If you run an accounting firm, you may wonder how big data and its growing prevalence can benefit your business. The wealth of digital information can provide valuable insights with which you can improve your practice and make strategic decisions.
In this guide, we’ll discuss how accountants can use big data for their firm, including what it is and best practices to harness it.
Big data insights in accounting and finance allow you to make impactful business decisions and back approaches with concrete evidence. On top of that, you use the information to scale and strengthen your services to satisfy clients.
Data-backed technologies are essential to predicting and adapting to industry developments. A study from Accenture found that 89% of people surveyed believe that big data will impact business, much like the internet. In other words, it will provide vast knowledge that can increase the agility of your practice and ensure longevity.
Beyond improving your services, the knowledge can help you earn a competitive advantage against competing firms. In fact, according to the study mentioned above, 79% of those surveyed consider big data to be essential to maintaining a competitive edge and surviving as a business.
What is Big Data?
If you’re not familiar with the term, big data refers to massive sets of information that most data processing software can’t support. As internet usage grows exponentially, digital servers collect more data points, increasing a wide range of insights.
But big data is more than just extensive collections of information. It’s collected and defined by four factors:
- Veracity – how trustworthy and verifiable the data is
- Velocity – how quickly new data is created
- Variety – different sources that information is collected from
- Volume – the amount of data
Computing power allows sources to collect more data over time, increasing the available knowledge it can provide.
How Can You Source Big Data?
There are a few places you can source big data to use for your accounting firm. Some of the main sources include:
- The web
- The Internet of Things (IoT)
Some methods of accessing these insights require you to purchase data sets that companies have collected from users. Alternatively, publicly available options include platforms like Google Trends, which allows you to access the frequency of topics and user behaviour statistics compiled by the search engine.
Aside from using outside data to learn about the industry and audience behaviour, you may collect and analyse your own firm’s data. To do this, you’ll likely need to invest in supplemental storage and greater processing power or use a tool like Domo.
How Can You Understand Your Data?
Massive amounts of data won’t prove useful if you cannot analyse the information. So, you may want to train yourself and the members of your firm to harness this information and transform it into findings.
Consider seeking a course in data analysis or taking the Big Data Specialisation course from Coursera.
What Are the Potential Drawbacks of Big Data?
Despite its worth, collecting, storing, or purchasing big data may require a significant investment. So, think about how much money you can put into this approach.
Aside from the cost, the technologies may use private information from clients and your business. So, it’s essential to prioritise security to protect the information and ensure it isn’t breached or stolen.
There are a few key ways to implement big data for accounting and finance to enhance your firm. Let's look at the main methods.
Data Analytics and Forecasting
Big data offers knowledge of typical financial behaviour and trends within the industry.
If you collect large amounts of information, it’s easier to predict the future of accounting and how it might impact your firm. As a result, you’ll prepare your firm and adjust your services accordingly to meet clients' needs and increase retention. You can also use this information to find opportunities to disrupt the market and grow your firm.
Aside from analysing and compiling this data to draw commonalities, turn the numbers into visual representations to make them easier to recognise. Tools like Tableau or Zoho, let you create charts to assess trends in one glance.
Weakness and Risk Identification
Analysing data lets you spot common mistakes or weaknesses in accounting processes. These insights can show you what to look for when organising your operations or working with clients.
The information can also suggest innovative solutions to common pain points and pitfalls. It can show the main causes and how to avoid or overcome them. As a result, you’ll form standardised processes to prevent weaknesses.
For example, say you plan to invest a large portion of your budget into a new service or growth area. If the insights you gather suggest this investment isn’t worthwhile, you’ll reduce wasteful spending and create more beneficial financial plans.
Client Financial Insights and Taxes
Implementing big data in accounting and finance into your practice also helps you create more accurate internal and external financial reports. The numbers let you ensure the reliability of your firm’s data and flag financial risks or bad habits.
Based on this data, you can create analytic models and practices that work better for your business and increase your productivity.
When filing and reporting taxes, big data lets you assess tax codes, check precision and lessen fraud. This approach increases efficiency when examining your budget and expenses, saving you time on an otherwise demanding process.
Auditing clients' financial information for compliance or due diligence can be a tedious process. But big data expands these capabilities to reduce manual admin and offer more in-depth insights.
Instead of basing an audit on a sample of a larger group of information, this system lets people arrange the data points to find commonalities and red flags, increasing audit efficiency and promoting accuracy.
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