How to Cut Your Board Reporting Process From Weeks to Days (with Fabian Ferrada)

Today's episode is brought to you by Insight Software, which has an automated disclosure management solution that will lift the burden of endlessly copying and pasting your financial data from Excel into Word or PowerPoint. This speeds up the narrative reporting process for annual board and investor reports and eliminates fatal errors. Go check it out at insidesoftware .com slash board dash reporting.

Welcome back to the Diary of a CFO podcast. I'm your host with Sia Kamon, a sitting CFO with a background in accounting and FP &A. I started this show because I believe that the way companies build and lead their finance function determines whether they scale or fall apart. Each week, I sit down with CFOs, CEOs, strategic business partners who talk about what actually looks like, building the right teams, getting systems and controls in place, partnering with the business and doing it all without burning out.

Today, I'm so delighted to have with me Fabian Ferrada. Fabian is a Senior Solutions Engineer on Insight Software, EPM Pillar, where he helps finance leaders modernize a full journey from financial planning and analysis to board ready disclosure. Before moving to tech, he spent over a decade in financial and operational leadership for a publicly traded infrastructure services company carrying P &L responsibility on major pipeline projects across South America and the Middle East.

Welcome to the show, Fabian. Thank you, Wasiya. Pleasure to be here. The pleasure is mine because what I like about your career journey is that you went from being in the trenches to now being on the other side of the table helping finance leaders with their board reporting process.

When it comes to board... presentations, I would like to hear from you. How would you describe what a great board presentation really looks like? Yeah, it's a great question.

I always start with context first. I think it's important that the information is always readily available. And then that way you have the information behind it as well, because whether it's a good number or a bad number, that the context is always most important. So having a system that allows you to be able to have that at your fingertips.

It's always going to make board reporting or any type of reporting that you're doing internally or externally much, much easier. Nice. So having contacts and having a great system. Speaking of system, here's what usually happen, right?

Inside most companies, the typical process of preparing a board meeting takes about two weeks. Okay. And that's after month and close. and yet another two weeks.

And then you're going to the meeting and some board members may look maybe at a few slides, a few minutes, maybe they can ask a question and then they move on. Like how do you make sure that the two weeks of preparation actually adds value to the process? The two weeks of building and then moving on in 10 minutes is something that a lot of us have dealt with before. So because the document answers, you know, what happened, but not what does this mean for us?

So what should we do about it specifically? Those two weeks matter when the report is straightforward, you know, it's for the conversation itself but we want to make sure that you know all of our CFOs or all of our executive leaders who walk out of those rooms that they're the ones that have the information readily available to them and then from there you know you're not finishing and working on formatting that it's just they're readily available quickly. Okay. And so what would you say is the difference between a board that leaves a meeting feeling informed and one that probably leaves feeling confused?

Like sometimes the underlying numbers are exactly the same. Yeah, exactly. And that's a great point, right? Because it's almost never just the numbers.

So the board that leaves confused, they're usually the ones that were handed a document and they read it in real time. Boards that leave informed. They had someone that guided them through it itself. So there's explanations.

It wasn't just the numbers, but again, it's kind of going back to the context itself. Those decisions, it's in front of them. So we want to make sure that the data is the same throughout. It's completely different experience in those regards when you can have that better story in that context.

Okay. And then when you say context, can you dive a little deeper into that? Because sometimes I think because we sow so much into the number, we assume that the other people also do. And so their elements of the context that we may leave out.

So how would you define making sure that we provide enough context for the information we're presenting? Yeah, absolutely. So typically with disclosure management itself, we're always tying some type of narrative with a number output itself. So the context around why revenue went up, why revenue went down.

So those specific items that are going to tell that story. And then from there, you can start to ask questions, identify root causes, and then... take actions on those. So if I just tell you, you know, revenue was up, but there's no context as to why it went up, we can't keep doing those best practices.

Or if something needs to be modified or changed, we want to make sure that we have a good understanding of why it changed. And that's what I'd mentioned before, that system itself, if it's supporting you, and it's giving you all of that information. you'll be able to get that context at your fingertips for, for everything. True, true.

And so thinking about, I like you to say revenue went up. Um, I feel like we have to get now used to presenting bad news to the board. And so how would you say someone can effectively present bad news to the board and live with their confidence still intact and don't feel like it impaired their reputation or maybe damage a relationship with the board? Yeah, absolutely.

You know, I think taking ownership is most important, right? If a number is bad, your leaders are going to find out. So your job is to make sure that they don't find out cold. The finance leaders who handle this well, they already have the answers and typically they're answering three specific items.

So what happened, why it happened, and what we're doing about it. So they own the story. The one who struggles are usually the ones who spend the whole reporting cycle building the document and had five minutes left to think about the narrative or that context that we were just discussing. When the story owns you instead of the other way around bad news, it feels and lands like a crisis.

Wow. I like how you say you don't want them to find out cold. No surprises. Exactly.

So as we thinking about preparing for a board meeting and we know there is bad news. Um, I know typically for myself, I've learned to have like meetings before the meetings. Um, but what are other ways maybe you found that really helped kind of lend that story better with the board? Yeah, that's a great question.

Building in feedback loops within the process is really important. And a lot of the customers that we end up speaking with and that we've kind of had these discussions with, typically it's a broken process. So making sure that we can help automate that process and then having that feedback loop to provide context at every stage is really, really important. Hmm.

So everybody knows what's going on and there is a, yeah, I really like that. I really like that. So what would you say is an ideal feedback loop in the board reporting process? What does it look like?

Yeah. So a lot of times we're managing, you know, multiple revisions, a lot of different contributors. There's a lot of individuals that are involved throughout that whole process itself. Um, everyone owns a specific portion of that document and say a larger organization or for a smaller organization, there's going to be one individual that wears more.

hats. So making sure that we have again those those feedback loops ahead of time that we can go through that process quickly and then ask the necessary questions that are meaningful that are going to help drive decisions moving forward. That's the biggest thing is making sure that the process can help facilitate that. Yeah.

And the version control. I, when you said multiple version, I was like, Ooh, I wonder what version I'm on. Is it five or seven? Yeah.

And we have a lot of technology today that allows us to be able to communicate quickly and effectively. But when we don't have a version control or a system in place to make sure that we can manage that with proper documentation, it's very easy to get lost in kind of who's reviewing what. And so since you've described what a great presentation looks like and what a great process will look like, what are the things I usually get in the way of financing actually being able to deliver that?

Yeah. So a big thing, again, I talk about process and a lot of the time is you want to spend typically about 20 % of that time. You want to make sure that we're spending as to why that report changed. And then 80 % of the time is going to be the other way around.

So gathering the data, formatting, reconciling information and chasing updates. So, you know, in a broken manual process, it's typically the other way around, but in a great process, we're able to flip that around. So the goal for that well -structured disclosure process really puts you in a to make sure that you're saving time or compiling, you're being strategic about thinking about all the necessary items to make the system and the process better, but then also making better business decisions.

Okay. And in that 80 and 20 rule, what does it actually look like during the week before the board meeting or during those two weeks, right? Because if I'm spending just 20 % of my time putting it together, which is like ideal, what am I doing with the other 80 % of my time? Yeah, absolutely.

So ideally we have an opportunity to have meaningful conversations. with all of our contributors, right? So there's a lot of different individuals that are going to be contributing. So now you have an opportunity to understand the intimate nature of your business, the whys.

Again, going back to revenue, why did it go up? Why did it go down? Everyone that's part of the process, they're very intelligent. They have a lot of insight and we want to make sure that we can spend time with them understanding what's going on and not just putting them to work on a manual process where 80 % of their time is gathering data, compiling, formatting, building presentations, et cetera.

Yeah, that formatting. It hurts. Yeah. You'd be surprised.

We actually have a lot of our customers that we talk to. That's one of their biggest complaints is when they go to generate a document, you know, font is off, margins are off, columns are off, you know, small things that just have no value added to the process. A lot of that can be eliminated. Oh, gosh.

I remember when I started in FPNA, because I was a controller and then I went to FPNA. I would hate the time of reporting because I felt like my time was more spent on formatting the green arrow or the red or the stable. And then if there was an extra digit and we went from thousands to millions, that's a lot. And sometimes it's hard to quantify what is the real cost of that, right?

Like not just a dollar amount, the frustration behind it. I mean, the person doing it, the quality of what comes out, you're probably frustrated. Like what would you say is a real cost of not having the right process? There's an interesting metric that we always look at.

we're talking to our customers, a lot of our questions up front, we're asking, you know, what does your process look like? Who's doing what? How long does that take? And that boils down to what we define as a cost of inaction.

So the cost of inaction specifically, it's a pretty simple calculator, but it's a really good metric that you can actually start to apply when you're looking at wasting inside of your process. So the fact that we have individuals that have a salary, they're fully burdened, they're being paid regardless from say an overhead perspective. And then that individual, have them working in Microsoft Word and or Excel formatting cells, making sure the font's correct, the margins are aligned, those types of tasks just become very, very wasteful.

So regardless of what's going on, you're going to have a cost and the cost of doing nothing is very, very high sometimes when you sit down to look at that process versus fully automating it with a solution, let's say. Wow. Tell me more about that cost of inaction because it's time, like you said, you're going to pay them anyway. Yeah.

how are you really adding value, especially now that, you know, with things moving that the way they are with technology advancing so much, there's so much pressure and then also a need for finance to be that strategic business partner. But formatting arrows from green to red and changing margins, that's a lot. So when you think about the cost of inaction, what would you say is something you want people to really consider when it comes to that or think about? Yeah, I definitely say, you know, the cost never shows up on an invoice itself.

You know, it's the conversations that don't happen in the board meeting themselves. So when a finance team spent the week building the document, they walk in exhausted and they've had no time to prepare for say questions. So the CFO who should be saying, you know, here's what this means for our Q3 strategy. Instead, they're hoping nobody asks about the footnote on page 11 that they didn't have time to verify.

So that's a real cost. Not the overtime, not the stress. It's the insight that never made it to the report itself. into the room.

Those types of items themselves, it's really hard to quantify. But again, when we look back at kind of that cost of inaction, it can become very high, especially when you start to take into consideration all the different contributors times, what they do and the amount of time being spent on non -value tasks. Yeah. And I feel like there is so much of that still in financing today.

So not just for board reporting. I mean, accounting and I feel like COVID accelerated us, a lot of companies going digital, but there's still a lot of broken processes. and information not flowing the right way. And you get to a point when you think about reporting, because at the very end, does it even make a difference?

Can I send the same report to this person versus that person, to this stakeholder versus the next? So there's even, I think, a bit of confusion between the difference between board reporting and investor reporting, right? Because you're doing so many reports, you're trying to streamline everything. And then you wonder, is a report you give to the board the same as one you would give an investor?

And should it be? Yeah. And that's, that's a great distinction. And the kind of high level, simple answer is no.

And the distinction does matter. So your board report, it's a, it's a governance. conversation that you need to have. So the board needs to understand what's happening in the business, exercising judgment, and then making decisions.

They know the context. Your investor report itself, or say your regulatory filing, it's a comparability conversation. So the audience itself has measured you against other companies, against prior periods. against the standard itself.

So they don't have the internal context, same underlying numbers, say two completely different audiences, two different purposes, and then two different levels of required precision when we're reporting. So the challenge itself is the most manual process can't actively serve both audiences well because the process was barely handling one itself. Wow. So it goes back to having the right context and system.

at the beginning, so that whether it's reporting to the board or reporting to investor, it's easier, right? And it's because, yes, both needs to be different because, you know, like governance for one. But when you think about what happens when the numbers in one don't quite match the numbers in the other. right?

So you present something on the board, something is weird, and it's not the same. How do you handle those kind of situations? Yeah, so an interesting stat that we can kind of look at is three or four manual disclosure processes contain at least one instance of the same number appearing differently across the documents themselves. And again, this is coming from conversations that I've had with existing customers and prospects as well.

So that's one of the most common stories I hear, and it's almost always a manual process story. So in roughly three out of the four manual kind of disclosure processes that we evaluate, you do have that inconsistency. There's multiple documents in some cases. You could say have your annual report, your preliminary press release, and then say an internal board deck.

All of those things need to be saying the exact same thing. And it's not always a good situation to be in. We start to lose credibility when those things start to be misaligned. And nobody that's caught in that type of situation is always.

I'm going to be walking away, you know, feeling comfortable at the end of the day. So there's nothing worse than that. Yeah. And I think sometimes too, the person doing the board presentation is not the same person doing the investor presentation.

So if you don't have the single source of truth, if I can say like, It's hard to be consistent. Like that's, that is scary. Yeah. And then say you bring in a multi national organization with different time zones and different individuals that are all reporting up to, uh, you know, the head office and then having to collate and then compare and consolidate that becomes very, very tricky.

Let's take a quick break to talk about a problem most finance teams face when creating narrative reporting for their boards and investors at year end. You make a copy of your previous report, spend hours searching for the latest data from different systems or people, then copy and paste those numbers in manually. By the time you're done, the data has changed and you have to start again. That's where today's sponsor comes in.

Insat Software gives your finance team a tool that automatically pulls data from your ERP and other sources and updates it as it changes. Your team can then collaborate directly in one document, working with one source of truth. When you're stressed by a reporting deadline, a simple click to refresh will have your report ready in no time. To learn more, check out their webinar, Break Free from Manual Disclosure, and visit insidesoftware .

com slash break -free to watch and banish copy paste errors forever. The link will also be in the show notes. And let's get back to the show. Yeah.

So at that point, what kind of tool or system can really help bring that together? Right. The fact that I could have somebody else working on the broad presentation, somebody else working on investor relations, somebody else working on different entities across the globe. Like what kind of tool can really help bring all these numbers together and provide that single source of truth.

So we're not just, you know, increasing our margin of errors just by doing it every quarter. Oh, yeah. So within the Insight software that we have a disclosure management solution that actually helps with that. And when that solution itself is being kind of discussed, we want to make sure that we understand the full use case of the business.

So just as we had mentioned before, the individuals that have internal reporting versus external reporting, who are the key stakeholders? We want to make sure that we're managing version control. You have a proper audit trail. And in many cases, there's individuals that are dealing with internal and external auditors as well.

So having a clear understanding of the version, what changes happened. And then if the auditors come back and say, hey, I'd like to see a version of you know, this report with my comments and then all the changes afterwards. That can become very time consuming and can become very complicated as well. So making sure that you can have all of that in one solution becomes really, really important.

Then you layer in data, making sure that you can support multiple data sources. So again, going back to say a multinational, there might be someone in say Chile that's operating in a different ERP system. There might be someone in the United States that's operating on another. And we want to make sure that you have a means and a mechanism to collect that data and then consolidate it appropriately into these reports.

That's the big, big factor there. Oh yeah. And I can see how it can make life so much easier in those instances, right? Because I feel often time what we forget about company growth, a lot of time it's not organic, right?

acquired another entity. There was a lot of integration that was not organic. And so maybe we build for being at, let's say, a size of 1 ,000 and we end up being 5 ,000 within like two years. And then your solutions didn't catch up.

They didn't evolve as fast as you did. And so now you find yourself in those situations where, oops, the business expecting me to operate at such a higher level than my systems allows me. to operate in. So I'm curious to hear from you for the finance leader that is listening right now and they recognize themselves in this conversation.

What should be their first step? What will be the first thing that should change? Yeah, you know, I always think about, you know, how do you eat an elephant? It's one bite at a time, right?

Like we hear that often. I tell my kids that as well. I'd say you want to start with your most painful process. So you can't tackle everything.

Just the one that costs your team the most time and stress every cycle. So going back to that cost of inaction, you can actually quantify that with that metric itself. So identify every step in that process where a number is being manually re -entered somewhere. That's the list that you want to make sure that you're compiling.

And all of those are risks that you're building into the process as well. So that becomes your roadmap. You don't have to overhaul everything at once. You can access one source, automate one link, and then run it in parallel with your current process for one cycle.

So you can see the differences between that switch. You can start making comparisons and then making improvements as well. So for smaller companies, the whole journey can take about four weeks. You don't have to stop reporting to fix.

the reporting problem itself. Well, that's very encouraging because, you know, there is always that wonder, is it going to be a big IT project? Like, will I have to freeze my team for so long? So it's very encouraging to hear that.

So after the four weeks, like what what actually is different? Well, like when they start the process, what are the first things that they go? Oh, that is so cool. I'm just curious.

Yeah, you know, it's. It's going to be different between every organization, but there are a lot of commonalities, right? So it's not a change to your accounting system at all. That's the thing most people assume, and that's not the case.

So if you think of it, say, like, you know, plugging in appliances, the power source doesn't change. You just get to use a new piece of equipment there, right? A new appliance itself. So your accounting data stays where it is.

the disclosure management solution connects to it. It'll go ahead and pull in the numbers through the data connection automatically. You change nothing on the source side. And one of the things that makes the transition feel less scary is that we are able to load previous year's report information into, say, a template on day one.

your team's going to look at their own document in a new system. So it really doesn't feel foreign. It feels like their report, just working in a different way and the way that it should be. Nice.

So all you have to do is maybe change your period and the whole report is like brand new. Absolutely. Yeah. And that's the biggest kind of wow factor.

Yeah. So that would have resolved my red arrows and green arrows problem I had when I started. It's a PNA for that. Yeah.

And you think, I mean, you're describing the roll forward process. beautifully, right? I want to be able to click a button, set a few fields, and then I get my new data for the new quarter, new period, new year, whatever that might be and how you're reporting is going to update automatically. And that can take a matter of minutes instead of days where you have a manual process that's broken, right?

Yeah. And your mouse is as tired as you because you're like literally dragging. Yeah. We need to get a new mouse.

Yes. That's when you start understanding why people have huge mouths. Yeah. Yeah.

You know, it's funny. I'd show you the mouse that I use because I have to make sure that I don't like get cramps in my arm from being in a weird position all day. Exactly. You know how bad it is, but it's size of the mouse, right?

Yeah, exactly. That's too awesome. Yes. So I'm curious, like once you get to a point where you don't need a bigger mouse to do your reporting, right?

Like because you have a better system and now you have time on your hand. Like what, at that point. How do we get our teams to be better strategic partners? Because now you save time.

I have more time to review, more time to check. What will be now the next steps for the team so that now with that time saved, they're able to add even more value beyond just submitting a board report. Yeah, absolutely. So I'll go back to another stat.

that as we're kind of going through and preparing for this conversation today, we did a case study with a company called Sheri SE. So they had 12 subsidiaries. They were in six different countries, four different currencies. And we were able to do a 60 day implementation.

So it was literally weeks, weeks to days. So the first thing that they noticed is that when a number changed, they don't have to manually find every place that it appears and then update it itself. So it just updates automatically. So that sounds small, but it changes the entire rhythm of the reporting cycle itself.

So for that week, those two weeks that we were talking about, it becomes much, much easier. So Share ESC, it was a publicly traded technology company with the 12 subsidiaries that I had mentioned. They had a process where a single number change could restart their entire approval cycle all over again, because they were managing different languages in German, English throughout their process. So having to translate all of that and then make sure that things link back together was very, very...

So after implementation, their consolidated financials are ready in one to two days, including all the schedules. And their disclosure process went from several weeks to a few days in all reality. So their group of accounting specialists put it this way. They no longer have to worry about numbers getting lost in translation, you know, pun intended.

Yeah. And that's the difference about, about the week itself. That is amazing. That is amazing.

Um, curious to hear, right? So now they have more time to review. Definitely your headache. When you said how many times that that number P I went like, ouch indeed.

Right. Because you change one revenue number is going to change your margins. It's going to change everything else. Versus one little thing in the expense section, right?

And so I know we think about, again, strategic business partners. How can we go back and really add value internally and externally as well? Yeah, so the biggest value, I'll use your example where you have an individual manually ticking and tying out the document. Value can be measured there immediately and it kind of goes back to that cost of inaction discussion we had previously.

How long does it take that individual to do something that that shouldn't be happening. That's an instant value back to the business. And then we're able to take existing resources, give them time back, potentially get home to their families as well. So we can talk about the cost to the business, but what's the cost to the individual themselves?

We want to make sure that we can retain that talent also. So making sure that we build a process around them to help them and be cognizant of that is really, really important. And that's a big value that gets understated many, many times. I agree.

Like that human element is so important because yeah, yes, I didn't like the mouse I was using. I was frustrated most days. Like I was extra grumpy. I know probably snacked a little extra Cheetos those days when I had to present it.

And I think we often forget how this wears on us as human beings, right? So I'm curious to hear from your experience when you're on the other side of the table. First, is that what made you run away from being in the trenches to advising? And like, what was your best way to cope?

in those moments, like while you were trying to make the change. Yeah. So for me personally, you know, I spent time as a financial and administrative manager for a business unit in South America. I ended up transitioning into project management and I had that large P &L responsibility.

The biggest thing that I disliked about the process, we had a manual process, was the fact that it was just non -value added tasks that I was doing. And I knew it was coming every single month, right? It was something that I knew. So on this day, starting here, I gotta go heads down and I'm not gonna see family, I'm not gonna see friends, and we're gonna be in the trenches doing the work for as long as it takes to make sure that we meet our deadline.

So for me, that was kind of the biggest thing. You say it kind of jokingly, but it was true. That was something for me that I had a young relationship, I should say, just had recently gotten married and I wanted to make sure that I could stay married as well. So that was a big transition for me.

And then moving into the other side of consulting, project management, reporting as well. All of those things kind of drive you down at the end of the day to... be able to do internal reporting or external reporting. So all of the activities, all of the business processes, operational processes, everything ties together, weaves together to make sure that we're reporting and doing things accurately.

So a miss on my end will have a large impact on the business. Let's say If I don't get my forecasting correct, if I don't have a system around me to be able to understand the context and then tell my board exactly, hey, we had a $60 ,000 overage because equipment got caught in customs and we're getting demurrage charges and I didn't know about it, now I have a $60 ,000 explanation that I have to give. But at the same time, I was able to tell them, now we've identified, we've contacted customs, we're moving to make sure that we don't keep hemorrhaging money.

And those types of things happen, right? I mean, it's life. And thank you so much for sharing your perspective on that because yes, if you don't allow your employee to have effective systems, like it does wear on you. I'm sure that you're probably very happy that you're helping other teams actually get out of reporting hell with this culture management now.

Yeah. And when we have those conversations and I tell my story as we're going through that, that process itself, it really helps kind of ground the conversation to say, I was in your shoes. Like I really understand it and I want to help. I'm not here just to try to sell you something.

I truly want to make your life better. Yeah, because I know how it feels that time of the month where you know you're going to be miserable. I knew. That's why I like when you said you know you're going to be miserable at those times.

So now I'm curious, what are some of the things that you like to do outside of work now that you are? on the other side of the table. Yeah, absolutely. So the big thing that I spend a lot of my time doing is trying to be outside with my family.

We have a small little off -road camper. We do get outside a lot, mountain biking, rock climbing. I'm an avid rock climber as well. I do Brazilian jiu -jitsu.

I just got my black belts about a year ago. So I do that three to four times a week. Yeah. And there's a lot of lessons that I'm able to learn from that that I bring into the business world as well.

And then I also roast specialty coffee as well. I had a beautiful trip to Australia where I had a friend that was a master barista and coffee consultant. I didn't even know that was a thing. So that brought me down the world of specialty coffee.

And now I roast my own coffee as well. So just a few activities like to stay busy. Oh wow, that is so cool. I'm curious to hear what is one lesson from jiu -jitsu that you bring into the business world.

Yeah, I'd say the most difficult thing for starting jiu -jitsu is getting on the mats day one. It's deciding to make the change, right? You're going to go through a process and to become a black belt, it can take a long time. But understanding that you're taking one step and you're learning something new, taking on say that new process and then making sure that you're committing to that process.

Ultimately what ends up happening is you start seeing the systems in place are there to support you to make life easier and then you can get through very, very challenging situations. So it's not often anymore that I get an opportunity to kind of tie both of those things together, but it is very, very true. you know, sometimes you're the hammer and sometimes you're the nail is a big saying that you'll hear jiu -jitsu. Oh, wow.

Wow. Thank you. Thank you so much, Fabian, for being on the show. It was such a joy having you.

Awesome. Thank you so much, Wes. I really appreciate it. Thank you.

And that's all for today's episode of the Diary of a CFO podcast. I hope it was as insightful and enjoyable as it was for me. If so, please leave a review and subscribe on whatever platform you're listening on. It really helps this conversation reach other finance leaders who need them.

As always, if you have any questions or want to go deeper on anything, reach out at ask at thediaryofacfo .com or visit thediaryofacfo .com. Thanks for tuning in and I'll see you in the next one.