Businesses now have more data than ever before, but many are unable to make the most out of it. They require analytical assistance at every stage of the process, from data collection through interpretation to making the right decisions based on the outcome. Accounting and finance professionals increasingly rely on data and analytical abilities. These abilities are in high demand throughout the industry, and professionals can add value by becoming data-fluent. Using analytics on financial data can help gain new insights and understanding of a business, the market, performance, and growth. So, if your financial experts aren't already utilizing predictive analytics, odds are they will be in the near future. Finance professionals will be well-equipped to respond quickly to make business decisions and foresee the future with the help of financial analytics, allowing them to maintain a competitive advantage in a saturated and ever-changing marketplace. 

Role of Analytics in the Finance Department

Data analytics is the process of interpreting a company's historical data in order to better understand its current and future financial health. Businesses may get access to the financial truth by measuring their financial success with sales and purchase data for instance. It can help the team draw patterns that can drive targeted data-based decision-making. One major aspect of data analytics is that it allows businesses to predict how well they will perform over time. Evaluating historical data with forward-looking financial statements offers the possibility of a prediction that takes into account probable variations over time. Furthermore, unlike static reports used in accounting, data analytics allows for dynamic analysis.

Financial analytics can assist businesses in identifying the risks they face, how to improve and expand business processes to make them function more efficiently, and whether companies' investments are directed in the right areas. Advanced analytics and its potential to exploit extensive data will empower enterprises to rethink their problem-solving and business-decision-support strategies. Analytics can also assist businesses in examining the profitability of items across multiple sales channels and customers, determining which market sectors will bring the most profit to the firm, and determining what may impact the business in the future.

Finance departments are nowadays changing and becoming crucial decision-makers. Finance teams that once focused on P&L statements and bookkeeping are transitioning towards management rather than accounting. Finance teams now follow the business model while transforming data insights into decisions that create value for the organization. Poor data quality can harm corporate performance by resulting in incomplete or erroneous prospect or customer data, ineffective marketing, and communications activities, increased spending, and poor decisions. Therefore, financial teams should apply predictive analytics correctly to enhance the quality of data and manage it effectively to improve results.

RSM Insights

Predictive analytics' potential is growing and there are multiple exciting possibilities, but there can also be major drawbacks. This focused data use might result in privacy violations, erroneous data use, and even discrimination. Such potential risks are why finance teams must develop some ethical oversight ensuring that the company's norms and values are upheld. However, the potential to leverage data from several sources, construct user-friendly dashboards and visualization tools, and forecast future returns indicates that financial analytics will provide financial teams with a competitive advantage.

Feel free to consult RSM UAE for a more in-depth analysis of your accounting concerns. RSM is one of the world’s leading audit, tax and advisory service networks, recognized for innovative solutions across the globe. RSM professionals can help your company undertake the granular analysis required for a comprehensive financial analytics exercise.