The reporting challenges faced by automotive retailers that are part of a group are complex to say the least and until now, spreadsheets have proved to be most ‘straight-forward’ solution for consolidation purposes and analysis. They are the easiest choice as users are already familiar with them, they are scalable and the IT department does not need to be involved whenever a new report is needed. When weighed up against an expensive enterprise solution, the spreadsheet invariably wins hands down.
However, issues can arise when spreadsheets are stretched beyond their intended use for complex modelling and for collaborative work. Versioning issues go hand in hand with traditional spreadsheets and manually copying and pasting different users’ work too often leads to errors. The sheer breadth of the industry’s reporting requirements makes them unwieldy and increasingly complex.
Reporting to 4 different audiences
Reporting issues can arise as a result of having to report for four different audiences.
- Operations managers will require management information and KPIs for each department within each of their branches. These results are then presented in various ways to provide performance comparisons (e.g.) by department, by branch, and by franchise, and these various reports all require comparisons against the budgeted and prior year performance
- Investors, banks and other business partners like to see results consolidated by statutory entity, often including significant analysis of performance against budget and prior year
- HMRC & Companies House require accounts in statutory format with sufficient analysis for Group Corporation Tax returns, VAT returns by VAT group, including intrastats, where appropriate, partial exemption calculations and PSA
- There are always requests for the production of ad hoc reports. Examples of those reports might be to produce cost comparisons across the group or to find out accumulated costs, revenues or KPIs for various activities across the group.
Most reporting is designed to primarily meet the requirements of Operations, as they are the users that utilise the information to make decisions at a departmental level and that will impact the profit and performance of the business. Operations require this information regularly on a daily, weekly and monthly basis, which means that the consolidation process becomes prone to error whenever updates are made. These range from adding new branches, franchises or product lines as this changes all of the linked spreadsheets. This is where anyone involved with spreadsheets will realise the nightmare begins, as any change or where a code is linked, all subsequent spreadsheets will need to reflect that change.
These can be summarised into four key areas:
- Lack of uniformity in reporting and presentation, particularly where groups include various acquired branches
- How to find a group wide/consolidated view particularly with regard to ad hoc reporting
- Third party reports are often not adequately catered for by DMS providers
- Reconciliation of third party reports to operational reports. The various reports are often produced by different personnel within the business; all with differing logic and assumptions resulting in conflicting results
How Cloud CFO is already transforming reporting in car retailer groups
So how can car retailer groups cling on to their beloved spreadsheets in 2017?
One option is to industrialise them and transform them into Enterprise spreadsheets with Cloud CFO. This automates the entire close process, down to P&L, balance sheet, cash flows and other required reports, saving days of laborious and error prone consolidation.
Users continue to enjoy the simplicity and comfort of using a spreadsheet at the ‘front end’ with a connection to a very complex (but well-hidden and transparent to the user) cloud ‘back end’ that does all the difficult work. This eradicates, at a stroke, the problem of keeping a complete track of every change made to every spreadsheet cell by every user at every point in time since document inception. This is invaluable for forensic audit and for industrial grade security and eliminates all of the risks.
- Reduces the reporting effort via automation of the ad hoc reporting process; ensuring data integrity and 100% accuracy. Running a report is a simple process with selection from a click drop down menu. Time consuming manual intervention is eliminated
- Existing spreadsheets and other disparate data sources (such as MS Access and core ERP) are integrated and reconciled into one solution
- There is no large scale data migration and therefore minimal disruption to daily business operations
- Multi-user functionality ensures all authorised users can access and update the same data concurrently avoiding issues with versioning, copy/paste difficulties and data integrity
20 entities will take minutes, not days to complete group reporting
In practice, entities can exist anywhere in the world and all are required to submit financial data to group finance at regular intervals. With Cloud CFO, each one is connected to a Cloud server via a simple spreadsheet interface from which, data is fed and all the local formats are translated to a group chart of accounts.
The data is immediately available to view upon submission to the server so they can see a real-time consolidated position of the group. This approach means that the finance team can take immediate control of modifying the fine details of the financial consolidation process and associated adjustments such as defining currency conversion logic. It has the added benefit of ensuring formulae and rules are executed correctly as well as being supported by a full audit trail that logs every change involving accounts or administrative data, which is securely stored in the Cloud server.
20 entities in different parts of the world and all running different systems will typically take minutes not days to complete group reporting using a version of Cloud CFO that has been developed specifically for group car retailers. Spreadsheets still really are the answer to the Industry’s prayers.
If you are interested in seeing a demonstration of the Cloud CFO system that has been developed for group financial consolidation and reporting for the motor vehicle industry, email RuthMcFarland@synapseinformation.com