The Importance of Reporting and the Role of the Financial Controller in a Rapidly Changing Economic

The work of a Financial Controller focuses on business-critical issues related to financial management, accounting, financial and regulatory reporting, budgeting, and forecasting. In an international company, the controller conveys information about the company's financial performance through group reporting to both the company and the corporate management.

From the perspective of group financial management, it's crucial to aggregate the financial data of all entities in the group to assess both the efficiency of the group's overall business operations and to view results by different segments or units within the group. This process of merging the financial data of individual companies into a consolidated whole, as if dealing with a single company, is known as consolidation. While smaller local groups may consolidate annually for the financial year report, larger groups monitor results continuously on a monthly or quarterly basis. Controllers, often responsible for transmitting such data, also verify intercompany balances, transaction volumes, and other critical information for consolidation.

For management, it is essential to have financial information in a concise format. Presentations of financial results are often prepared for them, accompanied by additional explanations. These presentations typically look at three main categories: comparison with the budget, with the same period of the previous year, and the dynamics of current year data month by month. In addition to the aforementioned comparisons, management reporting includes key financial indicators like profit margin, return on equity, and debt burden, as well as insights into the company’s cash flow situation. All this enables management to early identify potential problems and trends that could affect the company's sustainability and/or profitable growth, and to make informed, data-driven decisions about the company's strategy and objectives.

In preparing and analyzing reports for management, it is important to combine both quantitative and qualitative data to ensure the company's long-term success and stability. In rapidly changing economic conditions, forecasting future indicators and trends is in one hand much more critical than past performance analysis. However analyzing past periods provides a solid foundation for future forecasts.

There are several technical solutions in the market that automatically convert data into reports. When using such solutions, the controller’s main task is to check the raw data, accounting principles, and reporting accuracy. Often, due to regulatory requirements or the company's own needs, there is little time for collecting, processing, and reporting financial data. With a controller and a well-thought-out reporting solution, workflows can be distributed so that financial data reaches management as quickly as possible, enabling them to respond operatively in changing conditions and maintain competitiveness.

Technical solutions and practices differ across countries, and traditional tools like Excel are still widely used. Regardless of the reporting solution employed, the prompt monitoring of a company's financial health is especially crucial in today’s hectic economic conditions, while existing financial staff may not have the capacity for additional responsibilities. Until work volumes justify hiring a full-time Financial Controller, outsourcing this service is a viable option. A Financial Controller is not a convenience service but a crucial aide for a leadership team focused on efficiency.
 
You can read more about the daily work of a controller in an interview with BDO Estonia's controllers.