Collect, analyze, and report financial data with the record to report end-to-end business process

Applies to: Dynamics 365 Commerce, Dynamics 365 Field Service, Dynamics 365 Finance, Dynamics 365 Human Resources, Dynamics 365 Project Operations, Dynamics 365 Sales, Dynamics 365 Supply Chain Management

This article introduces the record to report end-to-end business process. It outlines how Dynamics 365 products can help organizations manage and optimize their record to report processes.

Record to report overview

The record to report (R2R) process is sometimes referred to as the financial recording and close process. It's a critical end-to-end business process that the finance and accounting department of an organization typically owns. The R2R process involves the collection, analysis, and reporting of financial data to make sure that the company's financial statements accurately reflect its financial performance.

The R2R process typically includes several key sub-processes such as:

• Data gathering:

  This process involves the collection of financial data from various sources such as accounts payable, accounts receivable, and general ledger. Dynamics 365 Finance is a double-entry, near-real time, accounting system that automatically posts all transactions from other modules such as sales, purchases, and production to a sub-ledger and to the general ledger simultaneously.

• Journal entry:

  This process involves the recording of financial transactions in the company's general ledger. In Dynamics 365 Finance, the process uses general journals. Other types of journals are available in other modules such as Accounts payable and Accounts receivable to post invoices and payments, for example. These journals automatically post to the general ledger without other manual user interaction.

• Account reconciliation:

  This process involves the comparison of financial data from different sources to ensure that they're consistent and accurate. Dynamics 365 Finance includes various tools and reports to help support the process of account reconciliation such as the financial period close workspace.

• Financial reporting:

  This process involves the preparation of financial statements such as the balance sheet, income statement, and cash flow statement. Use Dynamics 365 Finance together with Power BI, Azure Data Lakes, or Financial Reporter to quickly and easily manage and create financial reports and statements for your organization.

• Financial analysis:

  This process involves the interpretation of financial data to identify trends, patterns, and anomalies.

Overall, the R2R process is a critical business process that helps organizations make sure of the accuracy and completeness of their financial statements. It's essential for making informed business decisions and meeting regulatory requirements.

Every organization has variations to the record to report process. Here, we define the basic outline for any organization looking to implement a technology solution to support the record to report.

Impact

Every organization in every industry wants to report accurate financial information, either for internal analyzation of the data, or for external compliance with regulatory establishments. A poorly designed R2R process in business software can lead to inaccurate financial reporting. You would risk misleading financial statements that don't reflect the true financial health of the organization. As a result, investors, stakeholders, and regulators would lose trust in the organization, which can harm its reputation and financial performance.

Design and integrate the solution with clear processes to gain efficiencies and reduce duplicated efforts. If the solution isn't properly configured and designed, you risk increased costs. For example, if the system isn't properly configured, the organization may need to hire extra staff for manual tasks or to fix errors. Also, if the organization can't produce accurate financial statements, it might engage external auditors to help correct errors, which can be costly.

Compliance with regulatory establishments is common for many organizations around the world and different regions may have different requirements and regulations that must be followed. If the organization isn't able to produce accurate financial statements in a timely manner, it may be in violation of regulatory requirements, which can result in fines, penalties, and legal action.

Overall, it's critical for every organization to have a financial system that is well designed because poor designs can have significant negative impacts on an organization. Therefore, it's essential to ensure that the R2R process is well-designed, properly planned, and effectively implemented to avoid these negative consequences.

Stakeholders

Implementing the record to report (R2R) process with Dynamics 365 involves a cross-functional team that should include the following stakeholders:

• Finance and Accounting Team

  The finance and accounting team plays a critical role in the R2R process as they're responsible for ensuring the accuracy of financial data and producing financial statements. Therefore, they should be involved in the implementation of the R2R process with Dynamics 365.

• IT Team

  The IT team is responsible for configuring, customizing, and maintaining the Dynamics 365 system. They should be involved in the implementation of the R2R process to ensure that the system is properly configured to support the R2R process.

• Business Process Owners

  Business process owners are responsible for defining and managing business processes. They should be involved in the implementation of the R2R process to ensure that the R2R process is aligned with the organization's overall business strategy.

• Internal Audit Team

  The internal audit team plays a critical role in ensuring the integrity of the R2R process. They should be involved in the implementation of the R2R process to provide input on controls and risk management.

• External Audit Team

  The external audit team is responsible for auditing the financial statements of the organization. They should be involved in the implementation of the R2R process to provide input on audit requirements and to ensure that the R2R process is designed to meet audit requirements.

• Business users

  Business users are the individuals who will be using the Dynamics 365 system to perform their daily tasks. They should be involved in the implementation of the R2R process to provide input on usability, user experience, and training needs.

Involve these stakeholders in the implementation of the R2R process with Dynamics 365. this way, you're more likely to get a process that's well-designed, properly planned, and implemented effectively to meet the needs of the organization.

Record to report benefits

When your organization plans to implement technology solutions to assist with the record to report process, there are several benefits the solution can help provide. These key benefits should be used to determine if the solution is a good fit for your business. They'll also help drive the specific business requirements for implementing the solution. As a side effect, these benefits can be used to create a baseline for your goals and objectives for the project so that you can measure the success of implementing solutions to meet those business requirements.

Increased efficiency

Dynamics 365 can automate many manual processes that are involved in the R2R process, such as data entry, journal entry, and account reconciliation. You can save time, reduce errors, and increase the efficiency of the R2R process. Because Dynamics 365 Finance is a double-entry, near-real-time accounting system, users don't have to worry about posting transactions to the general ledger. It's an automated process, and with proper controls and security in place, the sub-ledger always remains in balance with the general ledger.

Improved accuracy

Dynamics 365 can help ensure the accuracy of financial data by automatically validating data, reconciling accounts, and detecting anomalies. Your configuration can help ensure that financial statements are accurate and reliable, reducing the risk of errors and misstatements. Use the workflow system in Dynamics 365 Finance or Power Automate to help ensure the accuracy of all entries before they're posted.

Better visibility

Dynamics 365 provides better visibility into the R2R process by consolidating financial data from multiple sources. You also get real-time reporting and analytics. This insight can help organizations make informed business decisions based on accurate and timely financial data.

Improved compliance

Dynamics 365 can help organizations comply with regulatory requirements. Dynamics 365 includes built-in support for audit trails, internal controls, and automated reporting capabilities. These configurations can help ensure that the R2R process is properly documented, monitored, and controlled. In return, you reduce the risk of non-compliance.

The Electronic Reporting engine in Dynamics 365 includes hundreds of templates for hundreds of countries/regions and formats that are standard throughout the world. With its ease of extensibility, you can modify or create new templates to meet compliance requirements in our changing economy.

Reduced costs

Dynamics 365 can help reduce the costs of the R2R process by automating manual processes, reducing the need for paper-based documentation, and eliminating the need for multiple software systems. This can help organizations save time and money while improving the quality of financial data and reporting.

Overall, implementing Dynamics 365 to support the R2R process can provide significant benefits to organizations. Benefits include increased efficiency, improved accuracy, better visibility, improved compliance, and reduced costs.

Next steps

If you would like to implement Dynamics 365 solutions to assist with your record to report business processes, use the following resources and steps to learn more.

1. Define the goals and objectives of implementing a record to report technology solution*

2. Define the business process scope of your project

3. Get a demo of Dynamics 365 solutions for the order to cash process

4. Sign up for a trial of Dynamics 365