In order to stand apart from the competition, increase revenue and boost profits, a company needs to make intelligent decisions, often quickly, in response to evolving market demands.
Which products should you discontinue and which should you focus on? Which market segments or locations should you invest in? Do you need to adjust your pricing or your inventory levels? Where can costs be cut? These are all decisions that should be based on relevant and accurate financial data, but too often they are left to best-estimate guesswork.
Many businesses have the financial data – mountains of it – but not in a form that they can interpret and use to run their enterprise. This can be especially true for complex, highly distributed businesses with different trading names or operations across one city, Australia or worldwide. These businesses may also lack the CFO-level knowledge needed to analyse their financial results and effectively address the business implications.
Give your business a boost
Large corporates have been investing in business intelligence software and the high-level finance expertise to overcome this problem for some time. Business Intelligence software collects complex business data and condenses it into reports. The reports can hone in on a specific department or product line, or roll up to give an overall view of the company’s status. They can, for example, help a company identify its most profitable customers, its trouble spots, or return on investment for certain products.
The good news is that Business Intelligence is not just for big businesses. When implemented and used effectively, the benefits for small and medium businesses are significant. Here are some ways business intelligence can give your business a boost.
1. Measure business performance
Your reporting system can be designed to keep track of various metrics that are important to shareholders, executives, employees and customers to ensure that the company remains healthy, efficient, and profitable. Should the company fall short of any of the metrics, the problem can be diagnosed and solved before it evolves into a much bigger one.
2. Get a more accurate picture of your business
Numbers reported by different countries or locations can vary due to local currency fluctuations, inconsistencies in the exchange rates or different reporting methods. This results in flawed output and difficulty reconciling the numbers at all levels, preventing the CEO from gaining an accurate picture of the organization.
With business intelligence in place, data from various systems and applications, including e-commerced websites, can be integrated. Internal reports can be customized for respective departmental requirements and locations, with all reports aligned to represent ‘one version of the truth’. This alignment helps the CEO derive insights at any level – country, region, global – to make decisions and respond immediately to challenges or opportunities.
3. Make faster, fact-based decisions
Once your reporting is in place, management will be able to see detailed, current data on all aspects of the business they require – such as current return on investment for individual products or product lines. This information helps management make fact-based decisions, such as which products to concentrate on and which ones to discontinue.
If management can see exactly where the business makes money and where it doesn’t, situations such as selling products at a loss can be avoided. Pricing can be adjusted in a way that reflects how much it costs to make and deliver the product and the margins you want to make.
4. Save time and money
Much of the work involved in collecting and consolidating monthly profit and loss data from each business unit and comparing it against the corporate budget can be automated and presented in a user-friendly format. There should be quantifiable savings in the production of this information and in the re-working of figures.
5. Better sales and cash flow forecasts
Sales and cash flow forecasting becomes easier and more reliable when the right information is at hand to support the underlying analysis. Imagine if you could forecast cash requirements and make accurate predictions as to what the profit and loss will look like three, six, nine and 12 months ahead?
Easy access to historical sales information supports both forecast accuracy and better, faster procurement and inventory decisions. The data can be a valuable backup to negotiations with suppliers.
6. Eliminate waste and cut costs
Reports highlight areas of waste or loss that may have previously gone unnoticed. For example, since the reporting system works as a single, unified whole, it can analyse transactions between subsidiaries and departments to identify areas of overlap or inefficiency.
A Business Intelligence service can pay for itself over and over by simply identifying such areas for cost savings. Cutting excessive inventory – and the cost to maintain it – is one of the easiest changes a company can make to immediately affect its bottom line.
7. Identify sales & growth opportunities
Financial data can be combined with industry benchmarks to help a company assess its capabilities, compare its relative strengths and weaknesses against its competitors, and identify trends and market conditions. Insights can assist your marketing and growth strategy, for example by swiftly identifying the most profitable customers, as well as potentially profitable customers.
Boost your bottom line
Leveraging your financial data through business intelligence reporting can deliver insights that lead to optimal profits, sales and growth.
However, while the reporting software is the starting point, the real value comes in having a trusted adviser to help interpret the metrics, uncover underlying issues and bring insights to help you identify opportunities and put a plan into action.
That’s where your Accru advisor comes in. Accru offers business and profit improvement services customised to the needs of clients.
Accru Felsers newly introduced BUSINESS BOOST+ service is one example. It includes establishing a Business Intelligence reporting system aligned to your key goals and metrics, regular preparation and analysis of your reports, and meeting with you to discuss and devise an action plan to improve your business performance. Please contact Will Merdy CA MTax, Accru Felsers.