Digitising the monitoring of your financial performance

One of the key benefits of digitalisation is to help better collect and analyse data – one of the most valuable resources you have in business management. The more information you have about your customers, your supply chain, your market, economic trends, the more strategically you can run your business.

In this article, we look at how embracing digitalisation can improve your financial outcomes.  

As we begin to exit the Covid-19 crisis, interest rates are at record lows and government-backed business loans are available, making it a good time to take stock of the digital processes you use in your own company. Reviewing how you gather, use, distribute, and analyses data is absolutely crucial if you want to keep up with the rapid changes in national and international trends affecting your business.

Digitised companies are more aware of their suppliers and their supply chains, and therefore of the risks in these chains, so they can react faster to deal with crises.

“Countries where the environment is more conducive for the digitisation of companies were better able to respond comparatively better to the economy, but also to the Covid-19 crisis,” says Allianz Trade Senior Economist Francoise Huang.

Aside from making the shift to remote working easier, digitising your company’s administrative processes allows you to access financial information and develop insights more readily and at will.

There is plenty of relevant data available inside your company that you may not be accessing, such as information pertaining to operations, IT, marketing or customer service. This information can help create a robust picture of your company but it may not often be shared, or not in a centralised way.

The easiest way to gather this information and create an overall picture of your operations is to agree on the key indicators to follow and on their definition, schedule regular reports from your teams, and define a standardised way to do it.

At the customer level, looking at surveys, website traffic, transactions, analytics of your online marketing campaigns, social media, subscriptions and registrations, or in-store traffic has proven to be relevant information. By checking sales figures to understand conversion rates and looking at financial results, you can for example understand the cost of attracting new customers. 

You’ll need to create a digital dashboard on which to store your data. This dashboard is the most important tool in your financial data toolbox: it gives you a 360-degree view of your business in a central place and allows you to share information widely. As an example, depending on your company size, you can easily use low cost tools such as Google G Suite and Microsoft Office 365 to boost your collaboration with your team.

There are many digital accounting products on the market that will help you manage your financial monitoring. For example, some digital cash flow tools provide a clear picture of your cash position. They order your invoices, log payments and present a clear picture of the money flowing in and out of your business. Examples include Pulse, Fluidly or SlideBy.

Once you’ve collected and stored the information… then what? Here are some steps to follow:

1. Determine what kind of information you need
2. Establish a time frame: are you using this data to gauge the effectiveness of a specific project, or to review your overall financial performance?
3. Create a digital platform to store the data and share access to the platform with your team.
4. Analyse the data at regular intervals to discover patterns and insights.
5. Deploy data to make informed decisions and take effective actions.

Boosting your company’s digitalisation also helps you flag areas for improvement or expansion and allows you to predict and prepare for future trends by generating a dynamic, real-time data analysis. This can help identify problems, such as late payments, which can wreak havoc with your cash flow.

Thanks to your dashboard, you’ll be able to make predictions such as cash flow forecasts that can prompt you to send payment reminders or negotiate a payment plan early with suppliers before problems get out of hand.  

But some problems are unavoidable, through no fault of your own. Trade risk insurance can help with that. It covers your receivables due within 12 months and safeguards your business from unforeseen political and commercial risks. These risks could include a customer going bankrupt or changes in import or export regulations that have a negative impact on your business.

Trade credit insurance ensures your business doesn’t have to deal with missed payments that can jeopardise your future viability by protecting your cash flow and helps you avoid taking on bad debt.

For more tips and advice on business financial monitoring, download our ebook: Boost your financial performance analysis.