A Publication of WTVP

The power of data and data analytics has the potential to revolutionize how organizations interact with accounting systems to make decisions, and this revolution has already begun. The accounting and finance department of the future is going to include professionals capable of providing more forward-looking analysis. To make this happen, accountants should start thinking like data managers.

Accountants as Data Managers
Our smartphones can tell us when our flight is delayed before we even ask. Our map apps can find alternative routes in real time when there is a traffic jam. We can receive restaurant recommendations when visiting a new city based on our history of dining out.

Smartphones gather data, report to you, and offer rudimentary analysis. Processing data is similar in accounting departments:

  1. Data is entered into the accounting system;
  2. The information is used for board reports, grantor reports and regulatory reports; and
  3. The data and reports are analyzed to understand the information and make better decisions.

Many accounting departments spend all of their time on the first two steps, but not nearly enough time providing insight into what the data means to stakeholders. One key to transforming data into decision-making is to automate all three phases of the accounting and finance departments.

Reduce Manual Data Input
How many manual journal entries does your organization post on a monthly basis? Most accounting systems have several modules that are designed to make accounting jobs easier. Think of your accounting system’s cash and bank reconciliation module. Often, this module helps record bank fees and interest without ever having to post a journal entry. The data is entered into a field while doing the reconciliation, and the system automatically posts the journal entries.

If your department is still managing manual journal entries, review your data entry process to identify opportunities to better utilize the accounting system—it may require some training and learning. Here are some other ways to reduce total input time:

Good Input = More Efficient Reporting
Reporting is only as good as the data entered. If your organization has industry-specific accounting software, the basic reports are generally very robust—but they only work if the data is properly entered. If your reports are not working, your first step is to confirm that the data is being entered properly. The next step is to figure out if the software needs updating or if the users need training.

Here are some ways to reduce reporting time:

Automating Data Analysis
Data analysis is often the area where finance professionals do not fully use their tools and training to truly have an impact on a business. This is because they have spent all of their time on input and reporting, and because in-depth analysis takes time. However, even basic reports can highlight important issues.

For instance, imagine if your accounting system provided a report every morning that listed vendors who exceeded a procurement threshold. What if the accounts payable manager in your department received a daily report of all invoices entered that were more than three times larger than the average invoice for that tenant? Identifying invoice anomalies is a simple step in identifying high-risk transactions that may need special attention. This type of analysis doesn’t need to wait on your staff; it can be generated automatically on a daily basis.

Here are more ideas for automating analysis:

Where Do You Start?
Evaluate your accounting systems to help improve the efficiency of your data processing. Sophisticated business analysis may take additional effort and training, but fully engaging the systems you already have is an excellent step toward a more robust use of data. iBi

Jeff Bonick, Managing Principal, CliftonLarsonAllen, can be reached at [email protected] or (309) 495-8731.