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Financial data: Business admin or insight gold?
Why keeping your financial data up to date could be the key to your business success
Today’s digital world is leveraging external data sources more and more to drive better customer experience, gather insights and provide strategic direction. Yet we often overlook one of the most powerful pieces of data in our business arsenal: our finances.
While bookkeeping and accounting appears more as a business administration activity, your financial data could be insight gold if leveraged correctly. But how do you turn all those numbers, expense line items, and monthly reconciliations into meaningful data for your business?
To get the numbers scoop, we sat down with Partner Vicken Medzoian from our bookkeeping services division to talk through how financial data can help you, your accountant or business advisor unlock business growth.
How financial data can help your business
We all know we need to keep financial records for taxation and business purposes, but there’s a way to make those numbers work for you. The trick? Starting with quality data.
“Like with anything, it’s about quality in to get quality out. For your financials, it’s about adding in quality data from the start,” said Partner Vicken Medzoian.
“If you’re not putting everything in – or in the same way – you won’t have all the data you need to get true insights. If there’s gaps in your data, there will be gaps in your output or it could portray a false picture of what your business is really doing.”
By having up-to-date financial records, you can:
- Get a better picture of your cash flow
- Generate more accurate forecasting
- Uncover growth and revenue opportunities
- Discover seasonal or business trends
- Find potential cost savings and profitability gaps
It can also provide key insights for budget setting as well as help define your strategy with your business advisor.
The quality of your financial data matters
The key to quality data is consistency. Whether this be refining processes or simply making sure expenses are processed the same way, being consistent with how, when and where you enter your data is key.
“We have some clients who may only need quarterly support. While this may align while with their company size and needs, there still needs to be some structure with how financial data is recorded,” said Vicken.
“For example, there may be an expense from two months ago that you suddenly have no idea what it was for as it wasn’t documented at the time. Without a process in place, you may also enter data differently each time or process it a different way. This could result in a bill being created before it appears in your bank feed but creating it again when you reconcile your account. In turn, duplicating your expenses.”
By being consistent with your process, your data inputs, and keeping your financial data up to date, you can improve the quality of your data. This then, in turn, improves the insights you, your accountant or business advisor can gain.
It’s also important to understand what insights and reports you need. This will help define what data you need to input as well as other data requirements to ensure you can access the data you need.
“Having data up to date and correct means you and your accountant or business advisor can get real insights. In turn, helping you make informed decisions based on real business performance. If you don’t have all the financial data pieces, it’s like building a puzzle without all the pieces.”
Leveraging accounting technology for business insights
While technology has increased what we can do with financial data, it’s important to know the capabilities (and limitations) of your software.
“The technology doesn’t do the work – it enables us to be more efficient, do reporting faster, and gather insights more easily. But are you using it to its full potential?,” said Vicken.
This is where having someone who knows your software is essential.
“Having the right accounting processes, technology and people in place, you can enable an effective decision making process. It will also help you get the most out of your technology. Don’t have the right expertise in house? That’s where we can help.”
“Often one of the first things people say when they come to us for bookkeeping support: I didn’t know the system could do that! Technology these days can do so much, and having someone in your team or a partner like us can maximise your output.”
Getting the right accounting tools for your business
Making the switch to new accounting software? Vicken recommends doing your research and mapping out your process and requirements before you start discussions. Your accountant or business advisor can also be a great asset as they often have done the research and can recommend a solution that suits your needs (and budget).
“While there is some great accounting software out there, there will always be limitations. A salesperson might tell you it can do everything, but can it do everything you need it to? Does it sync with the systems you need, or would you need to change your processes to make it work? It’s important to ask these questions up front so you aren’t paying for customisation later or end up with a system that doesn’t work for you.”
By asking these questions during your evaluation process and understanding what insights you’d like to gain, you can ensure you have the right technology in place for your needs.
Aligning the technology with your processes will also make day to day input easier, resulting in easier data entry and management for you and your team. In turn, ensuring your data is accurate and up-to-date for you to leverage for business insights and decision making.
About Vicken Medzoian
Managing Partner for our bookkeeping division, MP Bookkeeping, Vicken has been part of the Mead Partners family for over 12 years. A certified practising accountant, Vicken helps our small and medium clients access expert bookkeeping and accounts payable and receivable services. When he’s not in the numbers, Vicken is an avid sports lover and enjoys spending time with his family (preferably with a footy or his 4WD!).
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