FP+A Explainer
How do you create a single source of truth in financial data?
A single source of truth in financial data emerges when definitions, assumptions, and changes are clear and traceable. It’s a way of working — not a single system.
Why the lack of a single source of truth is a widespread problem
A lack of a single source of truth is rarely about the numbers being “wrong.” Rather, it stems from the fact that they are produced in different contexts, based on different assumptions, and across different systems—without that being clear to everyone.
In many organizations, planning evolves gradually. New systems are introduced, local adjustments are made, and Excel models continue to exist alongside them. Each part may work well on its own—but the overall picture becomes difficult to grasp.
Three common causes stand out:
Data is spread across multiple systems
Transactions reside in the ERP system, forecasts in another tool, and analyses in Excel. When information is extracted, adjusted, and combined manually, discrepancies inevitably arise—even when the intent is aligned.
Definitions are interpreted differently
What qualifies as “revenue”? What is included in “cost”? Is the forecast before or after adjustments? When definitions are not documented and consistently agreed upon, parallel interpretations emerge.
Assumptions change without traceability
Forecasts are built on assumptions. When these change without clarity on who made the change—and why—trust erodes. The discussion shifts from strategic choices to version control.
Implications for decision-making and trust
When different numbers are used in different forums, meetings tend to become debates about the numbers rather than decisions. This affects both the role of the finance function and the organization’s ability to act quickly.
Related questions in FP&A Explainer
- Why don’t CFOs fully trust their forecasts?
- When does Excel stop being sufficient for FP&A?
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