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How to train your finance team in financial data analysis

10/10/2022 minute read Amanda Grant

With the UK facing a cost-of-living crisis, these challenging times demonstrate the value of having the right financial analytics at hand and the best practices in financial data analysis.

In the past, finance functions had to balance business expectations with efficiency concerns based on multiple versions of the truth manually condensed into an Excel spreadsheet.

Data today offers finance functions the chance to better understand business performance and improve outcomes through better access to real-time data in the Cloud.

It is crucial for CFOs to understand which financial analytics to use for tasks such as Financial Planning & Analysis, and which manual processes to automate to make better business decisions.

The right Cloud accounting software plays a crucial role in leveraging real-time data and financial data analysis, but it's only part of the equation.

The top priority for CFOs will be to drive digital transformation initiatives in the finance function and invest time and money in training the finance team so that they can effectively analyse data and inform business decision-making in real-time based on accurate findings.

Why CFOs need actionable financial data analysis

Ensuring your team is well-versed in clean and actionable data can make the role of a CFO much easier.

As a result of AI, automation, and the Cloud, what began as reactive, descriptive analytics for financial business performance, reporting, scenario planning, and compliance with regulations, such as UK GAAP, has evolved.

Today, having clean, actionable data is essential to form stronger findings through financial data analysis for risk, credit, and financial business modelling.

CFOs need a digital finance function that can support digital strategies. Today, many organisations already use advanced data analysis to find relevant insights that can improve their tactical decision-making.

They do this by mining troves of business data based on cash flow, stakeholder relations, competitors and so forth.

In the same vein, understanding and leveraging advanced financial data analysis can help the CFO manage standard financial transactions and core processes more efficiently and help shape future decision-making.

Once CFOs understand how financial data analysis in the Cloud can help improve processes, they can work with the CEO, board, and other senior leaders to identify new ways to apply these analytics to uncover additional sources of business value.

CFOs must therefore successfully adapt and instil new mindsets and working best practices within the finance function, so they are ready to take advantage of the growing data opportunities.

Best practice for CFOs training their teams in data handling

Ensure your data is clean before using automation tools

In order to gain valuable insights from automation, the finance function must first have access to clean and usable data.

A finance function that uses high quality data can improve operating efficiencies and differentiate itself from its competitors.

As soon as the data is cleaned, structured, and actionable, automating financial data analysis processes in the Cloud becomes less overwhelming. This includes a wide range of activities from managing ongoing risk and opportunity, to optimising the collection of cash.

Implement real-time data analysis processes

In today's world of constantly shifting consumer, economic, and political demands, traditional month-end analysis is outdated.

Businesses require real-time, data-driven decisions they can trust, as incidents occur.

A data analytics platform that allows finance teams to combine multiple, complex sources of data can help them analyse financial performance, develop forecasts, and run financial simulations.

Bringing together data from multiple sources with continuous integration across the business guarantees complete, accurate, and up-to-date datasets. Rather than reporting on events after they happen, the finance team can alert lines of business when action needs to be taken.

Provide real-time insights for accurate decision-making

It is necessary to have accurate, relevant financial reporting that reflects the current business situation. In order to meet this challenge, AI-driven analytics must deliver a much more agile and proactive relationship with data.

Business decisions must be based on continuous real-time insights provided by a powerful analytics platform in the Cloud which uses complete data for more accurate financial analytics insights, rather than static quarterly or annual forecasts manually created in Excel.

It is this context-rich data on where the business is today that leads to real change, not last year's financial report.

Actively using data when conducting financial analysis means being active in today's fast-paced digital economy. This puts the finance function at the forefront of success now and in the future.

Identify actionable data and analytics for outstanding payments

In addition to knowing how much the business is owed by various parties, finance professionals should also understand how old that debt is.

However, what may not be clear is the riskiness of that debt, which could pose a significant problem when collecting outstanding payments in the future.

By getting into the habit of identifying what actionable data and analytics should be used in these scenarios, finance professionals will gain a stronger overview.

This allows them to better understand which debts are overdue, payments that are outstanding, and whether companies are late on payment due to underperformance in the market (meaning further payment delays).

Use alert notifications to maintain clean data

By setting up alerts that spot outliers and anomalies in data, finance professionals can be alerted in real-time if action is needed.

Also, CFOs can create self-service alerts directly, which can be centrally managed and configured for more widespread distribution across the business.

In addition, finance functions can set up thresholds and alerts to monitor business spend in a real-time manner to prevent budget derailing and force action to reduce bill payment delays.

Build a robust digital finance function

Take a step back to evaluate current processes.

Taking an inventory of core use cases and determining where they will be hosted on the Cloud is the first step in the digital transformation process for CFOs and finance teams.

When considering automating finance processes for improved financial data analysis, CFOs should ask themselves what potential value can be gained as well as its feasibility.

In light of this, CFOs should be communicative with teams and engage in discussions across the business about the pain points identified in existing financial processes, such as slow reporting and incomplete data.

This will influence the assessment of technology capabilities required for defining system requirements and investments by the finance function.

The CFO will also need to address critical business and talent-related issues if they are going to build a digital finance function effectively.

For example, it's crucial to define clearly the desired state of a digital finance function and how it relates to the business’s overall digital strategy and business strategy.

Hire, retain and develop digital skills in finance

To support a technology-driven, always-on, real-time business, digital skills are essential.

In contrast, finance functions accustomed to outdated software systems and Excel spreadsheets will be less likely to have the competencies needed for a digital finance function.

It is vital that CFOs fill the growing digital skills gap in finance to improve the functions ability to utilise digital technology to its full potential.

When it comes to hiring new talent, CFOs should consider changing their approach to source sought-after digital skills. It is possible to use an "always-on" skills-sensing approach, which would anticipate skill shifts as they happen, rather than trying to predict them in the future, and adjust accordingly.

Accelerate successful Cloud adoption with the right vendor

Although finance has successfully shifted key processes to the Cloud, it is necessary to scale processes to support business imperatives.

As Cloud service providers are accustomed to handling large amounts of data, data security is better ensured than on-premises or private cloud solutions.

It is the CFO's responsibility to identify the right vendors, at the right time, at the right price - and deploy solutions in a way that increases the speed, trust, and the predictive nature of insights.

Invest in the right Cloud accounting software

Despite advances in technology, many businesses still use outdated or legacy finance and accounting software to conduct their financial operations.

Cloud-based tools for financial data analytics can help businesses obtain more accurate information, gain a deeper understanding of their financial position strengths and weaknesses, and make more informed business decisions.

Data that is immediately accessible meets the new demands for financial information from other parts of the business.

When preparing reports more regularly and from multiple locations, Cloud tech is proving essential for a company to have a single source of truth.

As a result, all stakeholders interact with the same database, and everyone is making consistent and accurate decisions which align.

Cloud accounting software for accurate financial data analysis allows you to:

  • Track performance against KPIs in real time
  • Cash flow forecasts for best and worst-case scenarios so you can plan accordingly
  • View robust, versatile, customisable dashboards and reports
  • Have access to relevant information needed to make timely management decisions
  • Use configurable reports that can be emailed with automation options

The bottom line is that Cloud accounting technology has made this all possible by changing the landscape of financial stewardship.

After adopting the Cloud, finance teams now have the ability to engage more thoroughly with the financial data available before reporting findings to the C-Suite.

The power of CFOs leading by example

As finance teams look back at data, the Cloud allows them to use that data as a starting point for making real-time decisions.

Over the next decade, this enhanced relationship with data will only continue to grow and evolve. It is already enabling new working practices in many businesses and supporting greater collaboration between departments for richer insights.

To capitalise on the growing data opportunity, CFOs must quickly adapt new practices and instil a new way of thinking and working into their teams.

Cloud-based financial data analysis positions CFOs as not only forward-looking financial leaders, but also valuable business partners to other company leaders.

The ones who don’t will have to rethink how analytics programs can impact their work, and then lead by example, but CFOs cannot lead digital transformations alone. They should act as global conveners and collaborators, encouraging everyone to take part, including those in IT, sales, and marketing.

Our powerful Cloud accounting software, Advanced Financials, is here to empower your finance team using financial data analysis to achieve forecasting, automated planning, budgeting, and robust reporting in real-time. Get in touch with one of our experts today.