Wajiha Danish | April 27 2022
In today’s business world, staying at par with the present isn’t enough to ensure stability and keep the business afloat. Forecast and foresight are essential to guarantee success and tackle uncertain times. Nowadays, it is often required to peek into the future to perfect the present, and that’s what predictive accounting enables businesses to do.
Chief Financial Officer or CFO is the one who oversees business finances and has to identify and mitigate any possible risks that may hinder business operations. However, CFOs who live in the now and invest their complete focus in the present often struggle to manage uncertainties.
Just two years back, a pandemic shook the world, an uncertainty that changed the face of business. Today, the need to gauge the future and stay prepared is a mere obligation for business owners and CFOs.
Fortunately, one thing that is at par with the future is innovations in the FinTech world. Novelties like predictive analytics—A risk management technology that allows businesses to decode the present, plot the future, and trigger needed evolution—is what keeps the business heart pumping.
All things considered, the future of financial technology lies in predictive analytics and it is about time we peek into the future and decode the technology that can make businesses almost indestructible.
The single most-common application of predictive analytics in the finance world lies in its ability to detect wrongdoings and provide quick-fix solutions. Be it in business or life, it is integral to identify issues before they turn serious and inflict irreversible damage.
Besides financial risk management, analytics also lies at the core of strategic corporate decision-making. Here again, CFOs are the strategists who help executives create a foolproof plan and procure the finances to execute it to perfection. Without analytics, their odds of success would linger solely on far-fetched possibilities rather than probabilities.
Turning possibilities into probabilities require insights, and that’s what predictive analytics provides. However, its potential isn’t limited to foresight and forecast. It also plays a role in streamlining business operations as per consumer behavior and market needs.
Not to forget, predictive accounting also strengthens security and prevents fraud attacks in the ever-volatile finance world of today. Safe to say, it will become a necessity in days to come as more and more businesses turn on the search for the perfect solution to tackle ever-evolving market needs, erratic consumer behavior, and security breaches.
CFO’s goal is to boost the efficiency of day-to-day financial management and steer the business towards a more rewarding and risk-free path. Their role is to help executives make decisions confidently and eradicate financial ambiguity. How does predictive accounting analytics help CFOs do this?
Let’s say that you run a business and are searching for new ways to manage cash flow. Many options exist on the table, yet you can’t single out the one that guarantees max improvement.
The best way forward is to use predictive analysis to weigh all options and select the best one. In other words, use insights to anticipate outcomes and take quality business decisions.
Data and insights provide you with the perfect answers to all future-related questions about your business. Be it sales, consumer behavior, spending, or strategies. Put simply, predictive analysis allows CFO to anticipate variables in a business and regulate them for the business good. With it, they attain better control over finances and streamline business accounting for the present and days ahead.
Financial analyses help accurately monitor business finances and ensure all loose ends are tied up. CFOs use analysis to build coherence between expectations and realities, to choose and implement strategies that are less far-fetched and more aligned with the business vision, industry trends, and consumer priorities.
Here are four ways how predictive analysis help modern-day businesses better monitor finances, deliver quality results, fix business vulnerabilities, and make informed decisions:
The analysis is key to triggering a continuous improvement in a business. Financial insights help identify strengths and weaknesses and take plausible actions to better the former and eradicate the latter. In terms of finances, data is what you need to invest in the right opportunities and make decisions that better user experience.
Blindly investing in policies and resources to better experience is a hit-or-miss approach at best and isn’t apt for today’s world in which one botched may ensue demise.
A FinTech solution that doesn’t mitigate risks and prevent fraud is a half-cooked measure. Luckily, Predictive Analytics equip businesses against both.
Besides identifying and mitigating present threats, future-based insights prepare businesses for upcoming risks in advance. It places them in a position to tackle future risks and resolve any problems before they turn into vulnerability and slow progression.
Reviewing and forecasting the demand for your product or service in the present and the future is a sure-fire way to improve quality and set sails right. It is never too early to anticipate a dip in demand and create a strategy to market the product better or improve the troubled areas.
Last but not least predictive analytics enable CFOs to help business owners make informed strategic decisions. In the erratic post-pandemic business world, it is naïve to think that studying the past and the present is enough to make solid business calls.
The need of the hour is to peek into the future whenever possible and take strategic decisions that stimulate growth in the present and provide sustainability in the future. Thus, predictive accounting is a futuristic technology that boosts growth, streamlines operations, and helps businesses achieve and sustain financial clarity.
Wajiha is a Brampton-based CPA, CGA, and Controller with 17+ years of experience in the financial services industry. She holds a Bachelor of Science Degree in Applied Accounting from Oxford Brookes University and is a Chartered Certified Accountant. Wajiha spearheads Monily as its Director and is a leader who excels in helping teams achieve excellence. She talks about business financial health, innovative accounting, and all things finances.