Record to Report (R2R) Best

Practices

One of the most powerful tools available to modern businesses in the quest for
greater profits, performance, and competitive advantage is data management.
Companies can leverage the data generated by their financial and other activity to
gain insights and improve their strategic planning. For example, the record to
report (R2R) process is used to collect, organize, and analyze your company’s
financial information to produce accurate and complete reports as well as
actionable, strategically valuable insights.

Depending on the internal controls and workflows in place and the organization’s
overall data management approach, it can be challenging for finance and
accounting teams to complete the R2R process in the time allotted. That said,
taking the time to understand how the record to report process works, why it’s

https://planergy.com/blog/record-to-report-best-practices/
1 / 11
important, and the best practices needed to optimize it can help companies
improve their business processes, meet goals for growth and innovation, and
achieve a healthier bottom line.

Why You Need Record to Report Best

Practices
As it touches directly on the financial health of your business and informs the
decisions you’ll make to meet the expectations of both internal and external
stakeholders, the record-to-report process is critically important to the
competitive performance and overall financial agility of your organization.
Naturally, optimizing this process through the use of best practices can make a
substantial difference to how your company meets its goals and funds its ongoing
and future production and innovations.

A well-optimized record to report process also improves four areas of particular

importance:

Financial Compliance. In the wake of major corruption scandals like the Enron
collapse and Worldcom implosion, companies in the global marketplace find
themselves operating under much stricter financial compliance regulations.
Accurate financial reporting processes, complete with well-documented audit
trails, are essential for companies who want to avoid finding themselves on the
wrong side of industry and legal compliance requirements.

Tax Management. The reports generated by the record to report process affect
all of your financial planning, including taxes. Complete and accurate information
makes it much easier to prepare taxes accurately, pay them on time, and
strategize intelligent tax reduction measures.

https://planergy.com/blog/record-to-report-best-practices/
2 / 11
Strategic Planning and Decision-Making. By providing a comprehensive
picture of what’s working, what needs improvement, and any areas generating
more risk than value, the reporting process that follows the R2R process gives
your company’s CFO and upper-level management the information needed to
make smart, strategic decisions. The insights gleaned from the process can help
determine everything from the structure of the company to an overhaul of
business process management in order to support (for example) a shift to digital,
rather than analog, workflows.

Value Creation. A formalized and well-structured record to report process

supports value creation through process optimization. The more accurate and
efficient the process is, and the shorter the cycle, the more quickly valuable
insights and financial statements will be available for analysis, planning, and
decision-making. Ideally, optimizing the record to report process will also allow
for a “cascade” effect, i.e. the data collected and analyzed is used to evaluate the
efficiency and efficacy of all your workflows. Key performance indicators (KPIs)
can be used to identify those areas most in need of improvement, as well as those
processes already generating value through cost reduction, efficiency
improvements, etc.

“As with many other complex processes, R2R can present a number of
challenges for companies. This is especially true for large multinational
companies with very intricate intercompany accounting workflows, but the
truth is that any business can run into a number of issues when transforming
their data into financial reports and insights.”

How Record to Report Works

You know why it’s important, but before you can optimize your record to report

https://planergy.com/blog/record-to-report-best-practices/
3 / 11
process, you need to understand how it works. Every company is unique, but
generally speaking the process moves through four stages, beginning to end.

1. Data Collection and Management. During this stage, the data that will
be used to create financial statements and reports, including journal
entries, is generated, collected, and organized. Ideally, this data collection
(and, depending on the tools available, data entry) will be swift, accurate,
and complete. This data—known collectively as master data—comes from
a variety of sources in your software environment, including all of the
transaction data from all your business units, including accounting
workflows, your procure to pay (P2P) process and supply chain
management activities, etc.

Depending on your approach, this may mean extracting most of your data from a
single, consolidated enterprise resource planning (ERP) solution, a
comprehensive process optimization and automation solution, or a mix of different
systems bound together in a shared software environment. Smaller companies
may even have manual workflows and paper-based document management in the
mix.

2. The Closing Process. Also known as the closing cycle, the closing
process (also called financial close, the close process, or simply closing)
occurs at the end of a given financial accounting period. Finance and
accounting professionals have a specific window during this time to
complete all necessary postings in order to ensure the general ledger can
be safely closed and reconciliation and validation/confirmation of financial
information can be completed in a timely manner. As with data entry and
collection, speed, accuracy, and completeness are of paramount
importance in achieving a positive result without wasting time and
resources.

https://planergy.com/blog/record-to-report-best-practices/
4 / 11
 This may prove difficult, however, for companies still relying on analog
techniques and manual workflows, which can slow the overall process
through delays due to human error and oversight. Even companies using
more modern approaches may face difficulties if they’ve inherited a
complex closing process due to acquisitions, integrations, and their
attendant intercompany accounting.

Increasingly, these companies are seeking to walk the line between speed and
value during the close process. They do so by finding ways to remove needless
waste and delays while increasing speed and accuracy using tools such as process
automation.

3. Reconciliation and Validation. When closing ends (with the close of the
general ledger), the accounts team reviews intercompany accounting to
validate all the financial information entered and organized. Ensuring the
information is both accurate and comprehensive is crucial for the financial
team, who must use it to prepare the financial statements (including your
balance sheet) and reports for internal and external stakeholders, who
will in turn rely on those documents for decision support and financial
planning.
4. Analysis and Reporting. Once the data’s been verified, it’s analyzed and
used to generate a wide array of financial reports that include exhaustive
detail regarding the company’s performance, profitability, and process
and project management. Typically, these reports are sent to a range of
stakeholders, including:

The C-Suite
Senior Management
Division Heads/Business Unit Heads
Investors

https://planergy.com/blog/record-to-report-best-practices/
5 / 11
 Regulatory Organizations (Industry and Governmental)

Common Record to Report Challenges

As with many other complex processes, R2R can present a number of challenges
for companies. This is especially true for large multinational companies with very
intricate intercompany accounting workflows, but the truth is that any business
can run into a number of issues when transforming their data into financial
reports and insights.

Master Data Management Headaches. Incomplete and inaccurate data, as

well as inefficient workflows and staff struggles with data management can lead
to problems with the master data you need for decision support, reporting, and
planning.

Without clear and formalized workflows for data collection, organization, and
analysis, the entire process can be fraught with errors that lead to costly delays
or increased risk exposure.

General Ledger Woes. From closing to reconciliation and validation, the general
ledger is only as useful and reliable as the data that feeds it. Errors caused by
upstream inefficiencies may not become apparent until the general ledger is
being reconciled and verified. This can create additional expense, stress, and
frustration as journal entries must be investigated and analysis put on hold.

Increasingly Complex Reporting and Compliance Standards. Meeting the

expectations of not just internal and external stakeholders, but the regulatory
bodies that manage financial compliance, can be a tricky business in the modern
marketplace. This complexity is arguably the primary driver in the push toward
adopting fast, accurate, and complete data management solutions by companies

https://planergy.com/blog/record-to-report-best-practices/
6 / 11
eager to achieve not just compliance, but competitive advantage and a healthier
balance sheet through lower risk and greater performance.

Putting R2R Best Practices to Work

Despite all the potential frustrations that can make record to report such a
stressful and expensive time, you can still find ways to streamline it and overcome
the challenges it brings.

1. Invest in Automation. Every single best practice you can use to

optimize your R2R process will perform more reliably, efficiently, and
effectively with support from advanced data management and automation
tools supported by artificial intelligence. A procurement solution like
PLANERGY, for example, makes it easy to automate all your data
collection, capturing all information and activity across your procure-to-
pay process and supply chain management workflows, while providing
seamless connectivity to your accounting, marketing, ERP, customer
resource management (CRM), and other software solutions.

Cloud-based data collection and organization means nothing is left out or

overlooked. Process automation takes the human element (and error) out of
transaction processing, as well as data entry and verification. This speeds
workflows, reduces closing times, and ensures your finance and accounting staff
have everything they need for real time data management processes, including
analysis and both internal management reporting and preparation of reports for
external stakeholders.

In addition, advanced analytic tools take your complete and accurate data and
grant leveled access to all appropriate stakeholders. Dashboards make it easy to
generate reports on the fly, and slice and dice all data to reveal hidden insights

https://planergy.com/blog/record-to-report-best-practices/
7 / 11
and opportunities to further optimize processes, pursue new market
opportunities, or work with suppliers to achieve greater value for every dollar
spent.

2. Standardize and Simplify. Your general accounting process sets the

stage for quality data that drives all your financial reporting and strategic
decision making.

Standardize naming conventions.

Establish criteria for standard and non-standard journal entries.
Formalize, document, and automate your approval workflows.
Establish and document roles for every accounting process to ensure
accountability and adherence to internal controls.

3. Tighten Up the Month End Process. Every month-end close is a

building block for year-end close. Keep your financial reporting edifice
from crumbling with a few best practices.

Consolidate your software environment.

Automate and optimize all workflows.
Ensure all relevant stakeholders have full access and transparency to all
data.
Develop, implement, and monitor KPIs for accurate and complete
workflows and reporting.

4. Optimize Intercompany Accounting. If your business has multiple

locations and subsidiaries, making sure every part of the body corporate
is communicating accurately with the others is essential.

Standardize and document all workflows, roles, KPIs, and processes.

Automate wherever possible, including account reconciliation.
Develop and implement contingencies workflows to protect the speed and

https://planergy.com/blog/record-to-report-best-practices/
8 / 11
 accuracy of all processes.
Monitor KPIs and adjust workflows as necessary to ensure optimal
performance and data integrity across business units.

Streamline Your R2R Process for a More

Agile and Competitive Business
When you understand how the record to report process affects the success of all
your company’s initiatives, it just makes sense to invest in the tools and
techniques required to optimize it. With help from best practices and a switch to
process automation, you can be sure you’ll have the most accurate and complete
data available to achieve accurate financial reporting and strategic decision-
making while reducing costs and building long-term value.

PLANERGY Makes It Easy to

Manage Compliance While
Optimizing All Your Workflows

Find Out How

https://planergy.com/blog/record-to-report-best-practices/
9 / 11
https://planergy.com/blog/record-to-report-best-practices/
10 / 11
 AboutPur
chaseCont
rol
Pur
chaseCont
roli
scl
oudbasedpr
ocur
ementsof
twar
eforbusi
ness
spendmanagement
.Weempowerbusi
nessesbypr
ovi
dinggr
eat
er
t
ranspar
encyandover
sighti
ntot
hepur
chasi
ngpr
ocess.Wi
th
Pur
chaseCont
rol
,youhavet
hef
lexi
bil
it
ytomanagehow spendact
ual
ly
happensi
nst
eadofhow youwi
shi
twoul
dhappen.

Theent
ir
ePur
chaseCont
rolt
eam hasexper
iencewi
thi
nar
ange
ofbusi
nesses,andassuch,webr
ingapr
act
ical
,hol
ist
icappr
oach
t
opur
chasi
ng.Weunder
standwhati
ttakest
orunabusi
nessandappl
y
t
hatknowl
edget
omakePur
chaseCont
rolasef
fect
iveaspossi
blef
oral
l
user
s.

Lear eatwww.
nmor pur
chasecont
rol
.com

Cont
act
s
EU Of
fi
ceI
nfor
mat
ion
UK:+448455912724
I
rel
and:+35315134623
enqui
ry@pur
chasecont
rol
.com

USOf
fi
ceI
nfor
mat
ion
US:8007375605
i
nqui
ry@pur
chasecont
rol
.com

ConnectWi
thUs
Facebook:ht
tps:
//www.
facebook.
com/
Pur
chaseCont
rol
/
Twi
tt
er:ht
tps:
//t
wit
ter
.com/
pur
chasecont
rol
/
Li
nkedI
n:ht
tps:
//www.
li
nkedi
n.com/
company/
pur
chasecont
ol/

https://planergy.com/blog/record-to-report-best-practices/
11 / 11