Driving Performance in the Family Office

Three new approaches to attaining deeper financial analytical insight

Intuitively, many of us recognise that the decision window for executives has been shrinking with each passing year. Information dissemination has become real-time and on demand; however, the challenge for many finance functions is to try and keep pace with all the modern sources of insight and analysis that internal and external stakeholders are receiving. 

New approach one: Close faster to enable real-time reporting

The faster close has long been an objective of many finance functions. A fast close is one that minimises the time to release monthly or quarterly financials after the period ending date. However, leading organisations have realised that many of the techniques used for achieving the fast close actually enable even more frequent levels of reporting.

Achieving the fast close often requires a change in mindset as a first step. Instead of waiting for the calendar to turn over to begin closing the books, those executing the fast close are proactively reconciling and reviewing key accounts on a more frequent basis (weekly, daily, or automating integrity checks into the system).

This approach identifies errors earlier and alleviates the amount of work required at the month end. However, the added benefit is the organisation has reliable data of the transactional activity that can be accessed to create more timely intra-period reports.

A second enabler of real-time reporting and analysis arises with the deployment of a cloud-based solution that can pull in data from different entities and sources. This eliminates the time- wasting hand-offs of information that slow down all forms of financial reporting.

When the databases are updated and available in real-time, reports of various sorts can be issued more frequently. Frequent reporting can take pressure off the month end financial report, as managers are able to identify problems and act earlier to find solutions. This ability to monitor and react improves performance.

New approach two: Aggregate data from disparate sources to improve analysis

Today, leading financial systems address many of the shortcomings of the traditional approach to ad hoc reporting. These systems enable operational data from outside of the financial system to be integrated with the other disparate systems where the data resides. This live connection is continuously updated and maintained in real time. When cloud solutions are deployed, these connections can span different entities and geographic locations seamlessly.

Leading financial systems have the tools ready-built to aggregate and analyse data for user-defined periods and parameters. Using an analysis tool that is built into the system, instead of using an external spreadsheet, enables the development of real-time reports to meet the specific needs of the users without breaking that all-important connection to the underlying sources of data. These real-time templates can be saved and the analysis repeated with time without any need for redoing the set-up or the need to reconcile information between different sources.

New approach three: Implement dashboard reporting to monitor the financial pulse of the organisation

Executive dashboards are to businesses what cockpit control panels are to pilots. It’s the business equivalent of dials and metres, all designed to provide a user with a snapshot of the status of the business using KPIs. The KPIs should be a mix of financial and non-financial indicators, which means that data from outside of the financial system is leveraged with financial data to provide a more insightful perspective of performance. This would include information about volumes, pricing, shipments, utilisation, etc. Most organisations find they can identify 8 to 10 key performance indicators that drive performance and these become the metrics that populate the dashboard.

Modern dashboards are interactive for the user and add more value than a static printed report. The true insight comes from a user’s ability to drill into the various metrics on their screen and interact with the underlying data. This data can be sorted, spliced, and drilled further, all the way back to the transactional level, to give users a deeper and richer understanding of the underlying cause and effect of what has happened.

Dashboards should drive management action and decision-making. When indicators fall outside an acceptable tolerance range, dashboard indicators should make these deviations obvious to the user.

Changing the role of finance staff in the family office

The role of finance is to ensure that the data included on a dashboard has integrity and that the right metrics are presented. The adoption of enabling technologies enhances reporting integrity by maintaining the live connection to the underlying sources of data alleviating finance people of this time-consuming activity. As a result, these types of technology change the role of how finance people are deployed.

Conclusion

As an executive, you have a decision to make about how you choose to deploy your human resources and the extent to which technology enables your finance department to add more value across the enterprise.

A fast close mindset helps because it heightens the need to maintain data integrity throughout the period instead of just once a month. Once this real-time mindset is adopted, opportunities for more frequent weekly, daily, or even on-demand reports and analyses emerge.

Real-time reporting is greatly enhanced when the middleman, a spreadsheet, is eliminated from the equation. Disparate sources of data are seamlessly aggregated within a strong analytical tool.

A tool that can sort, slice, and dice data to answer the sorts of everyday business questions that often arise. Well-designed and implemented dashboards give you the best possible control over financial processes. Dashboards are user-defined, easily tailored, drill-down enabled, and visually direct attention to the important KPIs of the business.

Contact us

 Are your IT and finance teams overwhelmed with ad hoc analysis? Struggling to access timely, decision-driven insights for confident business management? It’s time to assess your reporting systems. At Akuna Solutions, we’re here to guide you through harnessing cutting-edge technology to enhance reporting for your private equity firm.

At Akuna Solutions and explore with a Sage Intacct implementation specialist how to leverage the most modern technology available today to support your organisation’s mission.

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