With the amount of available data increasing at exponential rates, today’s firms are hard-pressed to find solutions for organizing, accessing, and understanding it.
After all, the importance of real-time data in the financial decision-making process is multi-faceted, and that’s why 92% of companies are increasing their investments in the likes of real-time analysis and other modern data solutions, according to OpsClarity. Of course, numbers like that beg the question: Is your organization jumping on board to get ahead, or lagging behind?
What Is Real-Time Data?
Before we delve into the topic of how real-time data impacts financial decision making, it’s important to first understand what real-time data is. Just as it sounds, real-time data is defined as information that is immediately delivered after being collected.
The minimal or non-existent delay is best exemplified with a cloud system where, as soon as a someone scans a receipt, the copy is instantly viewable across devices by anyone who has access to that cloud folder. A more traditional visualization would be imagining a customer handing over cash for the purchase they just made and, as soon as the sales rep closes the register, the connected accounting system has already documented it and tagged it as revenue.
Immediately thereafter, the company’s accounting department would be able to see up-to-the-minute information on the transaction’s details, telling them that the customer paid in cash and that they were at X location where they bought Y and Z. This data is incredibly powerful from a business standpoint, but it’s important that we also define what isn’t real-time data.
What Isn’t Real-Time Data
Even when information is processed quickly and promptly, it’s not considered real-time data unless it’s available immediately. In other words, if an employee adds up all their sales at the end of each shift and then sends that information via upload, fax, email, or even a phone call to your head office, that is not real-time information.
Not only is this data delayed (and, therefore, not real-time), it also lacks specific information that is also crucial to informed decision making. For instance, it’s uploaded as just a daily sum. It doesn’t show how each transaction was paid for, what exactly was bought, or any other details beyond the revenue total. These transactions aren’t rich and they aren’t flowing automatically into the company’s system within seconds. That means they don’t represent real-time data.
Why Is Real-Time Data a Priority?
When it comes to business strategy, real-time data should be considered a strategic priority. Just take it from Gartner research, which states: “Data and analytics are the key accelerant of an organization’s digitization and transformation efforts.”
Not only does this data stand to have a monumental impact on how an organization performs, it also allows management and accounting teams to understand exactly how the organization is doing at any point in time. With this enhanced financial visibility, these people will then be empowered to make decisions based on real, up-to-the-minute information — and that’s what keeps companies going in this highly competitive world.
#1 Better Understand Your Performance
Real-time data gives you insight like no other. With it, you can draw factual conclusions about how your business is doing at any moment from a global and granular view. Depending on the level of detail given by your system, you could be able to consider highly-specific factors like project, vendor, customer, location, department, sales rep, and more. That gives you an increased ability to further analyze how these specific elements are performing and the role they play in your business’ overall success.
Real-time data also allows you to take a step back and get the most recent information regarding the bigger picture, be it your business’ overall revenue, expenses, cash flow, and so on. You can then compare this information to last quarter, last year, or other historical data in an instant.
#2 Detect Fraud With Ease
With fraud becoming a growing threat in the modern era, real-time data stands the chance to help protect your business from the costly expenses associated with it by helping you detect fraud and incidental errors more quickly. With transactions immediately posting to your system, being able to spot suspicious and incorrect entries is easier than ever.
At a glance, you will know instantly when account balances don’t match, if a payment has gone wrong, or if another error has occurred. Without traditional delays lengthening and impeding the remediation process, you’ll be able to take action more quickly, thus reducing the potential damage these errors can cause. Being able to promptly spot and correct errors also means more accurate data and reporting overall.
#3 Make Better Forecasts and Predictions
Up-to-date information gives you the confidence you need to make appropriate business predictions and forecasts using historical data and real-world numbers. With such technology, you’ll no longer be basing decisions on estimations or information that’s weeks (or even months) out of date. Things change fast, and having the most recent information will prove invaluable as you move forward as a company.
Furthermore, having access to the most recent data empowers you to set realistic and even aggressive goals for your organization while being able to instantly pull data and compare your performance to these goals at any point in time. That means better progress tracking and monitoring, helping you adjust goals on the fly so that your company is always striving for its best.
Start Utilizing Today’s Advanced Solutions
If your company isn’t already on board with the adoption of real-time data and advanced ERP software, it’s time that you took the next step. With more and more companies already making use of the industry’s latest technology, it’s only a matter of time before you get left behind for now adapting at the right moment.
Of course, as a company, it’s important that you get all of the facts before you make any decision about what you should or shouldn’t be investing in. Perhaps the best way to understand the importance of real-time data in financial decision making is to see the difference for yourself. You can get started with advanced ERP software today. Just request a demo and one of our experts will help your organization see what Multiview can do.