Finance and Accounting

How do R2R solutions streamline financial reporting processes?

In the digital world, where data is currency, effective data management is a powerful tool that helps businesses optimise performance, improve profitability, and stay competitive. Record-to-report (R2R) in finance is a key example of how systematically collecting, organising, and managing financial data can help businesses foster data-driven decision-making while promoting financial transparency and regulatory compliance.

But how are R2R solutions simplifying financial reporting for data-driven decisions? What are some of the R2R financial reporting best practices?

Understanding the R2R process

From transaction management and account reconciliation to financial analysis and reporting, R2R in finance is an end-to-end process extracting actionable insights from the troves of raw financial data.

You can look at R2R like a storyteller, making sure that the company’s financial information is not just a bunch of numbers – that only the pros can understand – but a simple-to-understand narrative of how the company is doing. From data collection, management, and analysis, R2R tells a story with numbers that can help every stakeholder make smart decisions and ensure regulatory compliance.

R2R financial reporting steps

Ensuring precise R2R financial reporting involves several critical steps, from data collection to compliance. Each step adds value to financial reporting and is critical to ensuring robust financial management. The key R2R process steps include:

Data collection

The first step is to meticulously collect financial data from various sources and validate data accuracy and completeness for subsequent analysis. Any discrepancies at this stage can result in inaccurate reporting and compromise compliance.

General ledger maintenance

This step lays the foundation for financial analysis and reporting by ensuring an accurate and organised record of all transactions in a centralised repository (the general ledger).

Account reconciliation

The next step involves cross-referencing the data in the general ledger against financial statements to detect and resolve any discrepancies.

Financial analysis and reporting

This step gives various stakeholders a snapshot of the company’s financial performance through various financial reports, including income and cash flow statements, balance sheets, and other financial metrics. Based on these reports, R2R financial reporting focuses on an in-depth scrutiny of the data, identifying trends, evaluating KPIs, and comparing performance to facilitate data-driven strategic decisions.

Period-end close

This is a critical step for regulatory compliance and involves meticulously reviewing and validating data before finalising financial statements for a specific accounting cycle.

Process enhancement

Continuous monitoring and enhancement of the R2R process is critical to maintaining efficiency, accuracy, reliability, and transparency in financial reporting. This also gives you the opportunity to stay on top of evolving regulatory standards and ensure compliance.

Challenges like data integrity and security, resource constraints, change management, cross-functional collaboration, process complexity, dynamic regulations, and many more affect R2R financial reporting. Investing in the right R2R solutions can help you leverage next-gen technology and advanced data analytics capabilities to not only streamline but also enhance the financial reporting processes.

R2R best practices in finance

Despite its significance in facilitating data-driven decision-making, implementing R2R in finance may seem challenging. Here are some R2R best practices to help streamline and simplify the financial reporting process:

• Simplify and standardise the financial reporting and period-end close procedures. Such standardised procedures can simplify reporting automation and minimise challenges associated with potential technology integration.
• Establish inter-company accounting for organisations with multiple subsidiaries. This can help enhance visibility and control while lowering the risk of misreporting or discrepancies within the group.
• Ensure regular account reconciliation to identify and rectify any discrepancies promptly. This is often the first step in combating fraud while building stakeholder trust.
• Stay on top of changing tax regulations, reporting guidelines, and industry standards to ensure compliance.
• Focus on reporting automation and invest in the right R2R solutions. With this, you can enhance efficiency, ensure prompt reporting, and lower operational costs while minimising the potential for human errors and allowing finance and accounting professionals to focus on high-value tasks.

Following these practices can help you optimise the R2R process, enhance transparency, streamline financial reporting, facilitate data-driven strategic decisions, and move closer to real-time reporting or continuous accounting capabilities.

How can Infosys BPM help?

R2R solutions have played a significant role in streamlining and improving the financial reporting process with advanced AI-driven RPA solutions. Infosys BPM helps you leverage proprietary technologies and analytics expertise to streamline R2R in finance reporting, from integrity of financial data and on-time closure to statutory reporting compliance.