In partnership with
There is much economic uncertainty out there today. Is the U.S. economy headed for a hard or soft landing or no landing at all? Is China’s economic growth gaining momentum or retreating? Is a 2023 recession looming, or might it be deferred to 2024? What will be the impact of the elections next year on consumer outlook and demand? It is in uncertain times such as these that having a clear understanding of your company’s financial health becomes paramount. To succeed, one must be ready for any eventuality.
Unlike macroeconomists and the Federal Reserve, CEOs and CFOs don’t have the luxury of ambiguity when submitting quarterly and annual reports. Their signatures on these documents are not just a commitment but a testament to their integrity and the company’s credibility. The reported figures must be precise and accurate.
Bad data costs more than the reputation of a C-suite executive, however. According to Gartner, poor data quality costs organizations an average of $12.9 million annually. Those costs come in the form of financial losses, missed opportunities, and reputational damage that turns customers away. Given the growing dependence on data analytics for business decisions, these costs are poised to grow even larger. Simply put, subpar data leads to suboptimal decision-making.
Here are a few things to remember while dealing with your financial master data.
Master Data Quality
Master data quality serves as the foundation for efficient and effective business processes. Ensuring the quality of master data is crucial because this data is often used across different systems, applications, and processes in an organization. The primary objectives of master data quality include the following:
- Data must be accurate, correct, and reliable.
- It must maintain uniformity across different systems and departments so that everyone is working with the same information.
- The master data should be updated in real time to ensure its timeliness.
- The integrity of the data and the relationships of different data sets must be preserved in lieu of changes or updates to the data.
- An auditable history must be maintained so that modifications can be traced and reviewed if needed.
In the same way that large enterprises are pivoting to automated deployments and management systems of their IT operations centers, forward-thinking businesses are shifting from manual, dispersed master data maintenance to integrated solutions like SAP Master Data Governance (MDG).
SAP MDG stands out as a premier master data management tool that offers built-in, domain-specific governance features, enabling centralized creation, modification, and distribution of master data throughout the enterprise’s system landscape. The SAP Master Data Governance application ensures consistent and accurate financial master data for both SAP S/4HANA and third-party applications.
Data Versioning
For stakeholders to trust a company’s financial data, it must be transparent. That means answering questions such as who, why, and when concerning modifications to your master data. Solutions such as SAP MDG utilize master data versioning to maintain and manage different versions or iterations of master data over time to ensure that historical versions are retained for reference or auditing purposes. Data versioning allows organizations some of the following capabilities:
- It ensures traceability so stakeholders can review and understand the evolution of relevant data records over time.
- By retaining historical versions of their financial data, companies can satisfy their required regulatory and audit requirements to maintain compliance.
- In the event of data corruption, incorrect modification, or deletion, versioning provides a simple process to revert to previous data versions.
- For data updated by multiple collaborative users, versioning helps ensure that each change is captured and saved to a distinct version to avoid potential data conflicts or overwrites.
SAP Master Data Governance supports time-dependent and period-dependent versioning. Time-dependent versioning means that each version of a data record is tagged with a timestamp to indicate when a change was made, while period-dependent versioning pertains to the version history of a record over a set time period. Both these options provide greater transparency and traceability of your financial data.
Automated Reconciliation
You don’t have just one repository, so you must ensure data consistency and accuracy across all the disparate systems and multiple databases throughout your organization. With so much data being generated and modified continually, you must identify and rectify any discrepancies in your master data among its various sources.
Automated data reconciliation helps you achieve that consistency throughout by verifying the correctness and consistency of your data so that all records are in agreement. While manual reconciliation can be time-consuming and error-prone, automated reconciliation tools expedite the process and ensure timely deadlines are met. Some of the benefits of automated reconciliation include:
- It reduces human error by automatically matching and reconciling transactions, thus improving your financial data’s overall accuracy, reliability, and integrity.
- It reduces the operational costs associated with manual reconciliation, including labor costs, printing, and storage.
- Integrated automation achieves greater efficiency and productivity by speeding up the reconciliation process to reduce the time and effort required to match and reconcile transactions.
In addition, the automated nature of SAP MDG can linearly scale along with any increased transactional volume without proportional increases in costs or resources. Automated reconciliation is just one more measure to ensure data integrity and consistency across all financial systems and datasets.
Growing Reporting Responsibilities
Financial reporting extends beyond just appeasing investors and stakeholders. An escalating spectrum of regulatory and legal mandates, including International Financial Reporting Standards (IFRS), the Sarbanes-Oxley Act, and GAAP, necessitate strict adherence. While complying with these standards is imperative, executing them efficiently is equally vital to conserve resources and focus.
SAP MDG provides predefined templates and practices tailored for specific data types, ensuring adherence to industry-specific regulations. Moreover, its comprehensive audit trails meet the rigorous requirements of regulators, emphasizing data traceability and accountability. When it comes to security, MDG ensures that only authorized personnel have access to specific data sets. This is vital for regulations that focus on data privacy and access controls.
Other Benefits of SAP MDG
When you have a master data governance solution that oversees, monitors and confirms your transactions, your finance professionals can focus on the numbers rather than the process itself. Your finance minds can now focus on further analysis, forecasting, and strategic decision-making that all add greater value to the organization. SAP MDG also reduces the stress load on your financial teams as it facilitates faster closes to financial reporting thanks to automated workflows.
While SAP MDG can standardize your processes involving creating, modifying, and validating master data, it still allows for agility and adaptation. That’s because SAP MDG can be customized to suit any unforeseeable needs or requirements your company may require in the future. This agility helps reduce future risks that may result in operational disruption or costly upgrades and updates.
Of course, no discussion about any digitized financial system would be complete without some mention of security. With the enforcement of role-based access control, you can be assured that only authorized personnel can access and make changes to your financial data, helping reduce not only costly errors but also fraud and other malicious acts. It’s one more confidence booster that adds to the integrity of not only your financial data but also your organization at large.
Conclusion
In many businesses, customers might offer a second chance. But in the financial realm, achieving compliance and accurately reporting earnings to investors doesn’t afford the luxury of second chances without significant costs. You must ensure the accuracy and integrity of your financial data, which is why many companies turn to SAP MDG to attain that sense of confidence. In a world where the speed of business seems only to accelerate, SAP MDG ensures that your data is correct when needed. It is proof that speed and accuracy can come in one package.
