Why a Single Source of Truth Is Key for Your Financial Data – Benefits and Implementation Tips

Have you ever heard the term “single source of truth”?

Or maybe the better question would be: Have you ever had to contend with Excel spreadsheets that were full of errors when handling your consolidation, reporting, or planning? Perhaps you've also found yourself spending too much time searching for and synchronizing financial data that's scattered throughout your company in isolated source systems. If so, it's probably because you don't have a single source of truth...

In this article, we’ll explain what a single source of truth is and how having one can help you manage your finances better. We’ll also show you how you can establish one with a CPM solution for finance (like Lucanet) and get the most out of it in your work as a CFO, controller, or group accountant.

 

What is a single source of truth?

A single source of truth is a central repository where data from all adjacent systems (for ERP and accounting, for example) is collected. Instead of going to all the trouble of maintaining information in a series of isolated data silos, you have it all coming together in one place – your single source of truth. All employees with the appropriate permissions can thus access the same knowledge base. This helps prevent related misunderstandings and breakdowns in transferring data from one system to another.

 

The disadvantages of a scattered system landscape

SAP, ERP, Excel... Today, many companies still often maintain their financial data in separate, independent systems – which entails a great deal of manual effort when it comes time to merge all that information for consolidation purposes. The larger an organization is and the more individual entities it contains, the more complicated this becomes. Maintaining an overview of all this scattered financial data and keeping it under control is difficult, not to mention time-intensive.

Lars Iffert, a data and analytics analyst at the research and consulting institute BARC, is only too familiar with this phenomenon. “You see inconsistent master data that's distributed across various systems, and other data that’s either outdated, contradictory, impossible to find, or only available in some cryptic, incomprehensible format,” he reports. The time it takes to round up and consolidate all this information is better spent elsewhere – on analyzing it and incorporating it into your company's strategy, for example.

Here are some of the main problems a fragmented system landscape presents in connection with financial data:

• Inefficient manual processes in which errors frequently occur
• Redundant, inconsistent data
• Inadequate transparency
• High costs and time requirements
• Stress and discrepancies between the group's accounting department and its individual companies

 

What are the advantages of having a single source of truth?

A reliable and universal basis of data is an absolute must when it comes to making intelligent decisions that will help ensure your company's long-term success. A single source of truth plays an integral role in this regard by offering the following benefits in particular:

The six most important steps in implementing a single source of truth

1. Analyze your current data landscape

To gain a comprehensive understanding of your current situation, identify all the data sources and systems at your company.

2. Choose a suitable CPM solution

Evaluate different corporate performance management (CPM) software solution that focuses on finance and select the solution that best matches your company's requirements and objectives. CPM solutions for finance are software solutions that support all the processes a typical finance department follows – by facilitating a single source of truth, for example. In making your selection, be sure to factor in aspects like functional scope, usability, integration, and scalability.

3. Migrate your data

Use your chosen CPM software to migrate all the financial data from your various sources and create a central data pool. Quality CPM tools offer an array of ready-to-use standard interfaces for importing data from source systems.

4. Prioritize standardization and harmonization

To safeguard data consistency and a common understanding of financial matters at your company, define uniform terminology, KPIs, and processes in this area.

5. Train your employees

Make sure that everyone who will be using your new CPM software is trained to do so in order to maximize the benefits and foster user buy-in.

6. Observe and optimize as needed

Keep an eye on your single source of truth, the quality of your data, and the way in which your CPM software is being used so that you can identify potential problems early on and take action accordingly.

 

How can a CPM solution like Lucanet help you leverage the advantages of a single source of truth?

Lucanet is CPM software for Finance that's designed to help companies make their financial processes efficient and transparent. By enabling you to merge all your financial data on a central platform, Lucanet makes it possible to enjoy the benefits of a single source of truth while providing solutions for consolidation, financial planning, and reporting. Ultimately, this means you’ll be able to optimize your financial processes and establish an ideal foundation for data-based decisions.

In a recent study by the independent research and consulting institute BARC, Lucanet was once again recognized as the market leader in this field. Our software stood atop the podium in the categories of customer satisfaction, consolidation, usability, preconfigured interfaces, and data integration. In more specific terms, Lucanet offers you the following advantages:

Valid data: The solution will provide you with reliable data in a simple and automated way. This will keep your company's finances in order and help you maintain a constant overview of your corresponding processes thanks to your single source of truth.

An all-in-one tool: Our CPM software for finance offers you solutions for closing, consolidation, financial planning, and reporting – all in the same package. It’s perfect for managing all the different areas of your corporate planning in a flexible manner.

Transparency: By providing an overview of current, historical, and future financial figures, Lucanet gives you complete transparency in accounting.

Simple implementation: You can integrate our system into your existing IT infrastructure and start using it in just days, with no need for complex training or an extended implementation project.

Problem-free importing: With Lucanet, you’ll have access to more than 300 ready-to-use standard interfaces for importing data from your systems into your new single source of truth.

Time savings: Automate those manual steps! Say goodbye to time-consuming, error-prone spreadsheets and start pulling valid financial figures at the click of a mouse. You might be surprised how much time and money you can save.

Compliance: Turn in fully compliant information that your stakeholders (banks, investors) and auditors can depend on without exception.

 

Conclusion

A single source of truth in finance can help you make your processes more transparent and efficient and give you a key competitive edge. By carefully implementing the right CPM software, you can reap the many advantages of a single source of truth. The improvements you’ll see in your consolidation, financial planning, and reporting will provide a strong foundation for data-based decisions and sustainable growth.

Looking to optimize your financial data using CPM for Finance?

 

Find out how!