Did you know that 38% of CFOs are responsible for their organization’s IT responsibilities? Companies pay CFOs to identify profitable opportunities and create new business models within their organizations. On top of their financial responsibilities, they need to have a greater understanding of their data and technological tools. However, they typically spend too much time on the nuts and bolts of accounting, rather than on strategic work to help their organizations keep pace with business.
Despite technological advancements, finance departments spend more time manually reporting revenue and expenses, forecasting, and budgeting. In this post, we’ll explore 3 ways analytics can help financial departments access the right data, improve reporting processes, and work towards strategically growing their organizations.
1. Inconsistent and error-prone reporting
CFOs and their finance departments are responsible for tracking expenses against budget with an organization’s general ledger (GL). Finance departments then generate GL reports, based on the financial data recorded. Managers look for variances and take corrective measures to eliminate cost overruns and maximize budget efficiency.
However, the summarized financial data in the GL reports typically doesn’t provide enough detail to ‘dive’ in and gain the insights to understand root causes of revenue decline, increased expenses, or missed goal performance, to name a few. This is where analytics can help. An analytics tool can help managers understand a specific transaction, in web-based dashboards or self-service reports, that caused them to overshoot their budget. Analytics can also help managers track potential variances or run a GL report with more detailed financial data. This leads to better GL reports with fewer errors, resulting in more clean and consistent data.
2. Access to the right data at anytime
Organizations struggle with understanding the sources of their financial data. Pertinent information from payroll, accounts receivable, or accounts payable is typically aggregated before being entered in to the GL as journal entries. This results in a loss of detail, which is needed for financial departments to gain insights into budgeting and forecasting. Additionally, IT departments typically get tasked with requests for data extracts, since the data isn’t owned by the finance department.
An analytics tool has the capabilities to integrate budgets, revenue targets, and forecasts. Analytics can also ensure data security, making sure the right people can access data at any time. Furthermore, it will enable anyone within finance departments to view the same data as their CFOs so everyone is on the same page.
3. Spreadsheets and reports for direct comparison
Finance departments generate income statements and balance sheets. These reports are key to understanding profits, losses, and performance against budget for a brand, product, or an individual. However, managers would manually compare GL reports on printed spreadsheets, resulting in more time spent waiting for paper reports.
Therefore, analytics can effectively improve reporting and comparisons for managers, directors, or executives. Rather than manually creating spreadsheets, an analytics tool would automate this task, ensuring that managers can view all their direct reports for comparison across web-based dashboards. Managers can now spend less time on menial tasks and more time on strategic decisions.
How to get the most out of your GL
CFOs and finance departments should invest in analytics to help them with financial reporting. Analytics will enhance accountability and transparency in understanding issues and variances. Analytics automates tasks that organizations completed in a manual fashion, allowing finance departments to spend more time focusing on finance.
Want to learn more? Learn about General Ledger Advisor on our website.