Doing business without prior research leads to tons of mistakes. When you’re a finance organization, you can’t afford mistakes. This is not a play on words because adding a single zero to a number can have irreparable consequences.
This is where being data-driven can help, but not in mathematical terms. There’s still a chance for human error in complex calculations. But being a data-driven organization leads to better business decisions and a possibility to gain more control over your profit.
1. Create a Strategy and Reevaluate
Define the strategy that you’re going to use in terms of data and how it’s going to be interpreted. When you create a strategy based on the data you collect and the values you want your finance organization to represent, you need to reevaluate it annually.
This means that even if you believe this version of the strategy is the best possible version, you need to think about what can be improved. Understand what happened to the profits and how data could’ve helped you organize better.
2. Make Data Accessible to Everyone in the Organization
Access to data on all levels in your finance organization can help you achieve the best results. This doesn’t have to mean that the cleaning staff will do accounting and that people who work in the legal department will do the finances.
It means that you can offer up chunks of data to the people best suited to look at that data. Your employees then rely on data-driven decisions, not decisions based on their gut or on the opinion of others. Plus, it shortens the meeting time as there’s data that easily backs the winning arguments.
3. Use KPIs to Develop Meaningful Data
Key point indicators provide a means to envelop the data you gather, giving it a framework your teams can reference and benefit from. One of the key financial KPIs is the AAR (Annual Recurring Revenue).
The AAR can be used as a framework for data that ultimately benefits it. This is where all organizations can benefit from AI in the financial market. The AI can gather, sort, and do many things with data based on how you define your KPIs.
Benefits of a Data-Driven Finance Organization
Clearly, there are many benefits to running your business in a data-driven way because data-driven decision-making is the best possible solution for your organization. Unless you can see into the future, here are some potential upsides of using a data-driven approach:
1. Increased Data-Driven Profitability Control
A major benefit of being a data-driven financial organization is the improved ability to control the profit. Gathering data on monthly, quarterly, and annual revenue helps fill the profit gaps if there are any.
Data-driven decisions mean that you’ll be able to predict seasonal profit gains and losses. Look into what you can do to compensate for the situations that occur every year in the same season. This is what we mean when we say increased profitability control.
2. Data-Driven Insight on Opportunities
Gathering data can provide thorough insights into business opportunities that may arise. There are certain situations where you can increase the loan offers to your clients depending on the inflation rate.
Data-driven insight can offer opportunities where the organization can make an investment. Offering various investment opportunities to your clients ensures their trust and loyalty. In finance, opportunity can mean profit.
3. Increased Data-Driven Predictability
Data-driven finance organizations use different financial tools that can predict the workflow defined by the selected tasks for their work profile. This can assure the best team composition, project definition, and budget assessment.
Another key predictability aspect is that you can maintain a flexible timeline subject to change only when new data that suggests it arises. Finally, you can always adapt the strategy and react to the insights the data provides. This will provide the best service to your clients.
4. Ease of Scalability
Being data-driven can mean that you can adapt to any scale of business based on the gathered data. The aforementioned financial tools can also provide the foundation for adapting your business on a larger scale.
Scalability should be an essential characteristic of a finance organization, because no matter the number of people requiring the service, you should be able to provide it. At the moment, the organization might have 200 clients, but it’s bound to expand.
5. Increased Data-Driven Efficiency
Finally, the major benefit of becoming a successful data-driven finance organization is increased efficiency. The benefit that envelops all the above means a clean bill of an organization’s health. Trust the data, and make data-driven decisions.
You might notice that the business is going smoother than usual. Teams are working more productively, interoperability is increased, and cooperation is smooth because everyone is looking at the same data.
Successful organizations require a data-driven approach. This doesn’t mean that your gut will make a poor decision for you. It simply means that it’s better to rely on information that can be measured. Become a successful finance organization that relies on data.
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