At a recent webinar, the presenter led by suggesting that in these tough economic times there is more of a need for live financial data. (They may have been selling a product).
I think it’s much more about the decisions that you need to take from the financial data.
There are definitely some cases where live financial data is helpful. I’ve worked in hospitality and retail and having up-to-the-second reports about what you’ve sold is obviously really cool and a little addictive.
But more to the point, it might actually influence a decision the business makes on the day. You might use it to decide what to restock, or to tell a staff member to stay at home.
What would your business use live financial data for?
What if you’re running a grant-funded charity? A typical process might look something like this.
- You carry out your charitable activities, which are probably a blend of staff costs and invoiced costs.
- Not all of your invoiced costs are actually invoiced on time, so you might also accrue for some costs incurred.
- You do a grant claim based on what you’ve incurred in the last period.
What does live financial information look like in this case? Until you’ve actually completed certain processes (payroll journal, maybe some accruals, raised a revenue accrual or invoice for the grant claim) then your live data is not particularly accurate and therefore not helpful.
If you wanted to speed this up, you could employ more finance staff (or more automation), but how does that sit within the priorities the charity or business has?
More pertinently, will the board actually take a decision based on this speedier live (but still historical) data? Or is it much more likely that their decisions will be based on forecasts, or on in depth analysis of a service?
Hang on a minute, aren’t you supposed to be really enthusiastic about technology?
Don’t get me wrong, I’m very much of the opinion that we should be using the latest tech to speed up transacting. There is no excuse not to have an automatic bank feed and smart bank reconciliations. We should absolutely be thinking about ways to reduce transacting time. And up-to-date actuals information can be a key cornerstone of good forecasting.
It’s just that live data is sometimes held out to be some kind of holy grail when it probably isn’t for most businesses or charities. Don’t beat yourself up if you’re not getting it. It’s much better that the organisation is using financial information effectively. Certainly you should be very wary about spending money on a new system if you don’t know how you will use the data.
Photo by Myriam Jessier on Unsplash
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