15 Jun Why Financial Analytics is Important for CFOs and Finance Teams
As the CFO or finance team of a company, you are tasked with understanding and interpreting your organization’s financial data.
You work to make sure that you have all the information necessary to make decisions about how much money should be spent on various projects, where funds should be allocated, which new investments will generate the most revenue for your company, and more.
One important tool that is valuable in this process is called “Financial Analytics.”
In this blog post we’ll discuss what financial analytics are and why they’re so important for CFOs and finance teams.
How does Finance Analytics help Finance Leaders and Get Better Results?
Without financial analytics, CFO, finance teams and everyone involved in the financial decisions within an organization are getting left behind.
While your team may possess the talent to conduct data analysis manually, engaging artificial intelligence enables to render the process ten times faster, cheaper and more accurate.
The key is in having a clear understanding of what financial analytics are before conducting any sort of data analysis.
Financial analytics is the use of data and sophisticated mathematical, computational modeling to identify opportunities in the financial markets.
Financial analytics are largely applied by professional traders and investors for trading purposes as well as portfolio optimization strategies that help minimize risk while maximizing return on investment (ROI). The most common type of data used in financial analysis is stock-market related information such as past price.
Benefits of Increased Financial Analytics
Financial analytics has many benefits to companies regardless of their human talent reflecting analytics capabilities.
There will be a more accurate projection for what’s to come in the future with increased accuracy when it comes down to forecasting sales or understanding the effect on customers from price changes.
Furthermore this translates into better long-term planning and making smarter decisions. It can improve your company’s management of projects, improve processes and engage technology to optimize the decision making to increase the value added to your company in any department, project, or even in sales and marketing.
Improved metrics and data analysis means there will be a higher level of accuracy when it comes to forecasting sales or understanding the effect on customers from price changes, furthermore this translates into better long-term planning and making smarter decisions.
In less time, you can use advanced analytics to improve profitability, reduce operational costs and generate reports that illustrate in-depth analysis into market research, key insights into on-going problems and strategic solutions to model future operational activity, systems and performance.
The beauty of incorporating data analytics into your company, business or or finance organizations is in its ability to create and provide real-time insights that can be transformed into better financial results.
By having access to data and market trends instantly, the CFO and other leadership arms of an organization can use data in corporate decision making to improve supply chain management, customer service, customer support, and cut operational costs. These are all areas that many organizations want to improve.
Data analytics can help reduce operational costs, which is a major goal for many finance organizations. By monitoring markets and supply chains in real-time to identify bottlenecks or potential problems before they occur, the CFO will be able to better allocate resources with less risk of waste.
With data insights at their disposal, finance functions as leaders in cost-effectiveness as they can identify areas of services, projects, sales or expenditure within the organization that can be reduced or reallocated on a needs basis.
This improves the company’s bottom line and ensures that all decisions going forward are data driven and ensures that reporting on ongoing projects and expenses provide business intelligence that can keep the organization ahead of the competition.
There is always an inherent risk in running a business. The risk of not being able to predict future outcomes accurately or the risk that you will make a wrong decision and not see it coming.
Predictive analytics can be used as an early warning system in financial planning since it can give key insights into what is happening in every part of your organization so these risks are mitigated earlier on before they become too costly for companies.
By monitoring supply chains and other elements of the business, data analytics can help CFOs identify potential problems before they happen. This will reduce risk in an organization’s operations by identifying when to make changes or where opportunities for improvement lie.
But how can this be implemented into business?
The first step in integrating finance analytics into your department is having the right tools, software and skills.
While your team may have analytics skills that can be placed along a continuum from data expert to novice, their capabilities can always be improved.
An example of such an avenue for improvement is by consulting with companies or people from different industries to learn about their approaches.
Once the right skills are in place, a finance team can begin analyzing data internally and externally.
One example of an external approach is by partnering with suppliers or vendors for analytics collaboration, like Incus Services. This will enable your organization to see how various aspects of the business impact each other as well as provide insights into potential opportunities for profitability.
You may have had the data all along, but perhaps the key insights that you need continue to escape you. This is where an external company can help you through training, helping you increase your repertoire of data analytics tools, and providing you with will the skills to navigate effective data visualization tools.
If you’re still uncertain whether financial analytics is the solution your company needs, check out some examples of how data can improve your finance departments.
Why are you waiting another moment to begin unlocking business intelligence? Why are you waiting to improve your company’s profitability and savings through financial analytics.