CFO: Why Payroll and HR records are at the heart of financial data
CFOs at multinational organizations around the world will always have to spend a significant portion of their time analyzing financial data, cash flow information and a balance sheet. As a natural consequence of this, they will be very interested in where this data comes from and if they are in full possession of all the data they feel they need for informed decision making.
Sometimes, technology constraints means that direct reports into the CFO struggle to supply this person with the level of comprehensive, detailed and insightful reporting they need to do their jobs in an effective way. This is obviously a very unsatisfactory situation, and one in which a CFO will look to rectify as soon as possible.
This may require a direct investment in a digital platform that comes with a suite of smart reporting tools and analytics -the very tools that are used to extract meaningful and insightful reporting for C-Suite leadership teams at multinational companies.
In this article, we’re going to examine the relevance of both payroll and human resources records & data when it comes to the kind of reporting a CFO and finance function requires for accurate forecasting and decision making. We will explain why payroll and HR data records are at the heart of meaningful financial reporting and data at multinational companies around the world and what a CFO can do to ensure that they always have full access to all of the data they need.
Facts and hard data
CFOs are generally risk averse individuals who do not enjoy making decisions based on data they cannot fully trust. In 2021, they should never be forced into a position that makes them do this – many of them will take it as a personal responsibility to ensure that technology, systems, people and processes are in place to ensure that vague data is not even a possibility.
They want regular and straightforward access to facts, metrics and real-time hard data around the key business functions that heavily influence the stability of the organization they work for. Human resources and global payroll departments are major business expenses and therefore need to be monitored closely.
Key data and insight need to be extracted from the data flows within these interconnected departments, so that a CFO and finance team can get a clear picture of what is happening with cost management. Flexible and innovative technology therefore needs to be in place to ensure that these two business partners can share and transfer data effectively while also producing the level of detailed and comprehensive reporting (general ledger and financial statements) expected by the CFO. When this level of reporting is in place, finance leaders can feel confident that they are making decisions based on trusted facts and hard data -without this level of reporting, they will likely feel under served by these business functions and exposed to risk- this is a largely unacceptable scenario.
The full picture
Global payroll data and HR records are at the heart of financial data at organizations because they have the ability to provide the full picture. Accurate facts and hard data are always needed but sometimes they are not enough to provide wider context and business understanding. Facts are crucially important, but they don’t always tell the full story -detailed and nuanced reporting is needed to increase the size of the picture and help develop understanding of what is really going on. They can also contribute greatly to financial management, pricing, budgeting, forecasting and profitability on a wider business strategy level.
HR data, for example can supply facts around the numbers of joiners and leavers in a certain year -but smart reporting is required to spot trends that indicate if members of the global workforce are leaving an organization at a particular time of year.
Global payroll data can reveal labor costs for a specific month or period, But detailed and comprehensive reporting is needed to find the true cost of employing a particular individual in a specific role -comparative reporting is required to highlight the differences between employing a person in one country versus another country when they both carry out the same role. Similarly, multi-country cost comparative reporting is needed to analyze and understand the differences in labor costs across different countries and time zones. When a chief financial officer has access to this level of nuanced reporting and they are able to drill down into specific countries, regions entities and pay elements -then they feel much more confident that they are getting the full picture around what global payroll is costing the organization, where it is costing them the most and the least, and what are the reasons for the differences in these figures.
This kind of reporting can ultimately play an important role in the strategic direction that a CFO and other business leaders recommend an organization takes. This is what we mean when we say that HR records and global payroll data are at the heart of financial data – because when these records and information are liberated through smart reporting and innovative analytics tools, they have the ability to influence the strategic direction a company takes.
CFOs are increasingly recognizing the importance of HR records and global payroll data when it comes to high level decision making. This has led to an increase in demand from financial operations executives in the CFO office for enhanced reporting and better record-keeping – these individuals are now looking to service the CFO office with more detailed, nuanced and comprehensive reporting that offers informative and comparative analytics. They realize and understand the value of crucial data and have begun to accept that a lot of this transactional data is hidden within fragmented and disparate systems, whose legacy age means they are not designed to deliver this level of reporting.
It is therefore important that an ongoing dialogue exists between the CFO office and HR and global payroll professionals – with a view to creating a solid business case for technology innovation and digital platform investment so that the kind of reporting they need is available at the touch of a button or ideally, on a self-service basis. Such conversations can take place in the wider context of a digital transformation involving several business functions or business critical services. It is important that global payroll and HR professionals continue to stress the importance of locating crucial business data in a single location while having the ability to extract consolidated reporting from this data via a suite of digital innovative tools. A cloud environment is the ideal one to make this a reality, and systems integrations plus new technologies will be needed at some point to ensure the human resources and global payroll can transfer and share important employee data with each other in a secure and seamless fashion.
Any CFO interested in ensuring that HR and payroll data is accounted for in valuable company reporting, should take on the responsibility of ensuring that the technology support and platform foundations exist to facilitate this level of reporting on an ongoing basis. This kind of data and reporting offers immediate value to the CFO and financial executives in terms of hard data and analytics -but it will also prove crucial to the strategic direction of the organization, especially when it comes to scaling activities and making an assessment around capacity to expand the business into new regions and territories.
Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.
Payroll Manager, LogMeIn
Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.
At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.
Head of HR, GetYourGuide
With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.
International Payroll Manager, Phorest