Numbers Don’t Lie…Or Do They?

“Firms have tons and tons of information, however [success] isn’t about information assortment, it’s about information administration and perception.”

– Professor and Head of the Knowledge for Enterprise Efficiency Institute Prashanth Southekal

It’s straightforward to amass info. Actually, lately we’re inundated with it from all instructions. The problem for corporations is to make sure that it’s correct and that they know the way to remodel it into actionable perception. 

Rubbish in, rubbish out

To paraphrase the American satirist Tom Lehrer, an organization’s information is a bit like a sewer. What you get out of it relies on what you set in. You’ll be able to gather all of the figures on the earth, but when they aren’t reflective of actuality, they gained’t do you a whole lot of good.

The issue? Many corporations aren’t all that assured that the knowledge they’ve is that correct.

In accordance with Experian’s 2021 International Knowledge Administration report, 55% of enterprise leaders don’t absolutely belief their information property. 

Nevertheless it doesn’t cease there: 69% of employees say that they or their CEO has made main enterprise choices based mostly on inaccurate info. 

These are shockingly excessive numbers with wide-ranging implications. With out an correct concept of money stream, for instance, it turns into virtually inconceivable to have interaction in money forecasting or planning for the longer term. On the accounts payable facet, defective reporting of what a corporation owes and when it’s due can result in late funds, broken vendor relations, and problem realizing the enterprise’ true liquidity. With out dependable Days Gross sales Excellent (DSO) or Common Days Delinquent (ADD) numbers, it’s tough to establish bottlenecks within the accounts receivable course of. 

Properly, there’s your drawback…

So, what precisely is inflicting this unhealthy information concern? For a lot of organizations, it comes right down to continued reliance on outdated processes and casual modes of operation.

Within the absence of cloud-based automation, many finance departments are compelled to work between a number of programs and handle handbook inputs, that are liable to errors. That info feeds important choices in flip, which, when based mostly on inaccurate figures, solely deepens the affect. Whenever you observe the method by way of, it’s straightforward to see how one thing so simple as a single typo can result in exponential issues. 

An oz. of prevention is price a pound of remedy

The 1-10-100 rule means that if it prices $1 to stop an error, it prices $10 to repair it, and $100 within the occasion of failure. Investing the money and time to enhance information accuracy is much cheaper than making an attempt to wash up the mess later. Fortunately, there are some sensible steps that organizations can take to do exactly that.

With out adopting an automation resolution, companies can nonetheless enhance accuracy by establishing consistency within the information enter course of. A key first step is to eradicate a number of factors of entry and centralize the place information is saved. The common firm with 200-500 staff makes use of an estimated 123 software program as a service (SaaS) functions, whereas corporations with fewer than 50 staff use as many as 40. The dearth of communication between these disparate sources will increase the percentages of errors.

It’s also necessary to create a proper approval course of so that each bill is handled the identical. Safety measures, reminiscent of requiring a number of sign-offs for invoices over a sure greenback quantity, are additionally useful. This course of retains managers accountable for guaranteeing information high quality and conducting checks as an bill makes its manner by way of the system.

One other easy step is to eradicate any current casual communication channels, which make it tough to audit the method and make any vital adjustments. Departments ought to put off practices reminiscent of utilizing e-mail to request bill approvals or counting on paper-based expense receipts. 

Let the Know-how Do the Heavy Lifting

There are a number of expertise options that use automation, machine studying (ML), and synthetic intelligence (AI) to make your AP and AR groups’ work each simpler and extra environment friendly.

Adopting a doc administration system can drastically enhance information high quality. Software program that makes use of Optical Character Recognition (OCR) extracts info from scanned paperwork or photos, and the perfect options are as much as 98% correct.

That stated, there are limitations to what OCR can accomplish. Numbers and knowledge require context to be helpful, and the expertise does nothing to consolidate or arrange the info in a manner that results in actionable insights. 

Clever AP and AR options can convey vital worth right here. On the accounts payable facet, Beanworks’ resolution leverages machine studying to extract info from invoices, receipts, and PDFs. With full visibility from the time an bill is acquired till it’s paid, it supplies corporations with a extra correct concept of what they owe and the way lengthy they will maintain onto their cash.

For accounts receivable, YayPay takes AI expertise and makes use of it to research buyer cost behaviors, offering perception into which accounts are more likely to pay late. This can assist create extra correct money forecasts, in addition to information AR groups’ exercise, permitting them to get forward of accounts that will have issues paying their invoices.

Automation additionally lowers the chance of bill exceptions, which take time and assets to resolve. In AP, this implies you’re much less more likely to pay invoices late, avoiding late charges, fines, and broken vendor relationships. In AR, it helps guarantee that you’re paid on time and that you just aren’t feeding buyer dissatisfaction. 

When contemplating the way to clear up your information and keep away from making enterprise choices with defective or deceptive information, your smartest wager is to seek out the fitting AP and AR platforms that convey effectivity and ease to a sophisticated course of.

For extra info on the way to enhance information visibility and accuracy, learn the white paper “Finest Practices for For Finance Leaders to Enhance Knowledge-Pushed Determination Making”.