Business Intelligence for Finance
As an everyday citizen, there’s a time of year that is filled to the brim with stress and unpleasantness: tax season. Analyzing a year's worth of finances, expenses, and revenue can be tough for the single person, couple, or family.
It involves a structured organization and a basic knowledge of numbers and law. Now, imagine instead of an average four-person household, you have a multi-million dollar revenue business and over 80 employees to manage. And that’s just a mid-sized company.
Let’s just say that while tax season is busy, it’s also managing the workload throughout the year to ensure smooth sailing come April. Client payments, employees’ salaries, expense reports, differentiating hourly rates, revenue, and of course staying in the green for a profitable year are among the massive task list a financial department must overlook.
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Most Enterprise Resource Planning (ERP) systems are ideal solutions for a financial department due to its automation and capacity to connect to third-party applications designed for finance.
However, like many things in life, it can sometimes have limitations in how specific data is analyzed and reported. But if an ERP is faced with certain restrictions, how can a financial department hope to maintain accurate numbers?
Easy. A business intelligence (BI) platform.
Eliminate Spreadsheets
Whether you’re the Chief Financial Officer, a financial controller, or accountant, you’ve probably become the Master of Microsoft Excel or Google Sheets. In fact, you may even be closer to the program than you are to your inner circle.
Unfortunately, more often than not it’s a rather acrimonious relationship. In small mom ‘n’ pop shops it’s easily manageable when you’re just a couple using a spreadsheet to handle finances.
However, once you enter the world of finance in a medium to large-sized business, or even a massive corporation, spreadsheets are still the most-used program. And that’s where the problems arise.
If you have a business of 40+ employees in the finance department, each using spreadsheets for the different accounts, expenses, employees, clients, invoices - it can get complicated very quickly.
Now you may have the Data Exporter tool which facilitates saved searches in an ERP like NetSuite to Google Sheets for easy data building. For accountants who survive on NetSuite, the connection to Google sheets is crucial when downloading specific data.
In an ideal world, the financial industry would never have to look at a spreadsheet again. Thankfully, miracles do happen. More on that soon.
The Profit Margin
Whether you’re a business that sells products or services, the common goal is to avoid the red and stay in the green.
When it comes to a services company, that could look a little different to one whose main inventory is a product. That being said, the main goal is the same: avoid spreadsheets at all cost. Okay, no, not really, but the goal is to maintain a healthy profit margin.
For a services company, among the obvious (revenue), the finance department must also measure success via project profitability. In other words, if you’re spending more on a project than actually gaining, that’s a red flag.
For example, perhaps you have a client in New York that requires a consultant to do on-premise work two times a year, and has an hourly rate of $200.00. If the costs of the business (travel expenses, employee salary, overtime, etc.) exceed that of what the client is paying, it becomes a question of profitability.
The key to that is knowing if something is profitable or not. Sure it’s all visible within an ERP and spreadsheets, but when this is done manually, errors can occur and vital analytical information is hard to come by.
Month’s End
Talk to anyone and their eyes won’t go wide when you mention the words month end reports. Speak to a corporate accountant and suddenly they start sweating, even in the middle of winter.
A month has around 30 days, 4 weeks, which when you read seems like a lot of time, but when it comes to finance, it’s what is lacking the most: time to get everything done.
Take a small to medium-sized private company. It can take up to 20 days after a month's end to retrieve the right data from the previous month. Of course this isn’t the same for everyone, a public company can typically wrap up their data reports a week after month’s end.
Without a solid foundational software in place to automate certain processes and data, the finance department has to manually close the month and on top of that deliver reports to specific departments to analyze.
You’d think that would be the end, but we haven’t even reached tax season yet! Audits, review engagement, communications with an accounting firm, tax returns - it’s a long-winded process and without the concise reporting built up throughout the year, March and April can be tedious months, often completely overworked.
So, what’s the solution to all of this? As mentioned above, miracles do happen and there is help in the form of a business intelligence tool that can solve all the pain points of the finance department.
Launching BI for Finance
A BI tool is often masked by spreadsheets due to the fact that spreadsheets serve a purpose and that purpose is rarely shattered. Just like an ERP lightens the usage of spreadsheets, business intelligence simplifies the required data reports.
A business intelligence platform can manipulate large data sets within a data warehouse. This is particularly essential for finance when they deal with massive numbers of data. Not to mention a services company dealing with time entries.
On the other side of the story, a product-based company will revel in the allure a BI tool brings to the table. An ERP has the customizations to handle inventory, WIP, warehousing and more, but a BI takes it to a whole new level.
Its forecasting on products, supply chain management, and warehousing are life-changing to these industries as companies are able to predict their inventory levels. It’s never ideal to have too much inventory and not enough customers.
As mentioned above, staying in the green is at the core of the finance department.
Last, but not least, business intelligence for finance is extremely useful for tax season. This time of year often requires a lot of manual review, reading memos, and is almost always very heavy on the data.
As the core of a company, the finance department has a lot resting on their shoulders. It’s time to invest in a software that can alleviate stress and help accounts keep track of data and ensure no mistakes are made.
A business intelligence platform will allow users to analyze and visualize heavy loads of data within its data warehouse to slice and dice necessary reports to make informed decisions. Learn more about GURUS Business Intelligence here.