Record-to-report (R2R) is a management process utilized by finance and accounting professionals which involves collecting, processing and presenting financial data in a timely and accurate manner. The process involves documenting all financial transactions within an organization (record) and producing financial documents (report), such as balance sheets, audit reports and budgeting reports.
The R2R process generally involves four stages:
- Transaction recording – All transactions within an organization must be recorded and processed in line with accepted organizational accounting principles. The accuracy of financial data in this stage is key and will determine how smoothly the rest of the process flows.
- Closing cycle – At the end of a fiscal period, finance and accounting teams are given a deadline to ensure that all financial postings are completed in time for the closure of the general ledger. This stage can be challenging, particularly for larger organizations.
- Consolidation – All approved and posted transactions must be systematically sorted, which involves collecting, validating and mapping transactions.
- Reporting – In the final stage, reports such as income statements and balance sheets are generated. They offer a number of statistics and key performance indicators that provide visibility on the financial activity of an organization.
The R2R process is critical to enable strategic decision-making, accurate tax reporting and compliance with regulations and standards. The consequences of poor or inaccurate reporting can be costly and have a significant impact on internal financial processes such as budgeting and forecasting. An inefficient R2R process is also time-consuming for accounting and finance teams who