Is it time to rethink the single source of truth?
The necessity of a single source of truth (SSoT) is a commonly recognized accounting principle for good reasons. When all financial data resides in a central repository and follows the same processes, businesses can rest assured that their financial data is accurate and verified. However, bringing together multiple activities and systems into a single source is a time-consuming process, and when it’s necessary to pivot quickly, leadership needs up-to-date information. Forward-thinking finance teams must ensure their SSoT supports agile decision-making with up-to-the-minute information, while retaining accurate records at all times. Decision-ready data is an important way to gain a competitive edge, yet a Blackline survey found that 69 percent of surveyed global executives feel they have made significant decisions based on incorrect or dated information.
Recent Gartner research points to the value of flexibility in providing financial data to aid in decisions and suggests a distributed “sufficient source of truth” is sometimes more useful than a centralized, highly governed SSoT. However, point solutions that provide information on a narrow accounting function, such as a bill payment solution, lack the holistic view often necessary for informed decisions. A spend management platform that consolidates all of a company’s spend acts as a sufficient source of truth for that one critical and often unwieldy area of the financial statements, by providing interim data on all non-payroll expenses.
It also serves as a distributed source of truth by making data accessible across the company to all stakeholders, with detailed reporting available by department, type of spend, vendor, and employee.
Platform solutions that update the GL with their data also help the SSoT to more accurately reflect current data.
When budget owners are able to track spending information in real time, they can stay on top of their budgets. Without that level of on-demand insight into spend, they’re left to impose on finance teams to produce ad hoc reports — which places an additional burden on an already-stretched operation.
The ability for others outside of finance to create reports on demand frees up time, and can even lead to a cultural shift where budget owners play a more proactive role in adjusting their spend behaviors.
Reports that pull data on multiple activities, such as cards, invoices, and reimbursements, give an immediate view without time-consuming reconciliations across platforms. The ability to create custom reports from data on the platform supports FP&A activities.
The importance of real-time data.
Modern platforms automate the collection of real-time financial information from multiple sources, then sync that information directly to a general ledger that becomes the SSoT. The resulting real-time data makes possible a move to a continuous close, which allows leaders to make decisions based on current financial data, not on what happened in the past. This change is significant: relying on the rearview mirror for important decisions is no longer necessary with the right tools.
Not working with up-to-date financial information without having to wait for a fully updated SSoT can also impact vendor relations, and, in turn, cash flow. When a business doesn’t have full visibility into payment status, they run the risk of missing out on the best payment terms, or mistiming a bill payment.
Consolidation + consistency = a single source.
Manual reconciliations and data transfers via spreadsheets can both slow down the creation of the SSoT and introduce errors.
Modern tools allow for the creation of a single source of truth via the automatic consolidation of multiple sources of data.
Plus, when processes are consolidated, compliance and accuracy are more streamlined, since every transaction follows common procedures and standards.
As a reliable single source of truth, your GL must be accurate, and it takes careful review and due diligence to fully consolidate all information. It also must reflect current financial activity, and financial information must be available to workers outside of finance for full flexibility. A more distributed source of truth offered by platform solutions offers the benefits of real-time data available to decision makers, and can also overcome some of the drawbacks of a SSoT that is more difficult to keep up to the minute. Airbase’s spend management platform provides a single source of truth for one aspect of a company’s financial operation — that of non-payroll spend. Because it syncs seamlessly with your GL in real time, it also contributes to improving the performance of your GL as a SSoT. Contact us to learn more.
Airbase offers a one platform solution to manage all non-payroll spend. It provides oversight and control over spending with real-time reporting and automatic syncing directly to your general ledger. Control all payments – physical cards, virtual cards, ACH, and checks – from one place. Close faster. Empower employees. Control spend.