How an Outsourced R2R Process Can Boost a CFO’s KPIs?

Introduction

Record-to-report or R2R Services have moved beyond being just a checklist item within the finance function to becoming more strategic in scope. As CFOs battle challenges like cost optimisation, technology reinvention, and facilitating people management to optimise productivity and results, record-to-report demands a transformative approach that helps CFOs achieve their KPIs and navigate the current and future challenges.

With 90% of CFOs saying a key KPI is ensuring their business can address challenges from unexpected events, it is imperative that they harness the potential of strategic financial planning and analysis to drive positive financial outcomes for the business. For this to happen, they need to set a robust framework for financial data collection, processing, and delivery to ensure meaningful data is available with the right team at all times for actionable insights. This is why optimising financial data management through efficient record to report R2R services is crucial for the finance and accounting (F&A) department.

R2R Challenges Impacting CFO KPIs

Critical KPIs from the R2R perspective include evaluation and analysis of financial exposure, time taken to close the book, quality of the closing, and cost of the R2R process. However, with R2R, CFOs also expect to break down the silos between their own high-level impact metrics and finance department-specific KPIs. The holistic visibility into different data types across different systems offered by R2R enables CFOs to take a more consolidated approach toward improving F&A output.

Also, while making R2R more efficient and bringing down process costs is a KPI, so is driving cost optimisation across the F&A process, which is facilitated by high-quality R2R. But to do so, CFOs need to address certain challenges:

Outdated Processes:

Legacy or traditional R2R processes, typically manual in large parts, are long and drawn out. Information collection, right up to processing and reporting, has a longer timeline, which can stretch to a month in the case of complex and comprehensive reporting needs. This happens because they have not deployed an advanced reporting solution driven by automation, which harnesses the power of AI/ML to speed up recording, reporting, and analysis. The overly long reporting process impacts timely decision-making.

Lack of Skilled Personnel:

This is a common problem across F&A departments. The attrition rate in accounting is high, and this industry suffers from a skills shortage. So, CFOs, at times, are forced to work with a small team that cannot keep up with the needs of R2R or an unskilled team that doesn’t have enough expertise or experience in R2R. Let’s look at this challenge from the perspective of financial reporting standards that are updated periodically. This calls for constant learning, updating skills, and incorporating amendments in financial reporting. If there aren’t enough team members, they will be stretched thin, unable to keep up with these changes, much less being able to incorporate them.

Distributed Accounting Infrastructure:

Sourcing data from different accounting systems deployed throughout the company across multiple locations can present a challenge. If the right standardisation and quality processes are not in place, it can result in data accuracy and integrity problems. The inability to capture or validate data quickly and extensively can result in discrepancies within reporting. In such a distributed framework, establishing internal control to meet industry regulations becomes difficult and, in a worst-case scenario, results in mistakes that can cause reputational damage and penalties.

Record to Report Outsourcing Services Boosting R2R

A key reason you must outsource R2R is to make it more efficient, streamlined, and cost-effective. With outsourcing, your company benefits from labour and cost arbitrage. You can scale your R2R team with a team of R2R professionals who bring a wealth of experience to this process. If you hire in-house professionals to add to your R2R team, the process can be time-consuming because of the talent shortage and can mean a disproportionate increase in overheads because the right talent will be expensive. Rather than stalling your team-building efforts, outsourcing record to report R2R services will help you scale your team quickly and without incurring a high cost of resources.

If you partner with the right record-to-report outsourcing service providers, you can benefit from R2R process improvement. This improvement can help your process adopt best practices such as lean Six Sigma, enhancing the R2R’s speed, quality, and accuracy. The provider can also fuel R2R transformation by harnessing the power of advanced technologies to help R2R deliver outcomes-focused insights. The focus is also on leveraging automation to improve R2R velocity.

Moreover, outsourced R2R helps push accounting analytics in the right direction.

R2R Services Boost CFO KPIs

Outsourcing your R2R function boosts CFOs capabilities, enabling them to achieve their KPIs faster, addressing scalability and technology challenges:

1. Achieve Financial Compliance: End-to-end, timely reporting helps create continuously updated financial documentation that enables the company stay on top of all regulations.
2. Improve Planning and Decision-making: Outsourcing helps add trust to data by making it more reliable and insightful so teams can confidently use this data to make informed decisions.
3. Cost Optimisation of Process: A mix of cost arbitrage, on-demand scalability with qualified professionals, and automation technology ensures CFOs can reduce process costs without compromising on deliverable quality.
4. Risk Management: By getting timely reports on the business’s financial performance, CFOs can identify growth roadblocks and actions needed to comply with industry standards and regulations. This data also enables them to plan contingency scenarios if sudden emergency situations or Black Swan events impact the business.

To improve R2R and achieve KPI goals with outsourcing, CFOs must ensure they partner with a record to report outsourcing services provider that delivers long-term value with robust capabilities. QX is an R2R services provider with a proven track record of helping CFOs benefit from a reliable, integrity-driven reporting framework.

Originally published May 22, 2024 04:05:08, updated Jun 18 2024

Topics: F&A Outsourcing, Record to Report Process