The evolution of technology in the business world is no surprise to anyone. After all, the tech-savvy tools and applications have made the lives of small business owners easy. Digital marketing allows entrepreneurs to promote their brands without spending a fortune. Similarly, automated software such as project management tools and expense trackers have taken business productivity to the next level. And now, the emergence of analytics is likely to streamline the finance department.
Most businesses struggle with complex transactions and data management. Likewise, many entrepreneurs find it tough to maintain records and prepare financials. Luckily, financial analytics would change the way how things happen in finance. In addition to performing repetitive tasks, it will help analyze financial data more accurately. Analytics minimize human error, optimize cash flow, and ensure the business has sufficient funds to stay afloat in the long run.
Moreover, analytics can dig into historical data and identify future patterns. In simple words, you can generate sale estimates for the coming years and reassess your product offerings accordingly. It will improve financial viability and growth prospects. However, if you are unfamiliar with this, have a look below. Here we are highlighting five ways financial analytics contribute to business growth.
1. Evaluates Shareholder’s Value
Are shareholders satisfied with the company’s financial performance? Usually, shareholders want their wealth and return to increase, but business growth seems stagnant. With the help of financial analytics, you can assess the value of shareholders. It would unfold the percentage of risk and the value that gets delivered to shareholders. If this sounds complicated, bring an analytics expert on board or learn the ropes yourself.
The data analytics industry is pretty lucrative, offering profitable returns. Currently, the Master of Science in Analytics – MSA degree salary stands at $80,000 on average. Thus, alongside improving your business worth, you will open yourself to many new employment opportunities.
2. Generates Sales Estimates
In the finance world, the accuracy of sales prediction reflects your business competency. Financial analysts have to assess how much money the company will generate in the coming five years. The estimates serve as the basis of financial decisions today, which means you have no room for mistakes. Fortunately, analytics can help in generate exact sales estimates by analyzing the past and current sales performance.
All you have to do is integrate financial analytics with accounting software. It would automatically sync all the data and provide visualization components – graphs, bar charts, etc., allowing you to apprehend trends.
3. Optimizes Cash flow
Undeniably, managing cash flow is a hassle. You have to keep track of inventory, receivables, suppliers, and never-ending business expenses. Well, you can save yourself some time by using financial analytics tools to keep track of cash flow. It would monitor all inflows and outflows, ensuring you have ample cash to incur routine expenses. Likewise, it can identify unpaid accounts and upcoming bill cycles. Hence, you can send repetitive reminders to make sure debtors pay timely.
Moreover, financial analytics have multiple tracking and reporting systems. It can keep an eye on the movement and utilization of cash into the business. In turn, managers can find areas where cash is misused or drained, allowing you to adopt effective cost-cutting measures. With optimized cash flow, entrepreneurs will have better control over finances and liquidity, promoting business growth.
4. Enhanced Security
When dealing with financial data, security is every person’s utmost concern. Financial analytics have encrypted software that restricts third-party access into the systems. Hence, even if you have information stored on the cloud servers, analytics will provide top-notch security. It will secure data in its servers with multiple layers of protection. For instance, you can use two-factor authentication for user logins. Anyone who wants to access the data will have to entire a pin and password.
Furthermore, financial analytics come with defense mechanisms and firewalls, protecting data from hackers and cyberattacks. When anyone tries to enter the local IP address, analytics deploy firewalls to restrict entry into the system. Thus, you no longer have to worry about data breaches and identity theft, keeping your business reputation intact.
5. Reassess Product Offerings
Sometimes, entrepreneurs develop unique products and services to influence peoples’ lives but forget about the viability. But you are running a business. It means if a product doesn’t offer returns, moving forward with it won’t be a wise decision. Financial analytics can help reassess product offerings. It determines which products are profitable for your business, allowing you to allocate capital adequately.
In turn, you can make informed decisions for the business regarding product and service offerings. For instance, getting an insight into consumer tastes and preferences will allow you to design a product they want. It would help you stay one step ahead in the market, giving you an edge over the competitors in the industry.
Believe it or not, the realm of technology is unstoppable. Soon, the finance industry would be cherishing the benefits of analytical tools while improving the flow of funds. Similarly, business owners would improve financial management with the help of analytics. From preparing budget forecasts to creating statements, analytics would make everything straightforward. Hence, start learning about these emerging financial tech evolutions and capitalize on them to foster business growth.