How to leverage data to improve client business performance
Accountants are more than record keepers that chronicle a business’s financial fortunes. With access to mass amounts of financial data, accountants have the ability to use that data to benefit their clients in countless ways. The key to harnessing the power of this data lies in data analytics.
Using data analytics
According to The Journal of Accountancy, there are four types of data analytics.
- Descriptive analytics: Provides insight based on past information. What happened?
- Diagnostic analytics: Examines the cause of past results. Why did it happen?
- Predictive analytics: Assists in understanding the future and provides foresight by identifying patterns in historical data. What will happen? When and why?
- Prescriptive analytics: Assists in identifying the best option to choose to achieve the desired outcome through optimization techniques and machine learning. What should we do?
As an accountant, you probably already use descriptive analytics every day. You can use this type of analytics to identify cost-saving tax deductions, detect and prevent potential fraud, and build a picture of how a business is currently performing. Clients can use that information to make informed decisions that benefit their business.
What if you took things one step further and used that past data to make recommendations for the future? With the power of predictive and prescriptive analytics, accountants can improve the way they use data and upgrade their accounting services to help clients transform their business and improve their performance metrics through recommendations.
From record keepers to advisors
According to Accounting Today, clients are “increasingly looking for proactive advice” and because of their access to financial data and innovative technology solutions, accountants are “ideally positioned to fulfill this need and help clients make smarter business decisions.”
Accounting Today goes on to explain that some benefits of using technology solutions include the ability to analyze large amounts of data, automate data analysis tasks, identify anomalies, and visualize data. Data visualization can be particularly useful when presenting information to clients because it allows clients to easily understand information such as key financial ratios and insights derived from financial statement analysis.
Technology reduces the amount of manual labour required to analyze data and provides tools to present insights in easy to understand ways. This allows accountants to dedicate more of their time to providing customized advisory services for clients, identifying key trends and data insights that can be used to forecast future business performance.
Although clients may be accustomed to equating accounting services with tax preparation or traditionally thinking of accountants as keepers of historical data, by using predictive and prescriptive analytics, accountants can become true partners with their clients, working as an advisor to achieve business success.
Understanding client needs
Although all clients want to improve their business performance, understanding exactly what your client wants to specifically achieve can help you determine which data-driven insights would be most useful for your client.
How can you determine what clients want? Just ask them. In The Black emphasizes the importance of rethinking your relationships with clients as “transformative partnerships” and of reaching out to your clients to understand what they want from their relationship with you.
For example, you may have a client who wants to open three more locations within five years. This client might benefit from data analysis that predicts future business growth so they can create a realistic expansion plan. Another client may want to understand how decreasing or increasing their marketing budget will affect sales. By analyzing how previous changes in marketing spend affected sales, you can predict the outcome of future budget changes.
As you build a relationship with a client and develop a deeper understanding of their business, you’ll be able to become a proactive advisor who understands what information your clients want before they even ask.
Looking for a data analytics solution? Explore how Caseware AnalyticsAI can strengthen your firm’s data analysis capabilities and transform your accounting services.