10 Ways to Optimize Your Record-To-Report Function

The world of finance is witnessing a paradigm shift in today’s dynamic marketplace. Frequent legislative changes, rising expectations from the finance department, and data-driven decision-making have become the norm.

Cash remains ‘King’ and it’s even more important for finance teams to run and maintain an efficient record-to-report (R2R) function. R2R is a highly specialized finance function that can directly impact the cash position of a business and therefore its future growth. In addition, the findings from this function enable business leaders to analyze business performance and make informed, data-driven decisions.

Before we get into the different ways in which the R2R function can be optimized, let’s first get a better understanding of it.

What is record-to-report?

R2R is a Finance and Accounting (F&A) management process that provides strategic, financial, and operational feedback on the performance of a business. This involves collecting, processing, and delivering relevant, timely, and accurate information to stakeholders and business owners.

We can broadly divide the R2R cycle into four stages:

• Transaction recording: Every transaction made by an organization is recorded and processed in compliance with local accounting standards.
• Consolidation: All transactions that were approved and posted need to be sorted in a systematic fashion. This involves collecting, validating, and mapping transactions.
• Reporting: Income statements and balance sheets, among other reports, will be generated to gain visibility into the financial health of an organization.
• Closing cycle: At the end of a fiscal year or other set period, finance and accounting teams must complete all financial postings within a set deadline to enable closure of the general ledger.

How to optimize the record-to-report function

Here are 10 tips to help your business optimize its record-to-report process.

1) Standardize and document business requirements: It’s important to begin the process by identifying the needs of various stakeholders. Based on their needs, segregate information for specific reports and audiences, and mention the data source. Standardize the process and document it.

Ensure that you document any and all queries or processes related to report creation, including precise steps, policies and procedures, personnel involved, controls to put in place, and stakeholder information, amongst others. Most importantly, have a single source of truth so that everyone involved is on the same page and there is no conflicting data source.

2) Organize the data: Define your datasets and add tags, filters, and other metadata controls to manage them. Develop templates, formats, and guidelines that can be applied across the organization. Set permissions and limit access to documents, pages, or spreadsheet cells to preserve data integrity.

At the same time, develop procedures to access and collate data from different sources in a seamless fashion, which can be converted into useable, intuitive reports. Don’t forget to put checks and balances in place to ensure accuracy of data and identify any issues at the earliest.

3) Conduct regular reviews: This is a critical step in the R2R process. Key stakeholders should be given the opportunity to review each new report prior to rolling it out. This will enable you to get feedback and make any corrections prior to finalizing the report. Transparency and communication are key to avoiding miscommunication, inefficiencies, and errors.

4) Embrace automation: It’s now commonplace to automate several aspects of the finance and accounting function. It’s no different for record-to-report. Automation enables your organization to reap several benefits, including precision, reduced costs, and timely delivery. It’s a good idea to automate processes such as recording, closing, consolidation, and data analysis.

5) Encourage collaboration: A shared and secure financial reporting environment where users can work in tandem is a good place to start. It’s also smart to eliminate unnecessary and time-consuming processes that can cause potential bottlenecks. Additionally, you should consider working with a single live document that tracks changes and leaves a trail in order to avoid constant re-saving and renaming of files.

6) Maintain an inventory of reports: The R2R function churns several reports for different purposes and stakeholder needs. The sheer volume and frequency of reporting is enormous. Therefore, it’s smart to maintain an inventory for all your reports to ensure continuity of information.

7) Limit access to certain transactions: There are a few transactions in the record-to-report process that can pose risks and raise audit concerns if they’re universally accessible. This includes the ability to open and close accounting, and perform mass transaction reversals. Such authorizations should only be provided to a limited number of people.

8)  Restrict changes to important records: Some critical records in the R2R function include customer credit master records, vendor accounting-related master records, and banking master records. It’s vital to restrict any changes to these records in order to have internal control and prevent fraudulent activity.

9) Create general ledger validation checks: Most systems have standard edit and validation checks in place. Additional validation can strengthen financial reporting controls, limit errors and reduce opportunities for fraud and abuse of data.

10) Partner with a specialist to tackle financial reporting: Financial statements are a record of the historical financial performance of an organization. These statements can aid organizations to make necessary course corrections and better strategize ways to boost growth. However, compliance and legislations are everchanging, thereby draining resources and making the financial reporting process cumbersome.

A specialist R2R services partner will not only free up your time and resources to focus on more value-add functions, they will also be able to provide accurate, timely, and compliant reports at a much larger scale than in-house staff.

Do you want to transform your record-to-report process?

Partner with QX to optimize your record-to-report process. Our R2R solutions include general ledger accounting, audit support, financial planning & analysis, and VAT compliance amongst others. Speak with our experts today to get a customized R2R solution for your organization.

Originally published Jul 22, 2021 10:07:52, updated Apr 16 2024

Topics: Record-to-report cycle