3 Ways Finance Can Leverage Data to Deliver Maximum ROI
The world of business is witnessing a series of developments that have an impact on executive decision-making. CFOs are at the center of this disruption, as their role in the past five to 10 years has transformed dramatically.Currently, finance leaders not only need to arrive at recommendations at critical junctures for the organization but also need to substantiate how they arrived at those recommendations.
Today’s business environment is more fluctuating than ever. The unpredictability introduced has thrown a huge curveball at CFOs who were already preoccupied with potential issues like political instabilities, trade wars, and other micro- or macroeconomic trends. As a matter of fact, PwC CFO Pulse Survey, almost 71% of CFOs are concerned about liquidity and cash management, and 86% are implementing cost controls in this dilemma.
In its initial days, companies moved quickly to reduce costs and right-size resources to weather these fluctuations. Business establishments also recognized the importance of automation and intelligence to be able to make faster decisions on the basis of data insights. Amidst all this, companies understood the liabilities of not having accurate data and well-defined standards that are important to make confident business decisions.
This impact of the rising unpredictability in business has affected many industries, including finance. It has introduced a number of challenges, some of them that we come across are:
- Business-critical decisions owing to manual and repetitive work involved in aggregating data are getting delayed.
- Closing the book for the month-end, quarter-end, and year-end financial reporting, both for internal stakeholders and external compliance requirements is time-consuming.
- Reporting is becoming inaccurate due to multiple ERPs and heterogeneous IT ecosystems.
- Inconsistent, duplicated chart of account hierarchies which make it difficult to perform various transformation initiatives.
- Handling financial data is difficult and the ability to adjust forecasts and plans due to discrepancies in mapping issues and human errors.
- Events like mergers and acquisitions impact business in terms of its capital structure, stock price, and future growth.
To address these challenges, the CFO and finance teams need to gain control and revamp financial plans as well as processes. They must focus on three aspects to handle disruption and accelerate business without difficulty.
1. Operational Efficiency
Financial leaders need to establish business continuity and operational agility. They also need to handle large volumes of data faster to enable faster decision-making. For this, they need modern data integration platforms that can unify data into a single database where it can be stored and analyzed for future purposes. And all this can be done in minutes as these platforms are embedded with automated functionalities such as pre-built application connectors, shared templates, monitoring dashboard and more. When they are able to do, benefits such as reduced time required for data analysis, improved cash management decisions, decreased invoice disputes, and more. As a result, companies can gain greater transparency in the context of cost and growth and enhance their ability to allocate resources.
2. Financial benefits
Financial gains come in various forms. When companies reduce the cost of finance, they can cut down overhead costs. The advantages also come in the form of increased cash flow, fewer non-compliance penalties, lower opportunity costs, and more.
3. Risk Reduction
CFOs must gain visibility into the impact on financial statements. They can leverage this to find out the best ways to alleviate days sales outstanding and days sales of inventory, fewer write-offs, increased forecast accuracy, and reduced revenue cannibalization.
When financial units address these challenges and embrace new ways to overcome them, they can deliver maximum return on investment (ROI). Consult our experts to know how these challenges can be proactively dealt with a data integration platform.