Every company must know how much cash it has on hand, how much it owes suppliers, and how much it owes customers. Keeping track of these facts, on the other hand, is the bare least. Companies that move beyond cash-basis accounting must keep more extensive financial records, especially if they intend to acquire a loan, raise venture capital, or go public.
However, as crucial as careful recordkeeping is, it is simply the first step. Simply possessing data does not provide business executives with the insights they require to improve performance, identify opportunities, and plan for future growth. This necessitates financial visibility, which static reporting cannot supply.
Obstacles to Financial Visibility
Companies often struggle to attain financial visibility while gathering huge volumes of data for a variety of reasons, including:
Fragmented data – Data is frequently kept in multiple locations. The accounting system will hold most of the financial data, but some details may be managed in Excel. Sales data will be stored in the CRM (Customer Relationship Management), but inventory data will be stored in another system. Individual computers may be used to keep project-tracking information. Data collection from these sources might be time-consuming. Even if systems are linked, only a subset of data may be shared. Even for professionals, exporting records, converting them to a standard format, and harmonizing structure and naming conventions is exceedingly difficult and time-consuming. Data is frequently out of date by the time it is gathered and standardized, making it difficult to give timely, meaningful insights.
Data errors – Having bad data is preferable to having no data. Inaccuracies lead to inaccurate analysis, incorrect conclusions, and poor actions. While errors are mostly found during data collection or entry, they can also be caused by decay, which is the natural propensity of certain types of information to become out of date. Incomplete or inaccurate data is also a worry because it might lead to incorrect conclusions.
Insufficient resources – Accounting teams nowadays are overburdened and understaffed. Finding skilled people to fill vacant positions is difficult in a tight labor market and a waning interest in studying accounting. And when people become available, they are usually snatched up fast, even if they lack some of the abilities required for the position. Alternatively, a recruit may have analytical talents but insufficient industry experience to contribute rapidly. As a result, even if high-quality data is accessible, businesses may be unable to use it.
Ineffective analytical tools – Lack of appropriate instruments should be the easiest of all impediments to financial visibility, but it can be excruciatingly tough. A corporation may face this challenge for one of two reasons. The most common is using incorrect tools. While almost all accounting systems can produce financial statements, they do not always allow flexible reporting. They may have a few basic reports that are tough to customize. Alternatively, they may not provide customized reports. Both flaws are frequent in entry-level applications. Because of these constraints, businesses must rely on spreadsheets for financial analyses. Although applications such as Microsoft Excel are incredibly useful, they lack crucial features such as complex visualizations and only deal with static data. This limits their utility for in-depth study.
Complex business intelligence packages are on the other end of the range. While business intelligence systems provide tremendous analytics capabilities, they are difficult to use without specialized training. These systems were designed for large corporations with people committed to creating reports for usage throughout the organization. The time and money required to purchase, configure, and operate these products make them unsuitable for medium businesses.
Improve Financial Visibility with NetSuite
NetSuite enhances financial visibility by providing real-time data and embedded business intelligence tools that enable you to examine performance in more depth. By storing financial, operational, and statistical data in a centralized database, a unified data model avoids fragmentation while boosting accuracy by standardizing data formats and avoiding redundant data entry. Automation of data capture and other fundamental accounting operations improves accuracy even further. Automation also boosts productivity, allowing accounting personnel to devote more attention to financial performance while decreasing the need for extra workers.
NetSuite’s comprehensive reporting and analytics tools enable you to make more informed decisions that lead to better outcomes. Role-based dashboards allow you to monitor KPIs in real-time. Dashboards that are simple to set upkeep team members focused on the most important goals. Create multidimensional reports that combine financial, operational, and other data, such as statistics on lease expenses based on each department’s headcount or square footage occupied. Hundreds of industry-specific and standard reports can be built to measure specific business performance parameters.
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