20th June 2014 Posted by Warren Paull
Within the finance sector senior executives may be well informed of some of the key functions and benefits big data can provide for them but the challenge continues to be the manner in which companies record this data and use it to their benefit. It is necessary to be well positioned to utilise this technology, not only to support strategic goals but also to minimise risk and improve overall performance. To achieve this, we must be aware of what big data can accomplish for accounts receivable, what we aspire to do with it and the skills and tools necessary to meet all objectives.
With ero57 finance directors and other credit managers can analyse large quantities of data and develop a more forward-thinking and agile management approach, whilst automating their accounts receivable by ensuring the right message gets to the right person at the right time – both internally and externally. Companies spend a large amount of time planning, making it very important to segment each activity on a day to day basis. Strategic planning can help determine a confluence of factors on markets and outstanding debt. ero57 employs techniques used for improving the accuracy of such forecasts for future working capital using large sets of historical data, which in turn, enables finance directors to better understand the various factors that affect it and how to use it to their advantage.
Big data contains data sets so extensive that it is beyond the capabilities of commonly used software tools. It has become a buzzword in many industries because the technology has advanced so greatly, it has now crossed the threshold to offer increased capabilities and a more cost effective solution for companies to employ such technologies. We can now tap into huge amounts of structured data using advanced analytics and visualization tools to achieve insights that were not previously available.
This advanced modelling using predictive analytics can be useful in improving the accuracy of business planning and budgeting, which is at the core of financial planning and analysis. Good predictive analytics models provide a baseline against which to compare actuals, enabling finance directors and credit managers to accurately forecast their working capital at any particular point in time based on previous data. To illustrate, if a company manages 2,000 invoices per month within a particular country they can use the receivables data collected over the past five years to effectively determine their working capital at any given moment in the future with a click of the mouse. This can help influence important decisions related to expansion and future investments.
Another benefit big data provides in receivables is to quickly and automatically identify customer patterns in the accounts, making it easier for credit managers to take adequate action before any debts are written off.
Big data analytics is an important development that is changing finance departments across the world, allowing them to improve their effectiveness and accuracy and providing them with a new competitive edge. At MoretonSmith, we have been investing heavily over the past years in this kind of data analytics, incorporating it into the development our ero57 collection software and facilitating the effective use of big data for our clients. This allows them to make highly informed decisions using a wealth of compiled data and in turn accelerates advancement within their markets.