Effective data interpretation is the key to building an effective strategy for a company and reducing risk.
However, the traditional reliance on stale, backwards-looking data is now becoming obsolete and the availability of forward-looking, real-time data is proving to be a real boon for busy CFOs. We believe that CFOs who can leverage this real-time information and build their forecasts around it are at a distinct advantage and add exceptional value to their companies.
In this article, we’re looking at how real-time data can help build that forecast and as a result, have a measurable effect on strategy.
Finance moves from recorders to forecasters
Modern accounting and finance departments can access data ever more quickly and with the availability of cloud accounting and reporting can distribute insight to executives almost immediately wherever they are in the world.
The advent of big data means that every aspect of a company’s operation is tracked and available for analysis should an executive care to do so.
We have seen over the last few years how accountants have begun to transform the profession, moving from simple recorders of results to forecasters for the business. This switch means that forecasts change from the traditional, ‘cast-in-stone’ budget produced once a year to dynamic, strategic forecasts that can be updated almost in real-time.
In fact, Rydoo’s Research Report on the State of Expense Management 2022 revealed that not only is the finance team changing as core programs are taken online, but roles are changing too as employees deal more with strategic business issues. To put it in numbers, 77% of respondents said they had welcomed people with new skill sets to fulfil changing roles.
For risk mitigation, this agility has never been more needed as we come out of the COVID crisis.
Your starting point: Deciding what makes the strategic difference
Possibly one of the biggest mistakes that people make when looking at forecasting is not defining which data will add real value to the output.
It’s important when looking at data interpretation to understand the bigger ticket items but also to be able to spot key indicators that in themselves may be small but that point towards a larger issue.
For example, during the recent lockdown, we saw a massive spike in people claiming expenses for home phone bills and subscriptions. On their own, they make little difference to the company but when we looked at the bigger picture, we could see that the way businesses were interacting with their customers had taken a dramatic shift.
Now imagine the CFO who sees this trend two days after it begins and immediately starts working with their Marketing and IT departments to put in place cost-effective methods of speaking with customers.
The strategic shift from face-to-face meetings with customers to safe and secure remote conferencing is huge but the availability of real-time data gives the company the agility it needs to build in competitive advantage.
Choosing systems that give you the data you need
If you are looking to develop this agility for your company then the starting point has to be building in the availability of real-time data collection.
Gone are the days of waiting two or even three weeks for sub-systems to close at month-end and for data to be combined into a single picture using a cottage industry of Excel workbooks.
Modern cloud-based systems like Rydoo are produced from the starting point of connectivity and reporting and this means that information can be combined and insight developed almost immediately.
By automating the data collection process, the strategic CFO can spend more time thinking about analysis and less time on the forecasting process.
Importantly the automation of data collection means that its accuracy is likely to be improved, after all, fewer manual processes mean a lower likelihood of ‘fat finger syndrome.
Reporting and collaboration – the way to more accurate forecasting
It’s no use having all of this wonderful data and then keeping it to yourself.
The important thing about a forecast, especially from a tactical and strategic point of view is to get it distributed. An executive is much more likely to be able to make a meaningful change if they are working on data that is a day old compared to a report produced using information from a month or more ago.
This means that you need to build on your data collection and data interpretation process by developing a reporting method that is as close to real-time as possible and this agility has to be brought into the forecasting and risk management functions of the company.
It makes sense then to look for systems that work like Rydoo, with managers and executives able to watch data change in as close to real-time as possible and to make amendments to operations so as to reduce risk and improve results.
Alongside the rapid and accurate reporting of information, there needs to be a built-in feedback loop.
By obtaining the thoughts of managers on the ground, finance can amend forecasts to take into account the knowledge and experience of the business.
Using systems that encourage collaboration increases the accuracy of data interpretation and as a useful by-product also adds credibility to forecasts and improves buy-in from managers who have had a chance to shape the final versions.
Real-time data – giving you a competitive advantage
In summary, then, companies that are more agile can respond to risk and events quicker and as such have a natural competitive advantage. A major part of building this agility is to have access to real-time data and to build its use into the forecasting process.
Taking the lead in this process is the modern finance leader who recognises that they need the right systems in place to provide data and that this will ultimately leave them more time to add their own insight. Utilising the experience and knowledge of operational managers in a feedback loop also adds accuracy to the data interpretation process and helps with buy-in.
And finally, being able to distribute information quickly to leaders means that there is far more likelihood of making a meaningful change to operations and this capitalising on that competitive advantage.
Just Rydoo it
With Rydoo and our module Rydoo Insights, you can take the first step to get the real-time data you need. Our intuitive platform will allow you to exploit the best of modern technology when it comes to expense management. Boost your productivity, reduce your costs and raise your efficiency starting today with your free trial!