If the words, "record to report" or "R2R" process don't immediately ring a bell, don't worry. You are not alone. That just means that you are not a high-level, corporate finance top gun. Truth be told, even many of them do not seem to understand it. And that is a real problem. Record to report has been described as the "bedrock of financial reporting". This is a particularly bad time to be without that solid foundation. According to a white paper from FSN:
Global finance functions face unprecedented levels of upheaval. Worsening conditions in Europe together with global economic deceleration and geo-political risk on an unparalleled scale, have contributed to the collective feeling of unease and uncertainty. In fact 90% of CFOs rate the level of economic and financial uncertainty facing their business as above normal, high or very high.
International corporations are not the only ones susceptible to the effects of inadequate R2R processes. Florida's city of Arcadia misplaced over a quarter of a million dollars due to sloppy accounting practices.
One would think that with all the regulatory scrutiny, public visibility, and high-level financial certifications and training, this would not be a widespread problem. Yet FSN reports to the contrary that:
despite the supreme importance of the R2R process, it is historically one of the most neglected and fragmented management processes. In fact, despite continuous investment in the R2R process, 68% of CFOs say that they have inadequate visibility into reporting.
The scope of the problem is sufficient so that companies are turning to software solutions that will streamline and guide the R2R process. The white paper focuses on Cadence from Trintech as the financial reporting software of choice. The ambitious goal of the software is to provide "a new model for financial governance, designed from the ground up to restore the â€˜rhythm of finance' to the R2R process."
Indeed, many companies have lost that "rhythm of finance", and it manifests in high exposure to penalties and share price drops. 15% admit that due to late changes in charts of accounts, they have missed their statutory deadlines. A whopping 88% have experienced delays in the last year during the process of reporting, final close, and filing.
Over-dependency of the manual process is cited as one of the failings in current R2R efforts. The process is complex and extremely multifaceted. Traditional solutions have not been very effective at managing the hydra-headed beast of the R2R process.
Cadence pioneered a different approach by enabling a "comprehensive stewardship of the process, regardless of the underlying ERP/CPM suite." Trintech says the software can cover the following aspects of R2R:
Certification - Account Reconciliation Software
Ensure the integrity of financial statements, via automated GL account reconciliation, balance sheet certification and variance analysis
Compliance - Compliance Management
Exercise quality assurance through comprehensive support for all corporate and regulatory compliance requirements including COSO 2013.
Completion - Financial Reporting and Disclosure Management
Gain confidence through complete, accurate and timely production of financial reporting, board books and statutory accounts.
Close - Financial Close Management
Manage the entire financial close end to end. You can finally manage and gain audit transparency into all your period-end close processes, all in real time.
Journal Entry - Integrated Journal Entry Software
Accelerate the Record-to-Report cycle by automating the journal entry management process.
These are the sorts of things that get lost in the process. With a clever use of process automation in a streamline fashion accessible through pocketable mobile devices, the solution is literally at hand. Siemens is one of the major companies that proclaims that Cadence eliminates a lot of the IT cost and complexity in the organization. Ports America, BJ's Restaurant, Torchmark Corp, and AutoZone are just some of the other companies that have provided video testimonials for the product.