The Importance of Accurate Data for Finance Departments
Gone are the days when finance departments were solely responsible for bookkeeping and managing transactions. With our increasing reliance on technology and digital processes comes a growing need for accurate financial data to help businesses make faster and better-informed decisions.
In this article, we examine why financial data accuracy is so important, as well as how a failure to communicate accurate financial data can negatively impact your business’s decision-making outcomes.
The Importance of Accuracy for Collecting Data
At any given time, a business is gathering large amounts of data, particularly in relation to finances. Just some of the significant ways accurate data can assist a finance department include:
Forecasting future sales;
Predicting customer & product profitability;
Generating accurate cash flow statements;
Performing value-driven analysis to see what will change and the effect of a decision before execution;
Here’s the thing though: unless this data is recorded free of any errors, it has the potential to hinder – rather than help – a business’s ability to make well-informed and successful decisions.
The number-one cause of inaccurate data during the collection phase is human error. Files are shared with and edited by different people within the finance department, making it exceedingly difficult to trace an error or track the most updated file.
Not only are the chances of an employee accidentally recording data that is incorrect high, but the likelihood of data being outdated by the time an executive acts upon it is also a possibility, due to the sheer volume being managed. This can lead to misleading figures and ill-informed decisions – which are time-consuming and costly to rectify – not just for the finance department, but the company as a whole.
The Importance of Accuracy for Communicating Data
We discussed the importance of collecting accurate data in the previous section, but how important is it to also be able to correctly communicate the data’s findings?
One of the vital roles of a finance department is to translate data insights into decisions that add value to the business. It is one thing to gather and arrange accurate data, but unless the finance department can effectively analyse, interpret and communicate that data, then it isn’t being utilised to its full, high-growth potential.
Through accurately communicating their data’s findings, a finance department can help business executives answer the following vital questions:
What measures need to be taken to improve the business process and make it more effective?
Which market segment is most profitable to our business?
How well are our various sales channels performing?
What kind of financial risks are we exposed to?
Are we making the right financial investments?
What factors might affect our business’s finances in the future?
How ExpenseIn can Support Financial Data Accuracy
Rather than having valuable expense data across several spreadsheets that must be manually sifted through, ExpenseIn gathers, analyses, and stores this data so it’s readily available. You can even generate reports filtered by parameters such as the user, department, expense type, category and more, allowing this valuable data to be kept in a single, easily accessible place.
As a cloud-based software, it dramatically reduces the potential for technological downtime or human error in reporting, thus providing you with reliable and accurate data to make better-informed business decisions. Plus, with GDPR compliance, you can trust ExpenseIn to keep your financial data secure and private.