Data-driven accounting – isn’t that redundant?
Isn’t “data” just a fancy, newfangled word for numbers – accountants’ stock-in-trade since time immemorial?
There’s no denying that the accounting profession has a leg up on the rest of the professional world when it comes to numbers.
But for a long time the use of those numbers was limited: ensuring the books were balanced and that every transaction was recorded in the right bucket.
No more.
Data-driven accounting allows you to put your numbers to work for making timely, strategic, informed decisions for your business.
Here’s how:
Reveal insights and predict future performance
Your accounting numbers are the nerve centre for your business.
They tell you how much you’re spending, how much you’re taking in and your overall cash and financial position.
But they can also be used to reveal a treasure trove of insights. You just need to dig a bit to reveal them.
With the right tools you can go from just balancing the books to making your data work for you.
Which business areas are most profitable? On which days of the week are your expenses highest? With whom do you conduct the most business? What geographic areas are contributing the most to your bottom line?
By slicing and dicing your data, you can reveal jewels of information of which you weren’t previously aware.
Measure success
Before the rise of data-driven accounting, the connection between action and result used to be less than clear. You’d make an investment then, at some point in the future, try to get a general sense of the return.
Using your accounting data takes the guesswork out of making business decisions and measuring performance.
Was an acquisition profitable? Did expanding into a new market make money? What was the ROI on investing in a new piece of equipment?
These are the sorts of questions that data-driven accounting can answer.
Discover growth areas
We don’t need to tell you how essential growth is for your business’ continued success. The problem is that deciding which areas to invest in isn’t entirely clear.
This is where a data-driven approach to accounting is invaluable.
Putting your numbers to work for you can give you a clear idea of where to invest next by providing an objective picture of how – and where – you’ve performed well in the past.
This means you’re making decisions based on facts – not guesses.
