In every business, it is necessary to keep track of available cash, debts to suppliers and payments due from customers. Keeping track of these details represents a basic minimum level. As businesses grow beyond simple cash-based accounting methods, they need to keep more detailed financial records – especially if they want to secure loans, raise venture capital or go public.

While detailed accounting is important, it is only the first step. Having data alone does not provide business leaders with the insights they need to improve the company, identify opportunities and plan for future growth. This requires the kind of financial insight that static reports cannot provide.

Challenges of Financial Transparency

Despite the fact that companies collect extensive amounts of data, they may face difficulties in achieving greater financial transparency for several reasons, including:

1. Fragmented data: Data is often stored in different places. Most financial data ends up in the accounting system, but some details can be managed in Excel. Sales data is in the CRM system, inventory data is in another system, and project tracking details may be stored on individual computers. Compiling information from these sources can be time consuming. Even if systems are integrated, not all data is shared. Exporting records, converting them to a standardized format, and normalizing structure and naming conventions is extremely difficult and time consuming, even for experts. Once data has been collected and normalized, it is often outdated, making it difficult to provide timely and useful insights.
2. Data errors: Having inaccurate data is worse than having no data at all. Inaccuracies lead to incorrect analysis, wrong conclusions and bad decisions. Errors most often occur during data collection or entry, but can also be caused by the natural obsolescence of some information over time. Incomplete or inconsistent data, where information is available for some records but not for others, is also a concern as it can lead to incorrect conclusions.
3. Lack of resources: Today’s accounting teams are often overworked and undermanaged. In a tight labor market and declining interest in studying accounting, finding qualified staff is challenging. And even when the right people are available, competition is fierce for those talents, even if they lack certain skills the job requires. A new employee may have analytical skills but lack industry experience and thus not be able to contribute fully from the start. So even if high-quality data is available, companies may still not be able to take advantage of it due to resource constraints.
4. Ineffective analytical tools: Despite being the easiest obstacle to overcome, the lack of effective tools can be extremely difficult to deal with. Two possible reasons why companies may face this challenge are that they either use the wrong tools or they use the tools incorrectly. Although most accounting systems can generate financial reports, they do not always offer flexible reports. Some include some standard reports that are difficult to customize or modify. Or they offer no customized reporting at all. These problems are common in basic software. This limitation means that companies rely on spreadsheets for financial analysis. Applications such as Microsoft Excel are very useful, but they lack key features such as advanced visualization and only work with static data. That limits their usefulness for detailed analysis.

Complex business intelligence tools are at the opposite end of the scale. Although BI tools offer powerful analytical capabilities, they are difficult to use without specialized training. These systems were developed for large companies with staff specialized in producing reports for use throughout the organization. The time and cost required to acquire, configure and use these tools makes them unfeasible for medium-sized companies.

Improved Financial Transparency with NetSuite

NetSuite improves financial transparency by utilizing real-time data and integrated business intelligence tools that enable a more detailed analysis of performance. A unified data model eliminates fragmentation by storing financial, operational and statistical data in a centralized database, improving accuracy by standardizing data formats and minimizing data entry duplication. Accuracy is further enhanced by automating data collection and other key accounting processes. Automation also increases productivity, giving accounting staff more time to focus on financial objectives while reducing the need for additional staff.

NetSuite’s powerful reporting and analytics capabilities help you make informed decisions that lead to better results. Track key performance indicators (KPIs) in real time with role-based dashboards. User-friendly dashboards keep team members focused on the most relevant goals. Gain new insights by creating versatile reports that combine financial, operational and other data, such as rental cost statistics based on each department’s headcount or square footage. Hundreds of standard and industry-specific reports can be customized to help you track and meet your goals.