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What to Know About the Role of Visibility in Business Finances

August 26, 2020 No Comments

Featured article by Susan Melony, Independent Technology Author


Increasingly business leaders see the importance of complete visibility in finance, and COVID-19 has likely reinforced that even more. For example, so many of us are working from home, attending virtual meetings, and trying to increase revenue during challenging times.

It’s essential to have access to accurate, timely, and quick data for decision-making.

Businesses are all having to pivot how they do things in these areas, especially with financial liabilities.

One way to improve overall visibility in finance is through the implementation of AP automation solutions.

That allows businesses to turn data into metrics that can be easily shared and understood at a glance. Team members can be granted access to this information as needed, and even when they’re working remotely.

In addition to cloud-based AP solutions, what else should businesses know in the current environment as well as in the post-coronavirus world as far as the role of visibility in finance?

Understanding Visibility

Visibility is a term used in this context to describe how well data and analytics can be used to estimate future performance. Visibility can include looking at the present, real-time data to forecast the near and long-term.

An executive team or business leaders need to be able to predict future earnings and sales by measuring the right data points at the moment.

A company is going to be positioned to perform better if there is full visibility.

Visibility should be a key priority across all areas of a business, but it’s even more important in finance because of the importance of the numbers and the data in this department.

It’s also important that along with general visibility, in order to be financially optimized that businesses have the ability to report on the numbers in a relevant way, and make corrections when necessary.

With automation across accounting processes, there’s confidence in the data being reported and being used to fuel decision-making because the processes are automated.

The potential for human error is almost entirely avoided with automation that then offers visibility.

When automating components of the finance department, you want to have not only insightful reports and transparency but also the ability to drill down and see expenses wherever they may occur in the process. You also want to be able to gain an overview of the approval system, which promotes confidence and saves time.

Real-Time Data

When it comes to visibility and transparency, all data is important, but this includes real-time data.

Real-time data are those things that are happening at any given moment, and you can’t capture real-time data just by using your accounting system. It takes time for transactions to flow through your accounting system, so you’re missing out on that real-time data.

Real-time data lets business leaders and finance executives get a snapshot of how they’re doing at any given time. That informs better decision-making, which can facilitate a competitive advantage.

With real-time data, you can look at your performance globally and at a granular level.

You may be able to look at highly specific elements to track their performance and get a snapshot of everything from cash flow to net revenue.

This also allows you to improve your internal controls, detecting both errors and fraud more quickly to remedy the problem.

Real-time data is a way to make strategic business decisions that are going to help you grow within your marketplace.

Tips for Improving Visibility

The following are some of the ways to stay on top of the financial health of your business and improve visibility:

– Create a monthly reporting process to see trends when the data is still fresh.

– Work with the financial team and management as well as any other stakeholders to create expectations along with a process for both recording and assessing financials. Assign tasks throughout your company and make sure that your staff is fully trained on how to best use your accounting software.

– Move away from annual planning and more toward a continuous planning approach. You want your approach to be dynamic, and you always want to be focused on maximizing value.

Data Points That Should Be a Part of Business Strategy

You need to know which data points are going to be most relevant to the creation of business strategy because, without an understanding of these points, your automation and visibility tools aren’t going to provide value.

The following are key data points that should drive business strategy.

– Net cash available is a data point that’s going to show the financial strength of your business, and it also shows where you can put cash toward new investments and how efficiently you’re using that cash. Net cash available is a measure of the cash available after you take out increases in working capital and investments. You can use this metric to determine whether or not you make major capital expenditures or move forward with current investments and projects.

– Revenue growth is measured by taking revenue from your last period away from the revenue of your current period. That’s then divided by the total of the last period revenue.
Profitability ratios show you how efficiently you’re operating, and it can be a place where you identify changes that need to be made.

– Of course, profit is a key financial data point. You want a strong margin of gross profit, and the operating profit margin shows you how well you can generate profit, so it’s a measure of your operations.

– Liquidity is a relevant point of data that shows how you’re able to generate the cash you need to pay your expenses. Even if you have strong revenue growth, it’s not going to be enough to overcome a lack of liquidity.

The more visibility you can put in place in your business, the better you’re likely to be able to weather the storms, such as coronavirus. When you have the tools and processes in place for visibility, you can make fast decisions and pivot as you need in a strategic, analysis-based way.


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