When taking care of a human patient, medical professionals check on that individual's vital signs. Those provide the most essential details about the health of the patient and about any immediate threats to their life. In the business world, a company's "vital signs" can be monitored via a process known as record to report or R2R. This process offers the most comprehensive overview of where the company stands at any point in time. It also provides decision-makers within the company with the information they need to make informed choices. With that in mind, let's take a look at the record-to-report process, its unique set of challenges, and the value that it adds for anyone who uses it.
What is Record to Report?
In its financial dictionary, Gartner offers the following explanation of what the R2R process is:
Record to report (R2R) is a finance and accounting management process that involves collecting, processing and presenting accurate financial data. R2R provides strategic, financial and operational feedback on the performance of the organization to inform management and other stakeholders.
It is increasingly important in today's world that businesses have real-time data to rely on. The R2R process ensures that the most up-to-date and useful information is provided to those who need to see it within any operation. This process can be broken down into 3 main components, those being:
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Data Recording - The collection of useful data is a cornerstone of the R2R process and is used to present the most essential and actionable data to those who need to put it to use.
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Financial Consolidation - It is easy for small pieces of financial data to be recorded here, there, and everywhere. Putting all of that data under one umbrella where it can be more easily accessed and absorbed is the goal for anyone who wants to make use of the information flooding into their company every day.
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Financial Reporting - Finally, the usefulness of R2R comes in the financial reports that it generates. These reports are a great summary of the data that has been collected. When used effectively, these reports can generate details that weren't previously available for consideration.
Common R2R Challenges for Small to Mid-Size Companies
Just because record to report is a useful process doesn't mean that it doesn't have its challenges. The reality is that many small to mid-sized companies find themselves struggling with certain aspects of the process, and it is vital to note those stumbling blocks.
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Data Accuracy and Integrity
The data generated via an R2R report is only useful if it is accurate. Unfortunately, this isn't always the case for some small to mid-sized companies. Something as simple as a data entry error can cause the entire report to have inaccurate results. All companies must zero in on getting the data entered correctly if they wish to benefit from all that it has to offer.
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Manual Record to Report Challenges
Most small to mid-sized companies are not able to invest in the resources needed to produce automated reports. They must rely on the manual entry of data from their staff. That can slow things down and leave the door open to human error.
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Lack of Integration
There is nothing more frustrating than the lack of integration between various financial reporting tools. A small to mid-sized company may already be using certain tools to try to keep up with its reporting. However, if those tools don't communicate with one another, then their utility declines rapidly.
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Regulatory Compliance
Keep up with all of the new laws and regulations that emerge each year is a full-time job all by itself. It is certainly a struggle to try to do so, and many companies find themselves struggling to keep up with all of the changes.
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Limited Record to Report Resources
Smaller companies are always constrained by their limited resources in everything that they do, and that includes their R2R reporting that they want to produce as well.
Strategies to Overcome Record-to-Report Challenges
Although the obstacles that stand in the way of quality R2R reporting for small to mid-sized companies can be frustrating, don't let yourself get too dejected just yet. There are strategies that you can use to try to overcome some of these challenges.
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Implement Automation
The use of automation is a good thing in the world of accounting. Research suggests that up to 90% of data entry errors can be prevented by using high-quality accounting software. Take some of the stress of data errors off of your mind and leverage the power of automated accounting software.
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Data Management Best Practices
It is ideal to have a set of standards for data entry that you can turn to in your time of need. With established best practices, it is easier to control how data inputs are made and reduce the likelihood of major data entry errors.
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Record to Report System Integration
Plugging one system into another might seem like an easy enough thing to do, but that is not always the case. Certain systems are better designed to communicate with other systems, and that is noteworthy. Make sure you have a plan in place ahead of time to handle the challenges that can come up with bringing in a new system.
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Stay Current with Regulations
Remaining on top of the latest regulations out there is a great way to be certain that you don't fall behind or run afoul of some new rule that you should have been aware of. You should use a team of people who know what they should look for when it comes to the changing regulatory landscape. Stay on top of it so you can take some of the stress out of managing your R2R reports.
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Leverage Outsourcing
You do not have to take on this entire project by yourself. In fact, it is best that you don't try to do it all on your own. You need to work with outsourced partners to take advantage of the skills that they bring to the table and save yourself a considerable amount of money in the process.
Implement R2R Reporting Within Your Business Today
Accessing real-time and actionable data ought to be your ultimate end goal. R2R reporting allows you to do exactly that. You will have the chance to act upon information as it comes flooding in to you. Leverage that and start working on the best ways to put your data to use. You may be surprised by how much of a difference it can make almost instantly.
Overcoming record-to-report challenges requires specialized support. Let Personiv handle your accounting and finance outsourcing needs. Contact us today!
