Bookkeeping services are essential because they provide unified fiscal oversight you can't get from any other source. Of course, even the most comprehensive accounting practices beg the age-old question, "Who watches the watchers?" Luckily, the business intelligence techniques you employ in other areas may provide an answer.
What Is Business Intelligence?
For the uninitiated, business intelligence, or BI, simply involves in-depth, constant analysis of any factors you define as standards for organizational success. At a bare minimum, for instance, your digital marketing team may produce reports that detail the individual ROI of each social media campaign they pursue. Most effective BI assessments break things down even further. By choosing key performance indicators, or KPIs, you can derive clear and comprehensive insights from general operating data.
Going back to the marketing example, your team of social media experts may individually track KPIs like how many times people comment on posts or follow links to your homepage. Because these behaviors result in different rates of conversions and purchases, you'll get a more accurate picture of what's worth your effort. By getting into the nitty gritty, business intelligence sheds light on what really makes your organization tick. This capability comes in handy when you're trying to implement effective controller services.
How Does Business Intelligence Relate to Accounting Technology and Methodology?
Tracking business-process factors can reveal trends that impact your bottom line. For example, an industrial manufacturer that keeps detailed logs of how long their production lines are up and running each month may gain insights into operating expenses like utility payments. If they take it further and plot these figures against the frequency and cost of maintenance actions, they might be able to control expenditures by rethinking their factory and service-call schedules.
BI can also provide business leaders with examples that translate to more effective accounting practices. BI software tools aggregate and organize large volumes of data, so they rely heavily on reporting, dashboards and layout components to make sense of what's going on. Teams that use these tools are commonly tasked with customizing and modifying them to increase understanding. As your company grows, having firm knowledge of how to communicate complex data clearly may make it easier to manage complicated bookkeeping tasks.
Can I Use BI Tactics in My Bookkeeping?
Key performance indicators aren't just for production line managers, retail sales staff and internet marketing teams. Accounting departments commonly use them to measure performance, keep sight of trends and identify valid solutions to ongoing problems.
Take your accounts payable division. You're obviously concerned with factors like invoice amounts, but this isn't the only KPI worth considering. Gathering data about how long it takes an invoice to be paid from the time of its receipt and the number of errors in invoices could help your accounting services identify critical snags in existing processes.
Accounts receivable departments can use KPI tracking to forecast cashflows more precisely by grouping open accounts by their age. Tracking disputes with credit account holders, collection-agency resolutions and litigation can give you an accurate idea of how much you're actually spending on administrative costs. Similarly, if you're offering client discounts to businesses that pay on time, it makes sense to plot this KPI against the time your invoices actually wait to be paid.
Finally, remember that accounting services can use BI to quantify their own performance. KPIs like how long it takes to correct errors and how well different cost-controlling measures work are vital indicators of bookkeeping efficacy. Make sure your small business accounting services provider is transparent about their progress-tracking and oversight methodologies.