Our day-to-day lives intersect with the digital world frequently; however, paper-based processes hold back the finance function sometimes. In order to improve efficiency, we need quick access to data and the ability to synthesize the information in a faster, quicker and accurate fashion. Digital transformation continues to advance, creating a new role for finance, allowing tech-savvy finance experts to save time and support the entirety of a business’s operations by modernizing the accounting and finance processes. Analytics is one of the biggest tools within digital transformation and should be at the top of the digital finance priority list for any CFO, regardless of industry or company size. As a toolset and a management discipline, analytics can drive a tremendous amount of value relatively quickly, and fundamentally change how a company is managed. We discuss two analytics topics for CFOs to focus on:
For many companies, financial reports are relatively difficult to track; having data stored in disparate sources can create a challenge. Ideally, financial reports should be modernized by using the right finance framework and tools to maximize the efficiency of the entire process. Technology is an enabler that can facilitate the handling of massive data sources and shaping of information in different ways however knowing what finance metrics to measure and defining those metrics for your business is what makes data analytics a powerful tool for the CFO. Finance analytics can take historical information and use it to understand the present, as well as the direction the business is taking. For example, tracking sales and cost of goods sold for different types of products and services will allow you to understand your cost structure and improve your pricing strategy. This is where trend and variance analysis become key drivers to improve business performance. Other examples for a CFO include the management of working capital and operating cash flow: these key performance indicators will help you analyze the financial health of the business beyond profits. As you continue on the digital transformation journey and centralize your data in one data analytics platform, this process will be faster and more accurate, allowing you to drill down to the details and find discrepancies quickly. By using technology as an enabler, you will be able to take advantage of real-time dashboards which will help you translate numbers into key metrics to improve your business’s bottom line.
Businesses need accurate information quickly to support management decisions although this is one of many challenges a CFO faces today, implementing a data analytics tool will allow you to perform your job in a more effective and efficient manner. During this journey, you will evaluate a technology software that can meet your business requirements and your finance metrics for your business. The most important aspect of developing a finance analytics dashboard is determining the key performance indicators you plan to track and why. Setting up your goal and objectives up front will be key for successful insights into your business. Then, you can move on to defining your key performance indicators framework and data requirements to create the foundation of your data analytics solution. Once you have accomplished these key steps, you will be able to model your data and recalibrate your metrics based on the output of your dashboard. There are many leading practices for implementing data analytics tools; however, understanding the value of your data is top priority. Analyzing how quickly the information is being refreshed and how easy is to bring data into the application is extremely important. Second, developing a strong framework to organize and retrieve your data is essential to optimize your results. Third, collecting the right data across different source systems and developing key performance indicators for each will provide you the business insights behind the data. As you evolve, you will be able to move from descriptive to prescriptive analytics over time. This forward-looking mindset will help you shape your business’s strategy and improve your day-to-day decision-making in real time.
Citrin Cooperman’s Finance Transformation services bring the latest digital technologies and sophisticated finance processes which will enable your finance organization to drive the growth and success of your business. Contact us to find out how we can help on your finance transformation journey. Here are some additional resources that might interest you:
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