Financial statements are reports that evaluate the business’s financial performance, health, and liquidity position. Financial statements are qualified by consolidating accounting data in a manner that is generally accepted and understood. They are essential to guide management decisions by external stakeholders like investors, analysts, creditors, and regulators. Financial statements assist investors in making decisions about investing in a company, helps potential lenders in deciding whether to lend money to a company, provide other forms of financing, etc. Thanks to technology, software to create financial statements have also become popular and used by various companies.
As mentioned above, financial statements are prepared by consolidating accounting data in a presentable and relevant manner. Therefore, it involves multiple sequential steps such as identifying, collecting, analyzing documents, recording transactions, classifying, summarizing and reporting financial information of the business. Hence, there are very high chances of error in the performance of these steps manually. However, with the fast and rapid development in the technology sector, software to create financial statements has become very popular. It can be beneficial in removing the burden from the finance team’s shoulder for preparing financial reports so that they can utilize their time on more analytical and avant-garde tasks.
Brief On Financial Reporting Automation:
Financial reporting automation uses software that covers the crucial aspects of preparing and generating financial reports. With the help of an automation tool, it is easier to make account reconciliations perform data entry, and prepare financial reports and statements with minimal errors. With an automation tool, one does not have to find and update the data manually. Automation software can automatically pull data from various sources, creates financial statements, or prepares reports as needed by the user.
Importance/Benefits of Financial reporting Automation:
Financial reporting automation helps to remove the burden of monotonous & time-consuming tasks from the team’s shoulders. Along with that, it also has the following additional advantages:
- Enhanced Efficiency:Automation of financial processes results in increased efficiency.
- Data Integrity:It’s probable for a person to make an error mistake while entering data even when he is doing it with full attention. Data integrity is essential regarding financial statements, reports, and documents. Automated solutions ensure that the data is accurate.
- Low Risk of Fraud:Financial reporting automation reduces the need for human intervention and reduces fraud risk.
- Audit Trails:Financial automation software can easily prepare audit trails as every action is stored within the system for user reference.
Key Aspects To Determine The Best Tool For The Automation Of Financial Reporting:
One should choose an automation tool that provides the following:
- Understandable report structure, i.e., the solution should be understandable.
- Interactive interface, i.e., easy to navigate.
- Powerful enough to perform advanced analytics.
- Better support system.
Thus, financial reporting automation is a game changer as it removes the burden of the tedious and monotonous task of manual data collection and upgradation. It prepares the data in minutes, which is error-free and updated.
