What is financial analytics | Microsoft Dynamics 365

Understanding financial analytics

Financial analytics is the field that provides high- and granular-level views of a company’s financial data, helping to improve its business performance. Predictive, data-driven insights help your team from beginning to end by understanding and analyzing past performances, predicting strategies for successful future performances, and steps to take to make smarter and more confident decisions.

As the role of technology has expanded, the functions of financial managers and their approach to financial analysis has changed. Acting as a strategist to executives means they’ll need to embody constant awareness of the business’s financial standing at all times.

Dynamics 365 helps unify your financial data

Optimize business spending by forecasting trends and cash flow with Dynamics 365 Finance—an automated financial tool providing data-driven insights to help mitigate risks.

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The importance of financial analytics

Whether you’re a small business or a large corporation, optimizing data from your financial management processes is important. You’ll need to create a methodology with a high probability of success using the least amount of resources—all while improving financial controls and overseeing a steady cash flow. Financial analytics affects several parts of your business as:

Every company needs judicious financial planning and future forecasting to be able to prepare for ever changing market needs.
Housing all of your critical financial data in one place for visibility and usability is essential.
Financial analytics offers in-depth insights into your financial status that’ll improve financial visibility, profitability, and the value for the business and stakeholders.
Being able to measure and manage assets like cash and equipment will be crucial in financial management and accounting efforts.

Having this information ready whenever you need it will provide quick answers for all pressing business-related questions and fiscal estimates.

The benefits of financial analytics

To build your business, you need to make informed decisions with the data-driven insights that financial analytics can provide. Some of the benefits of financial analytics are that it:

Uses real-time data, both external and internal, so you’re able to filter and analyze data sets quickly and easily.
Organizes data so it’s digestible, easy-to-understand, and provides a greater impact to your bottom line, ensuring data workflows are optimized and productivity is improved.
Improves productivity, offering a better way for teams to make confident decisions and mitigate complexity and risks.
Provides forward-facing strategies and insights for clear concise financial reporting.
Serves as your single source of truth, so you’ll never have to implement another financial management software tool to keep track of information.

It’s not enough to just add “financial analytics” to your process. You need to decide which types of analytics will be the most beneficial to your business.

6 key financial data analytics you’ll need

No matter the size of your company, there are six types of analytics you should implement into your processes to help you stay competitive.

Cash flow: Real-time indicators to determine how much cash is coming in and going out on a day-to-day basis, as well as how much you need to keep your business running smoothly.
Customer profitability: Data that ensures you have enough customer sales by breaking down your customer segments and analyzing each customer’s cumulative value.
Predictive sales: These analytics plan the success of your sales forecast and possible ways to improve predictions for the future.
Product profitability: Data that uncovers which products are profitable, while making sure to appropriate the right costs across various products that may share production processes or cost bases.
Shareholder value: Once your business is large enough to have shareholders, you’ll want to make sure they always see a return on their investments. These analytics are a calculation of a company’s value made through the returns you’ll provide to your shareholders.
Value driver: These key indicators ensure your business is on the right track to meet all your short- and long-term goals.

Taking all of these financial data analytics into consideration will provide all the information you need to build profitability strategies and accurately predict the future of your business.

When do you add financial analytics software?

Many organizations around the world are failing to gain the true meaning of their data’s insights. Some challenges with their financial data are that there’s an overwhelming amount of it, can’t access it, or their current software can’t accurately analyze that it.

As the world continues in its march towards globalization, your business needs to be able to scale financially when ready, meaning you need to implement the right software as early as possible. The four steps in determine when to add financial analytics to your process are:

Identify critical business problems and see how financial analytics can help.
Find areas where implementing a trial program will offer maximum results with minimal effort.
Organize, structure, and manage your data sources.
Continually look for new, strategic ways—including new tools, updated questions, and analyses—to effectively improve your financial analytics.

After completing these steps, you’ll know how, where, and when you need to enhance and hone financial data processes accurately and methodically.

Learn how you can optimize your financial data efficiently

Pushing to integrate large amounts of data when your financial data sets might not necessarily be in order can feel daunting. By relying on unnecessarily complex financial systems with significant manual labor processes, error is almost inevitable. A simple, automated system helps eliminate most human error while increasing productivity.

Integrating a responsive platform like Dynamics 365 Finance with minimal disruption means you’re able to provide your team with predictable results. As you maximize financial visibility and profitability, you’ll be able to easily predict when you’ll need pivot and change goals, ultimately guiding your business to success.

Learn more about Dynamics 365 Finance