7 Key Reasons You Need Financial Analytics

Organizations across all verticals are using financial analytics to gain insights into the financial health and stability of their business. While there are many ways to define this type of analytics, Gartner sums it up nicely by stating, “Finance analytics provide insight into the financial performance of an organization.”

The data analysis is typically performed on integrated data from across finance, accounting, sales, and other relevant business areas to paint a complete picture of a company’s finances. The information can be used to inform planning, decision-making, pricing, and more to maximize profitability.

Here are seven key reasons your business uses financial analytics:

1. Get Answers to Specific Financial Questions

One advantage of analytics is getting answers to questions, even complex questions that require integrating large and disparate data sets to provide timely, accurate, trustworthy answers. Modern businesses understand the need for analytics to drive decision-making. Financial analytics offers the insights the Chief Financial Officer (CFO) and other stakeholders need to understand the organization’s financial performance. It also offers a real-time look at cash flow to understand how sales, operations, and other factors influence finance and the management of cash and cash equivalents.

2. Predict Financial Outcomes and Scenarios

The ability to accurately predict what’s going to happen in finance is one of the primary benefits of analytics. For example, financial analytics can forecast sales numbers and allow you to ask questions about the data, such as how raising or lowering a sales price will impact profitability. Predictive capabilities also let you forecast future revenue, sales performance, and other factors that impact finances. The insights allow you to make strategic changes to improve sales and performance, leading to a stronger financial outlook.

3. Uncover Trends Impacting Finance

Having early insights into trends allows you to take action to mitigate issues that could negatively impact finances or seize new opportunities to grow or add revenue streams. The trends can encourage stakeholders to slow down spending to avoid going over budgets, or change investment strategies to benefit from emerging markets, a changing economy, or shifting consumer preferences. For example, the recent trend of remote work could wipe $800 billion from the value of office buildings in major cities worldwide by 2030, according to CNN.

4. Understand End-to-End Financial Performance

Financial analytics offers visibility into both top and bottom-line performance, to see if revenue goals are being met, how expenses are impacting budgets, and other critical information. The insights can reveal which channels, products, and sales teams are the most profitable, and what changes could improve profit margins, cash value, and the overall value of the business. Likewise, the analytics will provide insights into accounts payable and accounts receivable, which can be used to automate some accounting and financial processes to improve efficiency.

5. Manage Assets With Confidence

Do you know the value of your assets? Are some gaining value while others are losing money? Financial analytics provides the answers. The insights allow you to maximize the value of assets while having visibility into risk. Analyzing integrated data about assets lets you identify trends and patterns to inform asset management decisions and potentially minimize operational costs. For example, manufacturers can predict when an asset is likely to shut down, allowing them to perform preventative maintenance to extend its lifecycle or determine if it makes sense to replace an asset with a new model that’s faster, more efficient, or delivers new benefits

6. Determine Risk Across the Enterprise

You need to determine what’s an acceptable level of financial risk for your organization. Analytics lets you better understand risk so you can make that determination as well as better monitor and manage risk. This allows you to assess, from an enterprise view, how changes in the business or other events could financially impact the company. Changes include launching a new product, adding a new supplier, or adjusting deliveries due to extreme weather conditions or volatile fuel prices.

7. Identify Your Most Profitable Customers

Analytics might provide surprising answers about who your most profitable customers are and who has the highest lifetime value. A detailed analysis looks at more than how much you bill a customer. It considers every interaction you have with the customer, product returns, and other factors that have a cost associated with them. This allows you to align resources with the most profitable customers.

Make Data Easy to Use for Analytics

Finances affect every area of the business, which is why having real-time, trustworthy insights into everything related to the financial health of your organization is essential. You also need the ability to easily build pipelines to new data sources, manage growing data volumes, and have confidence in your insights.

The Actian Data Platform makes it easy to connect and manage your data for financial analysis and other types of analytics, such as risk analysis, customer profitability analysis, or predictive analytics. The Actian platform also offers industry-leading price performance, which will help with your organization’s finances.

Additional Resources:

• Business Analytics vs. Financial Analytics: What’s the Difference?
• Big Data and Data Analytics in the Finance Domain
• How to Maximize Business Value with Real-Time Data Analytics

About Actian Corporation

Actian makes data easy. We deliver cloud, hybrid, and on-premises data solutions that simplify how people connect, manage, and analyze data. We transform business by enabling customers to make confident, data-driven decisions that accelerate their organization’s growth. Our data platform integrates seamlessly, performs reliably, and delivers at industry-leading speeds.