5 Key Drivers for CFO’s in Modern Accounting Analytics

By David Zimny, Consultant

May 20, 2024

Blog

Reading Time: 6 minutes

One of the best things about accounting analytics today is the sheer number of options available for storing, transferring, cleaning and visualizing your data.

As someone from an accounting background, I’m increasingly struck by how much easier this could make every single position I’ve held. There is only one disappointing part – I see so many accounting teams not using any.

Managing and leveraging big data will be the future of Finance and Accounting operations, but they appear slow to adopt an analytics solution compared with Marketing or Sales. There are multiple reasons for this, but I believe there is one primary cause. The way analytics solutions have been presented to Finance and Accounting leaders leaves them feeling that their work and processes are not fully understood.

I’m a Data Analyst, but I’m also a Certified Management Accountant (CMA).  Here is what accounting teams actually need, and how we should change our accounting analytics approach accordingly:

1. Prioritize tracking and interaction before Data Science and AI

As accounting professionals, we must completely understand and have tight control over the flow of our data.  Allowing machine learning and LLMs into our process of analysis could represent a relinquishing of that control to an automated process that we cannot easily audit.  If we cannot explain our process in very simple terms for management, investors and auditors, the process is not acceptable.

Instead, provide straightforward visuals of our most important metrics and KPIs. We spend many hours monitoring, investigating and explaining variances. From the 10,000 foot view, allow us to drill down or link directly to the line item detail represented by each of the figures, and quickly sort and filter from there to find the main drivers of that top-level account or calculation.

During audits, we get dozens of requests from the auditors to retrieve exact details on invoices, purchases, payments, payroll, assets, and almost every other piece of the financial operation that you can think of. Building simple tools that let us filter to a list of five exact invoices or purchase orders by ID number and date speeds up our handling of these items significantly.

accounting analytics graphic
2. Automate the recurring manual tasks first

Accounting professionals don’t just move numbers around. They oversee the process by which those records are collected, handled, and presented based on a strict set of rules. Most will be familiar with GAAP or FASB standards.

The issue with building automation based on these standards is that the rules are based on the story of the transaction. For example, imagine all the expenses that may go into selling a property.  Which are attributable to a specific sale so that we can use them to offset the gain? You could scope the time and cash investment for an automated solution involving custom ID codes for specific events like property sales, tags for the relevant expenses, a reporting method, retraining of staff, and a budget for maintenance. Accounting analytics can do that.

But I could also have a Staff Accountant take five minutes and pick them out of the expense line items because he knows the story that the data doesn’t. There are a myriad of detailed issues like these that are not well-suited to automation.

Instead, automate our routine analysis, reporting, and internal audits so the Staff Accountant has time to think. It is shockingly common practice for accounting staff to download several reports from an ERP system, copy the contents into a MS Excel template, adjust the template to fit the new data in several ways, review the report, identify anything unexpected, investigate and explain, prepare a journal entry, then share that report internally by attaching it to an e-mail as a PDF. The entire process takes days if there are several reports to complete, and there always are. This causes major lag in our reporting after we close the books each month. We are always under pressure to shorten this reporting window.

3. Optimize visuals to fit a financial view

Many times, I have seen demo examples of Financial Dashboards and apps and said aloud “No accountant was part of developing this”. The dashboard will use fifteen different colors and we find cash balances, sales, accounts payable, expense management, and stock data in a single pile of visuals. None of them have drilldowns or links to the journal entries that support the graphs. Analytics platforms offer hundreds of different visual charts, but style doesn’t count for much in Finance or Accounting. Flashy dashboards are impressive but miss the clarity and consistency we prefer.

Visuals displaying a single value, tables, gauges, line charts and bar charts are often deep enough for our use case.  Management will not be pleased if I report on income with a Sunburst chart.

If possible, provide an easy way to replicate the format of an income statement or balance sheet, correctly indented and subtotaled. Notice that a real-world example of an Actual vs Budget sheet done in Excel could have eight columns in the final visual, not just two, and provide the flexibility to keep many columns readable in your platform. Do not put cash forecasts, detailed expense history, budgeted profit, fixed assets and head count all in one dashboard as a one-stop-shop. Separate these logically and give me easy access to the detail starting from the summary figures.

4. Provide clear governance controls that we can demonstrate for audit

Control of the data does not only include how it is processed, but also who has access to it. It is still a common hazard that reports are shared via e-mail and can reach the wrong audience due to a typo or simply adding the wrong Brandon in the “To:” line. If we print anything containing sensitive information, we have to make sure no one from another department is standing near the printer before clicking Print. Control over access is a constant issue.

We need clear controls that allow only qualified people to view certain information. We should have control over who has permission to share the content as well, and all access should be instantly revokable. Providing these settings in an easily readable format gives us a quick win during audit, when we can share the details and move to the next request. Provide a log of who accessed what information at what time so we can review history and demonstrate this during audit as well.

Let users in management view the content any time, but not be able to break anything. As a bonus, allow only our Finance and Accounting staff to view the content for unclosed months until we check a box that confirms others are allowed to see it. Now instead of e-mailing seven reports separately as e-mail attachments, we can send one e-mail stating “June is closed and ready for viewing”. Accounting analytics platforms make this very easy.

5. Find ways to increase the speed of information

When a KPI is trending in the wrong direction, we want to know before it’s caught in the month-end close or other reporting process.  I have seen small, mass-sold products with standard price below the standard cost. I have seen costs on a six-figure project go thirty percent above projected revenue and never get flagged until the project was entirely complete. Machines in workshops broke down but accountants who could quantify the financial damage in lost production didn’t learn of it for three weeks until we saw efficiency dip during monthly reporting. Nothing alerted us until month end close. Things like this happen and we need to detect them sooner.

For every KPI and metric that we visualize, provide a method of alerting the relevant accounting staff immediately when they fall outside of variance limits rather than after the month ends, and allow us to edit those limits as needed. Let the alert come straight to our e-mail and phone via text message so the Controller can forward it to a Staff Accountant or Analyst and ask them to investigate right away, not at the end of the month or quarter when the damage is done.

Embracing accounting analytics is a crucial move for financial success

As accountants, our jobs often revolve around explaining the story behind the numbers. GAAP and FASB rules apply based on these stories which aren’t effectively captured in rows in columns. Let us handle those things.

We can do this much more effectively if we let an accounting analytics tool handle the automated collection of data, visualizing it, protecting it and sharing it safely. While data science and AI are making headlines, they are different tools than analytics and don’t replace the straightforward utility of an analytics platform.

Data services that understand and speak toward the financial environment and offer simple implementation of these tools will be the ones that succeed in winning the opinion of those leaders. More importantly, the Finance and Accounting departments that successfully deploy a data analytics solution will be the ones who free up resources to accomplish greater things for their companies.

Accounting analytics done-for-you at a fraction of the cost

In conclusion, as CFOs look to the future of their organizations, the adoption of robust accounting analytics is essential. By choosing an affordable, turnkey solution like Graphable’s Analytics Team as a Service, you can not only enhance your accounting analytics but also streamline data analytics across your entire organization. For a fraction of the cost of 1-2 full-time employees, you gain access to a wide and deep skillset that can transform your financial operations and drive strategic decision-making. Don’t let your team fall behind—embrace the power of analytics today and set your organization on a path to success.


Graphable helps you make sense of your data by delivering expert analytics, data engineering, custom dev and applied data science services.
 
We are known for operating ethically, communicating well, and delivering on-time. With hundreds of successful projects across most industries, we have deep expertise in Financial Services, Life Sciences, Security/Intelligence, Transportation/Logistics, HighTech, and many others.
 
Thriving in the most challenging data integration and data science contexts, Graphable drives your analytics, data engineering, custom dev and applied data science success. Contact us to learn more about how we can help, or book a demo today.

We are known for operating ethically, communicating well, and delivering on-time. With hundreds of successful projects across most industries, we thrive in the most challenging data integration and data science contexts, driving analytics success.
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