Most businesses admit to difficulties in controlling the quality of data when reporting financial results, according to recent research.
And almost all finance executives suffer stress as a result of their reporting responsibilities.
The lack of good quality data is making it difficult for businesses to understand how they can grow. It is also opening them up to financial penalties from the regulators.
The research, carried out by Dynamics Markets, found that 82% of companies had made changes over the last three years and 47% had invested substantially in their financial reporting processes over the past 12 months.
But despite this investment, 60% of finance executives did not understand the total cost of reporting financial results and 68% of respondents admitted they had inadequate visibility of reporting processes.
Financial reporting comes in three phases: filing, closing and reporting. The report revealed that 15% of global businesses had missed statutory deadlines for these phases and risked being fined.
Spreadsheets are still being used to track and manage reporting on a daily basis by 72% of those questioned, while 68% use e-mails. This suggests investments are falling short of expectations.
The Challenges of Corporate Financial Reporting research polled over 1,000 finance executives at businesses in 12 countries, including the UK. The study revealed that finance departments find it a challenge to report financial data, despite making investments in technology and processes.
A substantial 97% of executives find some part of the financial reporting stressful, with closing the top cause of stress. A total of 40% of senior finance executives find the reporting process very stressful.
The study reveals the problems are caused because businesses have been investing piecemeal, rather than holistically. It suggests businesses need to change their investment strategies to avoid increased costs, ineffective financial reporting and missed deadlines.
“Without a vision and strategy that addresses process improvement, data integrity and user adoption, software investments alone will not meet the needs or expectations of most organisations.”
Andy Neely, director at the Cambridge Service Alliance, said business success is founded on good quality data and the ability to analyse it in a meaningful way.
“Without these two factors, it is very difficult to formulate the right insight to help your company grow," said Neely.
"The research shows that finance departments in many organisations are currently falling short of both these fundamentals and need to look now at how they can improve the way they collect, sort and interrogate financial data if they are to overcome the challenges they are currently facing.”