Financial data quality ensures stakeholder buy-in

In a market where share prices are under pressure and investor confidence is constantly being eroded, the availability of high-quality financial data has taken on a new measure of importance. Creating confidence in the quality of a company's financial data will increase confidence in the organisation as well as lower its cost of compliance.

According to Michael van der Merwe, Manager - BI & Enabling Technologies at Oracle, a further benefit of managing financial data quality includes the speed and agility of information retrieval, leading to rapid implementation of corrective actions when required.

It also plays a key role in improved visibility through dashboards, providing a big-picture overview of the financial situation of the company at any point in time as well as the ability to drill down to the general ledger.

Quality data also means that Sarbanes-Oxley regulations are more easily supported and assessment requirements are more easily achieved. The most important benefit of sound financial data quality management is widely believed to be that the origin of a specific value can be found and confirmed with little effort.

Van der Merwe supports Hyperion FDQM (Financial Data Quality Management) application for empowering clients to achieve data visibility, integrity and verification in their financial reports.

“The return on investment with a system like this is more productive time and increased ownership for the end-user,” he says. “The biggest benefit of sound financial data quality management is probably the increase in confidence levels, while lowering the cost of compliance through the elimination of data collection and validation errors.”

For enterprise leaders, however, simply being sure they have the correct data, even with the high levels of confidence an FDQM system can provide, is not the objective. The ultimate objective of any company is increased net profit. With the correct information at hand, managers can make informed decision with full insight into the activities of any part of the business. They are even able to understand the real cost contribution of each customer, ensuring that high-value clients receive the appropriate service and low-value clients can be encouraged to look for better value from the business.

The Hyperion FDQM system is not a standalone offering, but fits into other Hyperion application suites such as enterprise planning and profitability, as well as cost management systems. It can access data from almost any database system, even external to the company, when required. It effectively supports the consolidation process of the holding company and ensures that there is no longer a gap between the general ledger and consolidation and reporting.

“The financial figures derived are real and queries can be tracked by drilling down into the source data, no matter where it comes from,” adds Van der Merwe. “FDQM closes the door to incorrect and confusing reporting, giving stakeholders confidence to make decisions on data that they know is accurate.”

When working towards increased investor confidence it is important to provide complete transparency, Van der Merwe says, adding that a sound profitability and cost management system, linked with quality and trustworthy financial data will enable scenario analysis by region, product and client. It will also assist in the allocation of variable costs, while taking fixed costs into account.

“Such a scenario is bound to build confidence with the most cynical financial analysts and have a positive effect on share prices and investor confidence, both crucial aspects to thriving in this market,” he concludes.