Chief Financial Officers (CFOs) were once tasked solely with the management of their firms’ finances. Over time, this role has evolved to a place where these business leaders are also responsible for strategic visions and driving their companies forward. This means CFOs not only need to thoroughly understand their organizations’ financial data, but they also need to understand how to analyze it thoroughly so they can produce insights and participate in future planning.
This is when business intelligence (BI) becomes important. With the right tools in place, BI collects operations and finance information in a single platform. All relevant company information is compiled and processed in real-time. This information is then shown on dashboards, making it easier for leaders to identify trends, possibilities, and bottlenecks.
To garner greater insight, we’ve compiled the following ways CFOs use BI to guide their financial responsibilities.
1. Strategizing and Analysis
BI dashboards make it simpler for CFOs to digest complex data quickly. By showing budget and forecast data in one place, these dashboards allow CFOs to better understand their goals from operations and strategy aspects, and realign processes where needed. Information is pulled from companies’ historical records, cash flow data, and historical performance, allowing for scenario modeling and variance analysis. Present functioning can be pitted against the projected forecast, and if two don’t match, leaders can then explore where pivots need to be made to stay on track.
2. Expense Reporting and Management
CFOs need to focus on employees’ spending as it relates to travel and expense trends. With BI dashboards, leaders can quickly check in to make sure these costs aren’t exceeding set limits or alter expense policies when needed. BI systems can connect directly to companies’ expense reporting, invoice, and travel booking platforms.
3. Operations Reporting
Using dashboards, CFOs are able to see daily operational functioning, as well as present and immediate future needs. When leaders can see this information live, they’re better equipped to make quick, strategy-informed choices that will help their companies move forward. For example, BI can help leaders analyze the days from billing to payment and find ways to minimize this time gap.
4. Cash Flow Controls
BI enables leaders to automatically generate and update A/R and A/P projections. When they know there’s a surplus or deficiency of funds, they’re better able to make decisions regarding growing or scaling back. Business intelligence also enables CFOs to analyze the costs of ventures and inventory expenditures.
5. Risk Management
BI lets leaders quickly see crucial KPIs, as they’re displayed right on the dashboard. This means dedcision makers can easily view a comprehensive look at credit and competitive risks, ensuring leadership is knowledgeable and able to pivot quickly if problems arise. BI gives leaders the tools needed to readily assess risks, should an investment possibility or a request from officials arise.
6. Balance Sheet Controls
Business intelligence tools let CFOs find, analyze, and visually see information in ways traditional spreadsheets simply aren’t able. Visual analytics are created from companies’ operations, finance, and accounting platforms, displaying on dashboards for easy analyses and dissection.
7. Performance Improvement
The information gleaned from BI can be used to track performance metrics such as net profit, operating profit margins, and cash conversion cycles. This data is a crucial foundation for financial KPIs, which then are shown on real-time dashboards, showcasing whether the business will hit its targets or not.
8. Revenue Controls
BI guides decisions regarding what to sell and how much inventory needs to be sold. Leaders can garner information on market and historical prices, in addition to discounts and purchase desertion levels. This allows them to set advantageous pricing and strategize to regain lost sales. Business intelligence assists with inventory controls by providing insights into future demand, finding ways to optimize the purchasing functions and supply chain, while keeping an eye on inventory.
9. Customer Segmentation
BI enables organizations to gather valuable information on customer groupings. For example, leaders can glean information on customers’ pain points, interests, spending habits, ages, and genders. Armed with this data, marketing leaders can then identify target segments and curate more customized campaigns, eventually growing sales.
10. Profitability Management
To grow profit, organizations need to acquire and retain high-quality buyers. Business intelligence improves the knowledge of how consumer behavior and business viability are related by delivering information such as channel profitability, influence of markdowns, and lifetime profit inputs by segment.
Watch Our On-Demand Webinar Business Intelligence: Simplified for Corporate Finance
We recently hosted a webinar with The Controllers Council titled Business Intelligence: Simplified for Corporate Finance.
Panelists include Amir Bednarsh, Corporate Controller, at Kayco and Jory Weissman, VP of Sales at MIBAR and Chief Analyst at the Business Software Education Center. In this webinar you’ll hear how business intelligence gave Kayco an interactive, customized, and remarkably user-friendly reporting environment to provide users 24/7, cross-device and real-time access to their data.
Click here to watch now.
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Additional Business Intelligence Resources