reporting requirements can’t be met at a basic level, consider the impact on your organization when a professional standards organization like IFRS or ASPE inevitably issues new requirements for updating financial processes, validations, and systems.
This document summarizes Wipro Consulting Services’ point of view on creating a Target Operating Model and deployment plan to eliminate manual maintenance and validation of data sources, and to create a reporting regimen to support decision-making protocols and meet regulatory requirements.
Target Operating Model
To improve finance, treasury, and tax reporting, it is essential to redesign the reporting process and rationalize report inventory by assessing information needs and key performance indicators (KPIs). You must automate regular reports and establish end-to-end report ownership, as well as improve self-service capabilities that will enable interactive reporting through executive dashboards. This latter task alone will help provide timely information in a consumable format.
The Target Operating Model creates the foundation for driving the decisions made about what your new reporting methodology will look like. It’s focused on very specific values that you must incorporate to make your new protocols work and align with the business strategy. These values include strategic insight, financial benefits, improved responsiveness, increased productivity, confident decision-making, and regulatory compliance.
By strategic insight we mean that your operational and financial information is aligned, that it’s predictive and not historic, and that it is timely and formatted in a way that makes it easy to consume. Financial benefits include improved contract management and compliance, which leads to lower procurement costs.
It improves payables and receivables management, which will optimize your working capital, and it contributes to improved productivity, which results in lower staff costs. Improved responsiveness facilitates both better resource planning and reactions to consumer demands, which results in satisfied customers, and the ability to predict and plan for future change and investment decisions. Increased productivity releases organizational capacity, thanks to automation technologies, executive dashboards, and user self-service.
Confident decision-making is achieved from data accuracy and integrity that result from established data governance over reported information and a single source of the “truth.” Regulatory and statutory compliance is reached as a result of transparent reporting and the ability to adapt reporting to meet changing requirements. With success in compliance, organizations can benefit from incentives from regulators as well as improve their external reputation.
We’re seeing some companies developing reporting capabilities that focus on specific user groups across finance, treasury, and tax with a single reporting organization. While the objective of this initiative is to ensure data integrity, it offers additional business benefits:
- It highlights the need for reporting to provide answers to the specific questions asked by business users
- It realigns individual groups based on operational and financial business drivers
- It enables effective decision-making at all levels of the organization and increases control over each function
- It facilitates ease and comfort in timely decision-making based on trustworthy sources, since the reports are group-specific
- It establishes reliable, responsive, and flexible reporting processes
- It creates transparent service management through relevant KPIs
Our Target Operating Model is the pathway to achieving these benefits. It is comprised of four integrated components: business processes, enabling technology, organization roles and responsibilities, and data and reporting requirements. Each component is explained below:
Component 1: Business Processes
Typically, reporting for finance, treasury, and tax can be aligned to the high-level business areas of Purchase to Pay, Lead to Cash, and Record to Report, each with a corresponding process flow.
It is important to understand the process flow and pain points associated with each of these processes. Once they are understood, the enabling technology, organization roles and responsibilities, and data and reporting requirements collectively contribute to solving the pain points, resulting in improved reporting.
Process Flow: Procure to Pay
Procure to Pay, commonly referred to as P2P, refers to the business processes that cover activities of sourcing, requesting, purchasing, receiving, paying for, and accounting for goods and services. Figure 1 illustrates typical P2P pain points. Some of the reports identified in the P2P business process are supplier contract status (expiring and expired), buying channel analysis, retrospective business order, and supplier payment analysis.
Process Flow: Lead to Cash
Lead to Cash refers to the business process for receiving and processing customer sales. The pain points of this process flow are shown in Figure 2.