Guest Post by Alicia Cole
Recent data suggests that accounting analytics is an increasingly essential field in the world of modern business. Even as more and more companies are realizing the value of data analytics itself, the McKinsey Global Institute states that these same companies need to do more internal training in terms of combining accounting with big data analytics. Small businesses, in particular, could be at risk of failing if they do not apply accounting analytics in order to keep up with rapidly-changing industries.
After all, accounting analytics is already reshaping the world of business in significant and seemingly irreversible ways. More and more small businesses are realizing that data analytics isn’t a luxury, but an essential growth-focused investment. And with that comes a huge demand for investment in analytics across industries, with Maryville University noting that the market will reach over $95 billion by 2020. This shows how much money companies are already pouring into data analytics. In order to compete, small businesses will have to increase their spending, which could explain why some are still hesitant to apply these models to their own already costly investments. At the same time, however, being fully informed about your own numbers – the raw data on how your business is doing so far – is simply business 101. In the cutthroat world of business, combining accounting and data analytics is a matter of survival.
Small businesses serious about growth realize that data analysis and accounting go hand-in-hand.
Ceterus is all too familiar with this fact that there are still not enough small businesses that are putting a premium on simple bookkeeping – never mind accounting analytics. It is a fact that for 46% of the small business that have failed to thrive in the US, the details of their financial downfall can be traced back to poorly managed financial reporting, bookkeeping, and generally terrible accounting practices. This means that nearly half of US startups fail because of poor bookkeeping, and not because there aren’t any clients or customers to buy their products or services. Although most customers don’t necessarily care about your company’s bookkeeping or whatever goes on under the hood, actually crunching the numbers can go a long way towards keeping your customer base intact and actually growing.
In fact, the Journal of Accountancy tells us that in this increasingly data-driven world, CPAs need to acquire skills related to data analytics. Through the use of automated and sometimes cloud-based accounting software, CPAs are able to continuously monitor, audit, and analyze the numbers as they’re fed into the system. In essence, this allows CPAs, CFOs, other financial specialists in the company (and basically anyone with access to automated accounting software) the ability to become financial analysts in their own right. Armed with automatically analyzed data, it’s easier for representatives of small businesses to make better long-term financial decisions.
While traditional accounting requires significant effort with analysis that relies on dated financial snapshots, those days are over with accounting analytics. Small businesses serious about growth realize that data analysis and accounting go hand-in-hand.