Thanks to making tax digital and cloud based software, businesses have access to a vast amount of financial data thanks to cloud-based bookkeeping systems. Yet, the true value lies not in the raw numbers, but in the ability to extract meaningful insights and turn them into actionable wisdom that can drive your business success. Here are six ways to power your financial data to make informed decisions.
1. Manage what you measure using Key Performance Indicators (KPIs)
What’s important to you? What really nudges the needle in your business. By Identifying and tracking the things that matter, like gross profit margin, customer acquisition cost you’ll gain insights into your business’s health and spot trends that can inform your strategic decisions.
2. Look at the trends
Use historical financial data to analyse trends and patterns. Look for seasonal fluctuations, growth trajectories, and any unexpected anomalies. This analysis can help you anticipate periods of high demand, plan for slow seasons, and adapt your strategies accordingly.
3. Make the comparisons
Compare your financial data against industry benchmarks and competitors or against yourself this time last year. This will help you identify areas where you’re excelling and areas that need improvement. Understanding how your business measures up can guide your efforts to remain competitive.
4. Identify cash flow patterns
Your financial data can provide crucial insights into your cash flow, allowing you to predict when your business might experience cash shortages or surpluses. Effective cash flow management ensures that you can cover your expenses, invest in growth opportunities, and weather financial challenges.
5. Find out things that you didn’t know before
Got a hunch about most valuable clients, popular products or services, and buying patterns? Make sure that these hunches are correct by using AI software such as PowerBI. This information can guide your marketing efforts, inform product development, and enhance customer satisfaction and improve your sales, profit and cash position.
6. Forecasting and Budgeting
Use historical financial data to create accurate forecasts and budgets. This forward-looking approach empowers you to plan for future investments, expansion, and other financial decisions with a clear understanding of their potential impact.
Turning your financial data from cloud bookkeeping into useful wisdom requires a curious, questioning mind that in turn will shape your business’s success and our team of experts can help you do this. We offer a wide range of business development services, including Management Accounts, which can help you stay on top of your real-time business data.
Remember that it’s not just about numbers, but the story they tell about your business’s journey. Use this narrative to make informed decisions and continuously improve your strategies for a brighter future.
To find out how we can get you started, get in touch here or directly with your dedicated client manager.