In today’s data-intensive market landscape, analytics plays a significant role in keeping a business agile and competitive. Financial analytics is one key area that enables organizations across industries to truly predict the future of their strategies and goals, and take mindful decisions that can foster their growth.
Better insights into financial efficiency measures, operational KPIs, product/service and customer profitability enable businesses to augment revenues and the value of shareholders. They also help in overcoming any correlated shortcomings and modify their approach to meet their customer’s needs and ensure superior end-user experience.
In this article, you will get to know about some of the key financial analytics that every organization, irrespective of its shape and size, should work with:
Predictive Sales Analytics (PSA): It goes without saying that sales revenue is the backbone of any organization. Thus, implementing strategies to know how much growth your business can expect in the current and following years can have a strategic impact on your business’s bottom-line. Here, predictive sales analytics applications come handy. It enables you to evaluate how effective your forecast is, and also, to augment your sales pipeline in approaching years. Organizations making use of PSA tend to adopt an array of competencies and tactical approaches to gain learning about their customers.
There are two sure-fire ways to estimate sales – comparing past trends with the current and making use of predictive techniques, such as correlation analysis. PSA is considered as a powerful tool for planning and achieving hassle-free workflow by enabling clients’ to manage their respective operations in an effective way.
To put it simply, let us say, you have done predictive analysis and you have figured that in a certain month of a year, your sale may drop. In this case, you can implement new and effective strategies to boost sales for that particular period. Having a clear idea about your sales generation will stop you from falling in panic situations. According to studies, conducted by leading research institutions, forecasting how productive your business will be in the months or the years to come keeps your business abreast of all ifs and buts, giving you a platform to thrive.
Product Profitability Analytics (PPA): To give a strong competition and make the best out of your investments, it is important to contemplate where exactly to invest. In order to calculate the profit, you will need to look at your product and its costs separately, and for sure, this could be a difficult and time-consuming task.
Here, PPA is a top-notch solution that helps determine profit-line on the basis of each product. It enables you to gain quick insights across all your offerings so that you can make an informed decision for your business. For example, if you get to know what products customers demand the most, then you can promote those products strategically.
Customer Profitability Analytics (CPA): Be it a cloud hosting provider, a giant e-commerce platform, or just any business working on the World Wide Web, having a clear data about who your potential customers are is always sage. A fair comparison between profitable and non-profitable clients helps in doubling the revenue generation. Remember, there are two kinds of customers – one that brings value to your organization, and the other one that brings risk to your organization. Extracting this detailed information about the customers will the best complement for your future marketing efforts.
The best thing is this you can do it with the help of CPA as it smoothly enables you to analyze the behavior of customers of both kinds.
Shareholder Value Analytics (SVA): How successful your strategies are will be determined by the interpretation of the final outputs evaluated by media, experts, stakeholders, and shareholders. SVA helps in adjudging the business value on the grounds of what returns a business provides to its stockholders. It also determines the percentage of risk and value delivered to the shareholders. That’s why most of the experts recommended complementing SVA with profit and revenue analytics for better comprehension and execution.
Cash Flow Analytics (CFA): You need fuel to drive your car, don’t you? In the similar context, your business needs capital to operate. Predicting inflow and outflow of capital is important to ensure the health of your business. Herein, CFA and regression analysis tools can help in determining how much capital you may need for future investment. This is not where the CFA benefits end up. Managing cash flow and fostering corporate functions also fall under its responsibilities.
Adding more to it, it always proves sagacious when it comes to right predictions while taking a look at past data.
Value Driver Analytics (VDA): Only planning does not offer desired results. For that, you need to implement your well-researched strategies. On top of it, you should have a positive and pragmatic business approach. A great understanding of economic drifts that can disturb your financial motifs will help you forecast correctly and promptly. Your goals will determine your value and aid you in meeting your strategic business objectives. In connection with this, VDA will help you analyze these strategic business drivers so that the expected outcomes can be achieved. Not to forget, these drivers are majorly based on assumptions, thus needs to be cross-checked.
It is important for CFOs to embrace financial analytics so that they can achieve their organizational goals. Financial analytics provides in-depth and proactive datasets that offer better insight into profit, cost, and market trends, thereby ensuring a rewarding experience for your business.