Tag: data analysis

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Knowledge, Sustainability, and Succession

Knowledge, Sustainability, and Succession

In a global economy, where competitive pressures are increasing every day for even the smallest of businesses, sustainability becomes as much a focus for the business as growth once was.  Developing strategies for retaining profit margins, improving cash flows, solidifying supply chains, and streamlining operational processes is essential when designing the business to handle the stresses of a depressed economy.  But knowledge management – investing the learning and experience of individuals into the DNA of the business – is also an essential element to sustainability and business continuity.  When the entire realm of understanding of how the business runs exists solely in the proprietor or founder, there is little foundation upon which to build an enterprise.  However, when this knowledge is turned into systems and processes which guide the operation, results are able to be reproduced consistently, and reliance upon key individuals is reduced significantly.  This aspect of succession planning is often overlooked, but is THE essential element in business continuity.

Accounting professionals are trusted advisors to their clients, and provide much more service than simply financial reporting.  The consultative approach, delving deeper into the business and looking beyond the surface-level numbers, is what business owners are looking for.  You can help your clients see beyond the numbers to find ways to improve efficiency and profitability in the business, and to help turn individual knowledge into business knowledge, crafting a plan to retain and build on that value.  That’s what sustainability is all about.

Make sense?

J

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Success in the Finance Department: Better Data and Analysis

Success in the Finance Department: Better Data and Analysis

CFOs and corporate controllers are beginning to recognize the increased value they can deliver to the organization when they take a more holistic and comprehensive approach to data reporting and analysis.  The key is in delegation of duties, and establishing the controls and connections which ensure proper (and complete) flow of information throughout the enterprise.  The finance department can easily become overburdened if not structured properly, but can be as easily undervalued if the sole focus is getting the numbers right.

An article on CFO.com discusses some of the elements of structuring the finance department for greater success, and identifies the value of taking a proactive, consultative and analytical approach to business finance.

“For a CFO, “success is not just about getting the numbers right, but also uncovering the story behind the numbers: taking raw accounting information and creating cogent and compelling management discussion and analysis,” says Eileen Kamerick, managing director and CFO at investment bank Houlihan Lokey.

Those who take the big picture into account are more likely to develop an organizational structure that isn’t merely reactive. That will allow staff to come up with more ideas and, ultimately, help drive revenue and run the business. “You have to create an organization so you aren’t in the engine all the time,” Kamerick notes.”


This is a great article… read the entire post on CFO.com here

You’ll find that it makes sense.

J

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Working With the Right Numbers: Financial Data Analysis Requires Accurate Financial Data

There is a lot of discussion these days about big data and financial data analysis.  One of the most valuable aspects of the available tools for performing financial analysis, forecasting and “what-if” scenarios is the ability for a business to benchmark their performance against other businesses in similar industries.  By comparing their performance metrics with other like businesses, an owner or manager may be able to identify items in the performance profile which could be improved or which may represent differentiation from competitors.

When speaking to accounting professionals about the additional valuable services they could be providing to clients by using these KPI reporting tools to identify additional consultation and advisory services clients need, the feedback I generally get from the professional is that “you have to get the numbers right, first”.  It seems that, even with the ready availability of powerful and affordable software solutions to run the business, accounting and finance still tends to be an afterthought for many business owners.  Relegated to the back-office, and being an after-the-fact recipient of transactional data, accounting is still viewed by many as a “necessary evil” of doing business rather than an area of potential strategic advantage.

Many accounting professionals are still struggling with finding the right approach to help clients get better financial reporting on a regular basis, in as near real time as possible, without having to practically live in the client systems.  These professionals are often still approaching the problem by attempting to get the client to participate in the financial systems directly by inputting checks and payments, creating invoices, and doing other types of work the client needs to perform – and using the accounting system to do it.

This approach may well be the source of the dilemma, and all because the client is being asked to work in the accountant’s software rather than with a solution which addresses specifically the tasks the business users need to perform on a regular basis.  When users have tools which don’t suit their requirements well, they tend to not use the tools properly, if at all.  When users are provided with tools suited specifically to solving their functional or process support problems (Service Oriented Architecture approach, or SOA – what Doug Sleeter calls “chunkify”), usage and accuracy can increase dramatically.  Getting the numbers right means getting the supporting solution right first. When these solutions are properly configured and deployed, data collection and integration can become a “stealth” process, silently passing information from one system to another, significantly improving the accuracy and quality of data.

Accounting professionals who focus on assisting their clients with applying the right solutions to support operational as well as accounting processes, and who help to create the controls around the appropriate flow of information end-to-end, are delivering very high levels of value to those client businesses.  It is the assistance these consultative professionals provide, helping the business facilitate its processes faster and more efficiently, which increases the accuracy and, ultimately, the meaning of the resulting financial data.

Make Sense?

J

Interested in learning more about tools which can help your professional practice get more opportunity from every client?  Contact me @JoanieMann on Twitter, or connect with me on LinkedIn or Facebook.

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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More Than an Accountant: A Trusted Business Advisor

More than an accountant: A Trusted Business Advisor

Accounting isn’t available for re-invention.  The rules were established long ago, and my debits and credits aren’t any better than yours.  Accurate accounting, completed tax returns, and quality audits are an expectation of every client of a professional accounting practice.  So, with accounting being somewhat of a “known quantity”, how does a firm show that it can do so much more than simply crunch the basic numbers, and demonstrate their value as a trusted business advisor? The answer is in knowing more about the client business and operation, and using that knowledge to identify opportunity for both the firm and for the client.

Accounting firms serving growing businesses must deliver value, insight, and long-term service to their clients.  These firms desire to enhance their service deliveries to existing clients and prospects, and need efficient and effective tools to support the effort.  For today’s accounting professional, that toolkit needs to include data collection, integration, and analysis.  The accounting professional’s participation in these areas is critical.  Data collection and integration efforts must be controlled in order to ensure accuracy of data in the financial systems.  This becomes the first and most important element – making certain that the data in the financial systems is accurate and complete.  Only then may additional steps be taken to add more value to the service delivery.

A primary method of adding value to accounting service delivery is to enhance the firm’s ability to provide data analysis and deep insight into business and financial performance.  This is, of course, enabled through the monitoring and control of data flowing into the financial systems, ensuring accuracy of information used for analysis. Staying abreast of changing financial needs and finding additional opportunities to add value to client deliveries is a key element in gaining new business and revenue for the firm, and adding to the “sticky” nature of the firm’s services.  Engaging with clients on key financial trends and industry performance metrics can help to set the firm apart from its competition, differentiating services and offering far more value to the client.

Financial analysis tools available today offer accounting professionals more capability and process support than ever before.  With direct integrations to practice management and engagement solutions, firms gain the ability to map and sync data automatically from core firm applications.  This ability can significantly improve upon the time and effort required to introduce data into the system, and delivers efficiency and scalability which allows the firm to easily expand use of the solution to the entire portfolio of client engagements.

There are numerous benchmarking and reporting tools today which make reading and understanding financial data easier and more accessible for business owners and managers, yet these solutions rarely address the needs of the firm in terms of mining the entire portfolio of clients for new opportunity where the firm can deliver more value and service.  The selection of the right tool for the firm becomes a key element in this respect.  The solution must deliver not only better analysis and reporting for each client, but should also be oriented to provide a system-wide view for the firm members and participants.

A key aspect to the efficient application of these tools is to systematize the activity, and structure it as a standard process within the business.  When it becomes part of a firms DNA, to structure, compare and analyze client engagements for trends and similarities and then to take advantage of the opportunities revealed therein, the firm has a practice model which speaks to sustainability and growth over time.  For smaller firms and solo practitioners, this approach is what turns individual accomplishment into a long-term business model.

The solution is out there, and it’s available today for practitioners who wish to introduce efficient and scalable ways to identify client opportunity, capture it, and deliver on it.  Turn your firm into a value machine, and deliver the trusted advice your clients need.  A little investment in this area can deliver large returns for years to come.

Make Sense?

J

Interested in learning more about tools which can help your professional practice get more opportunity from every client?  Contact me @JoanieMann on Twitter, or connect with me on LinkedIn or Facebook.

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Data Dashboards and Financial Analysis: Comparing Apples to Aardvarks

It’s been said that the only constant is change.  Businesses are being told that having the strength and agility to meet those changes is what makes the difference between success and failure.   But in order to address change, to understand the possible outcomes in various “what-if” scenarios, a business has to understand how it is performing today, and then must capture and compare measurements over time to be able to identify trends and similarities.  Only then, when the business has the information necessary to view performance over time, is it then possible to introduce changes and forecast potential outcomes.  When the analysis includes many businesses rather than just one, even more may be revealed in terms of comparative performance levels under varying circumstances.

It doesn’t sound all that difficult, really.  Not on the surface, anyway.  There are a lot of tools and resources available now which make this type of analysis a walk in the park.  With accounting moving “online” and into connected web service, and with accounting professionals working closer than ever before with their online clientele, the data available is astounding and analytics providers are eating it up.  It’s actually possible for a small business to subscribe to a solution, upload or sync up their QuickBooks or similar financial information, and magically have a really cool dashboard to look at that makes financial statement reading obsolete.  More often than not, there’s also a feature that lets the owner compare or benchmark their performance against others in the same industry.  And that’s the problem.

Stepping back a bit, let’s now talk about XBRL (eXtensible Business Reporting Language).  In its simplest form, XBRL can be described as an application of XML (eXtensible Markup Language) intended for use in business reporting.  The idea is that all financial reporting should be “marked” in certain standard ways, so that it is easier to compare and monitor.  XBRL is considered by many, including the AICPA, to be a “language for the electronic communication of business and financial data which is set to revolutionize business reporting around the world.” Even though it sounds logical enough, it hasn’t taken off as quickly as everyone thought.

So what does XBRL have to do with data dashboards and industry performance benchmark comparisons for those small businesses we discussed earlier?  They both suffer from the same dilemma, and that’s lack of consistency in definitions and taxonomy (categorization).

Because businesses have a lot of, um, flexibility when it comes to financial reporting, it is not unusual for the application of a single term to mean one thing to one company, and a very different thing to another.  As an example, what one company calls “operating revenues” may be what another business calls “net revenues”.   Does “inventory value” mean the same thing to a business using a FIFO costing method versus LIFO?

When you try to perform an analysis of the financial data of two companies who report or label their information differently, it makes it really difficult to trust the comparison because you may very well not be comparing the right things – apples to apples.  It may be more like apples to aardvarks. I can’t tell you that the solution is out there, because at this point I don’t think it is.  I say this because the problem starts where the data is created and initially “categorized”.  There are few standards, and even fewer that are actually implemented on any sort of broad basis.  The problem exists in the trial balance software, in the accounting products, and in those Excel spreadsheets everyone carries around with them.

The best, first step any accounting professional can take with their clients is to make every attempt to address the financial reporting in a standardized manner, and capture and categorize the data appropriately from the get-go.  It’s the only way you’ll avoid spending days with Excel spreadsheets and working papers, attempting to normalize client data into a framework that is available for a useful and trusted comparative analysis.

cropped-jmbunnyfeet1Make Sense?

J

Interested in learning more about tools which can help your professional practice get more opportunity from every client?  Contact me @JoanieMann on Twitter, or connect with me on LinkedIn or Facebook.

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud
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Accountants Need Business Intelligence, too

I think that accountants recognize that their profession is in the midst of transformation, and technology will continue to play ever-more critical roles in helping professionals meeting these trans-formative challenges.  There are increased pressures on a variety of levels, not the least of which is the pressure to differentiate and find new value and opportunity to deliver to clients.  While this has always been a challenge for the professional accountant, the do-it-yourself tools and services available today have served only to increase competitive pressures, and have made it more difficult than ever for accountants to demonstrate their business value to the client.

Being a successful business today means being able to make decisions – informed decisions – quickly.  Business owners need reliable and actionable information now, providing greater ability to adapt to the complexity, risk, and volatility of the market.  In terms of differentiation, one of the challenges plaguing accountants, delivering higher levels of business intelligence to the client is a key differentiator, and one that can not only set the practice apart from the competition, but also help to establish the firm as an industry leader.

The difficulty that many firms have faced is finding the right opportunity to deliver more intelligence to the client.  Not understanding what tools and solutions may be available, and not knowing how to identify real areas where the firm can add value to client engagements, becomes the barrier.  For accounting professionals, business intelligence is not just a tool to measure performance, but should be the foundation for exploring the depth of services and advice potentially deliverable to each and every client.

Because many professional practices actually operate as more of a “collective”, with individual partners handling their own books of business, there is often no good way to understand the overall mixture of clients being served by the various practitioners in the firm. Certainly, billings and collections are measured, but there is often little “intelligence” applied to analyzing the client base as an entire system and identifying those clients where similar needs may exist or where differentiated service offerings may apply.   Applying a level of business intelligence to this problem, and providing the firm with a means to analyze the various properties of the entire client base and client performance, becomes the centerpiece to increasing the value of and opportunity within every client relationship.

The important thing for professionals to remember is that their business clients need informed consulting and knowledgeable advice.  Business owners want to know if they are performing well in their respective industries and are creating long-term value, and they need guidance and support in order to understand business performance and make the necessary changes to improve it.  Business owners trust their accountants to do quality tax and audit work, but if they aren’t able to get a higher level of consultative service from their trusted accountant, they’ll go somewhere else to find it.

J

Interested in learning more about tools which can help your professional practice get more opportunity from every client?  Contact me @JoanieMann on Twitter, or connect with me on LinkedIn or Facebook.

  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud