Finance departments are starting to use BI to discover actionable insights and make better decisions.
Over the past few weeks, we focused on how BI can improve different functional areas within companies. We looked at the sales, marketing and HR departments benefiting from the use of BI tools.
This article will continue going through business units and look at the finance department. In the past, organizations saw the finance function as a repository for accounting data. The finance department’s main task was to report on past performance and annual reports.
However, with the use of modern BI tools this is quickly changing. Finance departments are taking on more proactive roles, using BI’s real-time dashboards and advanced analytics to deliver actionable insights from across the company and providing executives with key data to help make decisions.
Better management reporting
Whether for internal purposes or when preparing a financial document for auditors, investors or creditors, finance managers spend a lot of time editing and re-editing static data in spreadsheets. For many finance professionals Excel is a tool of choice, but for certain tasks the legendary spreadsheet software can be cumbersome, slow and a little too manual. Having BI software, for example, Power BI, which is compatible with Excel and user friendly, removes the traditional limitations of spreadsheets and at the same time keeps its convenient formatting and organizational functions.
Reporting needs to be clear and readable. Living and breathing in their spreadsheets every day, finance managers can obviously understand all the small data points, trends and figures in a report. However, when these reports need to be presented to management or non-technical users, things can get complicated quickly. If management cannot quickly comprehend the report data, drill into certain details when needed while being able to see a bird’s eye view of a situation, very little would be accomplished during a meeting. BI comes as a good solution here, using simple visualizations that can present data in a simple way, but when it is required, quickly drill down into details.
Another key advantage of using a BI tool (albeit this mostly applies to modern self-service BI) is a degree of independence that BI provides to finance managers from the IT department. Once up and running with BI, the finance department no longer needs to wait for IT guys to extract and process information.
When finance professionals can speed up past-looking, repetitive operations, they can focus on more important business-related tasks. In fact, many CFOs highlight the importance of finding the balance between accurately reporting on past financial performance and delivering predictive, insightful forecast. This leads to the next point.
Better planning and analysis
Planning is one of the main responsibilities of the finance department and its importance cannot be underestimated. Using a financial forecast, companies use their resources where they are needed most. Although predicting future was never an easy thing to pull off, algorithms in modern BI tools can do it really well.
BI tools operate in real-time and provide users with the most up-to-date information. Only by having accurate historical information and the most detailed snapshot of today’s data, you can accurately forecast future trends and build precise models. BI software is a perfect tool for these tasks. By finding out little details, analyzing trends, creating “what-if” scenarios, a BI tool can quickly identify when and where things are going off the course and help to steer them back.
Using BI’s analytics, the finance department can start playing a more strategic role within a company, as opposed to being viewed as a back-office space which deals with day-to-day operations and bookkeeping.
Taking care of revenues, cost and profits
Financial data is often scattered across different departments. Whether it is HR or marketing, spreadsheets upon spreadsheets must be consolidated, often manually, to keep track of all the company’s expenses. BI can be a great tool here by establishing one place where all the information can be kept, analyzed and accessed when needed.
Instead of departments keeping their own separate financial records and then chaotically merging it all together, a BI tool can set up a universal view on company’s revenues and cash flows, helping every departments consolidate financial data.
Overall, the right BI tool can be the backbone of the finance department. With businesses changing and competition rising, faster and more accurate insights are needed. Using modern BI tools, finance managers can move beyond simply keeping numbers organized and take a more proactive and intelligent approach, becoming a company’s key decision-makers.
If your company is looking to speed up budgeting processes and improve reporting, please feel free to get in touch with us at email@example.com. Within the first week, our experts will analyze challenges your company is facing and propose a number of working solutions that would cater to your specific needs.
Centida is one of a very few specialized niche firms that follow the principle of “from finance practitioners to finance practitioners.” Our advisory services focus on the improvement of operational, day-to-day activities in finance and controlling departments.