A decade ago, an accountant balanced the daily transactions and prepared a statement of profit and loss for the year-end. In recent times, the ERP and spreadsheets became the accountant’s best friend to create static reports and communicate historical financial performance. Now in today’s fast-paced business environment, the story has flipped on its head. Accountants manage the end-to-end accounting process as well as act as strategic partners to growth and success. They use accounting analytics to review data, collect insights and communicate outcomes to people across the organization, so everyone can understand the impact of their decisions in real-time.
The use of diagnostic analytics
By doing descriptive analytics, the accountants collect data from multiple sources and break it into easy bite-sized chunks. Then, they apply statistical techniques like arithmetic operations, mean, median, max, percentage, etc., to analyze historical data and discover what happened in the past.
For example, the accountants have been analyzing month-over-month sales growth, variance in actual vs budgeted figures, changes in year-over-year gross and net profit.
As the name ‘diagnostic analytics’ suggests, the focus is on finding ‘why’ behind what happened in the past. During this process, the accountants drill down into specific data to find the root cause of the numbers. Accountants have been applying techniques of diagnostic analytics to find the reason behind for example month-on-month sales growth or deviation from budgeted figures.
Diagnostic analytics relies on historical data. To conduct analysis and collect crucial insights, the accountants have to pull data from ERPs into spreadsheets and apply formulas.
Since it is a tedious process, the accountants can’t drill down into specific data, leaving gaps in uncovering hidden and unusual patterns.
How can accountants overcome these challenges?
The best way to overcome these challenges is to devote more time and effort in conducting the cognitive analysis.
Cognitive analytics uses advanced technology like semantics, artificial intelligence, and business intelligence to not only make historical data easier to comprehend as well as predict and forecast future outcomes.
Accountants can opt for intuitive business intelligence software with specific financial modules to carry out cognitive analytics. Phocas is cloud-based data analytics that does the hard work of compiling data from various sources (without affecting general ledger), preparing dynamic reports personalized for each user, converting complex data into compelling stories by preparing dashboards and other visual representations, and making visual dashboards for easy analysis.
The accountants can quickly drill-down into specific data, uncover hidden, unusual patterns and manipulate data to find specific insights. Through visual dashboards, accountants have a clearer and more realistic snapshot of the business, which leads to data-driven business.
By using Phocas, accountants can keep a close watch on the crucial financial and non-financial KPIs and communicate up-to-date information with the decision-makers and other people in the organization. Since back-and-forth communication gets eliminated, the accountants get more time and energy to do value analysis and leverage data.
As technology continues to disrupt the world of accounting and finance, the opportunities for accountants to dive deeper into data will continue to expand. Business intelligence software products give the command of data directly in the hands of accountants who can harness the power of big and small data.
With advanced analytical skills, the accountants will become the driving force behind key business decisions that lead to unprecedented success, growth and competitive advantage.
To find out more about accounting analytics, download this ebook: Turbo Charge your finance team with Data Analytics.