Data improves finance strategies

Pat SuttonPat Sutton

Pat Sutton from Xeinadin on the role of data in building an effective financial strategy.

The value of data to modern businesses is indisputable. From performance analytics to market research and customer intelligence s, data is essential to how organisations plan, make operational decisions and unlock new opportunities for growth.

It is also fundamental to develop an effective financial strategy for businesses to support risk management, cost optimisation and accurate forecasting.

“If finance teams are not leveraging data well enough, they could be at risk of missing out on these opportunities to advance their business”

However, despite the benefits, it is clear financial departments are struggling to source the correct data.

According to recent research from financial management software firm AccountsIQ, 86% of CFOs and finance leaders in Ireland feel that decisions about financial strategy are being made without sufficient data.

On top of that, less than half feel they have access to the right kind of data and analytics to make informed business decisions. On top of that, less than half feel they have access to the right kind of data and analytics to make informed business decisions.

If finance teams are not leveraging data well enough, they could be at risk of missing out on these opportunities to advance their business.

How data improves finance strategies

Financial strategy is all about how business objectives are financed. This takes two elements into account – growth aspirations on the one hand and resourcing on the other. An effective financial strategy marries the two together in a way that is most effective and efficient.

Data first and foremost informs what resources are at the user’s disposal. Business growth often requires investment; therefore, the user should know what is available to invest, or what level of debt could be safely taken on within the current financial structure to fund investment. Another element to consider is what else would need to be done to change the structure to safely take on extra debt burdens if required.

Notice that the word ‘safely’ is used above twice. Financial strategy is also about risk management – funding ambitions safely – which includes identifying risk factors both inside and outside the business. In terms of outside risk factors, it is essential to consider wider economic trends as well as compliance requirements. Again, data helps to identify what these risk factors are, which allows for mitigation within the financial strategy of a business. 

Data is also hugely valuable due to the fact that it provides past insights which can be implemented with the aim of steering future developments. Since most businesses want to track current performance using financial KPIs, there are now powerful techniques like predictive analytics and AI-driven forecasting. Another way of using data is by looking at past and present performance to build detailed statistical models of how financial decisions are likely to play out in terms of future performance.

How data deficiencies hinder financial strategy 

If a company’s approach to financial data management and analytics is not robust enough, they risk locking themselves out of future-facing insights and the level of informed decision-making that goes with it. This puts them at a competitive disadvantage when compared to businesses who are using financial data in an effective manner.

The AccountIQ survey also gives hints at wider drawbacks; for instance, CFOs don’t feel in control and are feeling the pressure from all angles.

When asked about the main challenges facing their organisation, 40% said the impact of rising costs on profitability, 40% said cash flow, 37% said revenue and profit targets, 29% the accuracy of reporting, 24% compliance risks – the list goes on.

This all has a human cost as well as an operational one, as Irish CFOs say they feel overwhelmed by the challenges facing them 8.5 times a month on average.

Turning complexity into clarity

Put simply, data can establish a feeling of control in relation to the various moving parts that go into financial management.

It helps with the level of insight needed to make informed, meaningful, effective decisions. It replaces guesswork with substantial intelligence; and it helps with confidence in relation to the direction being taken, resulting in a less stressful and more informed financial strategy.

With the right people coupled with the right data, businesses can make smarter decisions today and build a more secure financial future tomorrow. With the right data, businesses can make smarter decisions today and build a more secure financial future tomorrow.

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Pat Sutton
Pat Sutton
Pat Sutton is the Area Managing Partner for Xeinadin in Kildare. Xeinadin is one of the largest multi-disciplinary business advisory and accountancy firms in the UK & Ireland. With almost 40 professionals located at their new premises - bright spacious modern offices across from Kildare Village - Pat and his team offer the highest levels of audit, accountancy, tax advisory, and corporate finance services to clients in Kildare and surrounding areas. They are advisory experts to family-owned businesses, SMEs, high potential start-ups, and not-for-profits. Specialisms include business advisory, financial reporting, corporate finance, corporate tax planning and outsourced online cloud accounting. The office is currently undertaking a major expansion with plans to double its headcount over the next two years in Kildare. Their accomplished team work tirelessly servicing their valued and loyal client base, with some staff with Pat for over 20 years and some clients for nearly 30 years. Pat is a Chartered Certified Accountant, he ran his own practice for 28 years before joining Xeinadin in 2022. Pat has lectured extensively in Financial Management and Auditing and is a qualified Business Trainer with National University of Ireland Maynooth. He is a member of the Revenue Commissioners panel of experts for valuation of private companies. He is an Enterprise Ireland appointed Business Advisory Consultant. Very involved in his local community Pat was Treasurer of his local GAA Club Suncroft for 15 years and is an active member of the local Bush Cycling Club.

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