Leveraging Data Analytics for your business

Every organization relies on some amount of information for its operations. Information is generally processed from data and organized for the end-user to understand its contents. In a technological space, the process of gathering and processing data is much easier with the use of software applications and tools in what is described as data analytics. Thus, data analytics is the process of analyzing data sets to find trends and draw conclusions about the information they contain. Data analytics is becoming increasingly important to business executives because its rapidly improving the way they perform their duties.

Data analytics is done with the aid of specialized systems and software. But data collection is the first step for any analytics application. Accounting data analytics extracts data or information from financial transactions, such as bank statements, invoices, payments, and sales receipts. This must be collected and ingested into a big data stack where it is easy to find and manage.

Key Tools in Data Analytics

In data analytics, users including accountants and other business executives can utilize predictive analytical tools to make projections and estimates, and to enhance business intelligence. The choice of tools for data collection depends on the source and type of data being gathered and processed. They include tools for data mining and visualization to present data in the forms of graphs, charts, and maps so that other people can understand it easily. Statistical analysis tools can also be utilized to perform statistical analyses on large sets of data to identify relationships between variables such as sales volume and price changes over time or sales volumes across different regions within an organization’s market area.

Apart from that, advanced reporting tools can also be used to create customized reports based on specific criteria. There again, accounting software is the most common tool used by businesses to record and analyze the financial data of a company. It helps in automating tasks, reducing errors, and improving efficiency. Some examples of accounting data analytics include stock price analysis which allows users to see how a company’s shares have performed over time. There is also cash flow analysis which shows receipts (how much cash is coming in) and payments (expenditures going out) each month. Thus, it is very important for accountants to take advantage of these technological advancements and harness the benefits.

Benefits of Data Analytics

Data analytics initiatives support a wide variety of business uses. Some of them are the following:

Improve Financial Management

Data analytics is a powerful tool for businesses and can provide an insight into a company’s operations upon which they can improve efficiency and financial performance even in the midst of economic crises. For instance, a data analytics can provide an insight into sales and expenses with faster access to key metrics. When you identify an increase in sales but not enough profit, data analytics can help you identify which products are selling well and which ones are not.        This will allow you to make changes accordingly and improve transparency into financial performance. Similarly, accounting data analytics also helps to make sense of a company’s financial data by providing insight into how it relates to other aspects of the business.

Identify Key Trends and Patterns

Businesses can leverage innovations in data analytical tools to identify trends and patterns in their financial information that may not be apparent at a first glance. Depending on the application, the data that is analyzed can consist of either historical records or new data that has been processed for real-time analytics. The outcome of real-times analytics can empower organizations to respond quickly to emerging market trends and gain a competitive edge over business rivals through informed decisions and strategies about where best to invest or reallocate resources. In effect, data analytics can provide more accurate predictions of future market and industry trends

Improves Audit and Assurance

In other applications, data analytics can help auditors to improve the risk assessment process, substantive procedures and tests of controls. Audit Data Analytics (ADAs) help auditors to perform a variety of procedures to gather audit evidence. They are able to discover and analyze patterns, identify anomalies and extract other useful information from audit data through analysis, modeling and visualization (graphs, charts). For example, banks and credit card companies analyze cash withdrawals and spending patterns to prevent fraud and identity theft by relying on data analytics. These software tools have the potential to provide further evidence to assist with audit judgements and provide greater insights for audit clients.

Better Understanding of Customer Needs

The most important aspect of any business is its customers. The more you know about your customers and their needs, the better it helps to be responsive to serving those needs. Businesses can, therefore, deploy data analytics tools to gather data about their customers’ preferences, spending habits, demographics and other which can help inform product development and marketing campaigns. For instance, mobile network operators can use analytics to examine customer data to forecast churn.

Business Partner for Strategic Planning.

Data analytics can help businesses to set future goals and plans accordingly. Analytics helps extract valuable insights from data and make better decisions. For instance, with analytics, the finance function no longer serves only as a provider of financial reporting but a strategic partner for strategic planning. Data analytics has necessitated a transformational move from the conservative transactions to the support function of decision making by using both financial and non-financial information. As book-keeping and financial statement preparation require less human interventions and manual processes, there is indeed, a paradigm shift towards spending more time on management drilled down to strategic planning and decisions-making.

Challenges in Implementing Data Analytics

It is imperative business leaders appreciate the enormous benefits of implementing data analytics. However, there are some challenges which must be thought through by organizations willing to integrate it into their operations. Some of these challenges include:

Budget Constraints

Many organizations know very well that the benefits of implementing in-house system or third-party software data analytics software really outweigh the cost of investments required but have not yet done so due to budget constraints. Furthermore, the enabling infrastructure to support the integration of data analytics software requires significant investments. Thus, data analytics can be achieved by using cloud services which offer better scalability and cost-effectiveness compared to traditional on-premise solutions.

Insufficient Number of Expertise

It is also revealing to note that many organizations don’t have people with expertise in data analytics. This also makes its implementation quite difficult for them to exploit the full benefits. The crux of the matter is that gathering and analyzing data requires expert knowledge and advice. In this regard, I will encourage organizations to explore training options to empower their personnel to develop the skills or competences in data analytics.

Conclusion

It has been established that data analytics offers more promise for delivering innovative sources of value to businesses. Considering the fact that users can analyze very large volumes of data from all business units within a short time, data analytics improves accuracy of outcomes and invariably increases productivity. The built-in, customizable dashboards allow for real-time reporting and analysis where trends and opportunities can be identified. In effect, the use of data analytics in accounting and finance can boost profitability by reducing the costs of doing business through resource optimization of operations

BERNARD BEMPONG 

Bernard is a Chartered Accountant with over 14 years of professional and industry experience in Financial Services Sector and Management Consultancy. He is the Managing Partner of J.S Morlu (Ghana) an international consulting firm providing Accounting, Tax, Auditing, IT Solutions and Business Advisory Services to both private businesses and government.

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