Finance teams and the practical challenges of real-time data

Real-time data has been pushed to the fore for finance functions to allow them to constantly monitor their organisations’ performance and environment and adjust plans accordingly. This process has accelerated in the past 18 months as more entities look to monitor progress day by day and week by week.

“Uncertainty has made it incredibly difficult for businesses to plan ahead for the future, particularly when it comes to cash flow,” says April Foster, Partner at Moore (south). “Having access to real-time financial information means that business owners can react quickly, and can make business decisions based on accurate, up to date financial data rather than estimates or assumptions.”

Around 60% of UK finance teams still do not have access to real-time information. However, it is becoming easier due to the evolution of technical skills and the advent of cloud technology and automation.

It gives the finance function a more detailed view of the financial state of the organisation, from its available cash to its assets and liabilities.

We asked accountants in business how they utilise real-time data, and what advice they’d offer to other teams looking to make the most of real-time data.

Don’t be afraid to trust data – follow any anomalies

Björgvin Vigfússon MAAT AATQB, finance manager, Westmorland Linen Rental and Laundry

We’re a commercial linen rental and laundry and we’ve just completed a state-of-the-art module that is capable of laundering just under 3.4m units per year. All of those machines can give us readings on production on an hourly basis. A lot of the processing of that data needs to be done manually –we check productivity at 8 o’clock, then at lunch time, and we input the data into our productivity Excel file, which is set up in a way where it can tell us exactly where we stand production-wise, profit-wise and productivity-wise. I am basically the team’s data collector.

We have a CRM system that collects client data. Clients hire linen on a three-day stock, and the CRM keeps us up to date by telling us exactly how much linen, broken down by category, each client is using on any day by clicking a few buttons. We use that on a daily basis to monitor where we are. On a weekly basis, we take down sales figures for the week to see where we’re standing. That then is fed into Xero and matched to invoices.

I can also use our CRM to compare periods, which was particularly useful during lockdowns. We had to find ways of finalising paying for the factory and getting cashflow up and running. We were able to use that real-time data to see how clients will potentially be spending this summer. We use Xero to its full potential with payroll and cash flow to support this further.

From the beginning, we’ve been quite strict on what data is relevant to us and what we need to measure. That has grown in recent months. In our weekly management meetings, we try to work out what further information we want to include in our reports and how to source and measure that data.

How to implement Real-time data: Don’t be afraid to let the data tell you things you don’t know. If there’s an unusual stop or a rise in one of your data lines and there’s no obvious explanation for it, trust the data and investigate. Listen to what the data is telling you.

Ensure your infrastructure can handle real-time data

Farha Jamadar FMAAT, finance manager, Todd Doors

Real-time data was game-changing during the pandemic to keep on top of the changes and change business strategy to maximise sales and keep costs down. Focusing on our online sales and deliveries to ensure we reach our customers in whichever way we can but maximising the furlough scheme. This was the biggest catalyst in ensuring we got as much turnover as possible whilst ensuring all cost elements were a low as possible, which allowed us to keep afloat when no other sales channel was profitable.

We use various apps and databases to process real-time data, which are pulled into our in-house software. We’re constantly reviewing our systems as the data available and the potential for how we can use it changes at such a pace. It’s important to invest in tech to allow you to harness it to its full potential.

Data gaps occur where specific industries or customers are stuck in older systems, where data is not readily available. It has a domino effect when the companies you work with are not on the same page as you, technology-wise. HMRC also has gaps in the efficiency of its systems. For example, it can take some time for a payment against your VAT bill to be reflected in HMRC records.

When utilising real-time data, it’s a challenge to put together a robust enough system to be able to process and merge your disparate sources of data. This is essential to make the most of the data you have; once it’s done, data manipulation is easier, ensuring that you can produce reports faster.

RTD has boosted our work by enabling us to make quick changes to the business and strategy, especially when new legislation comes out. We can work around specific restrictions and keep everyone safe. It seemed like all we were doing during Covid is reviewing new information and making it work for us, whether that be grants, infection rates, etcetera.

More immediate and relevant information holds a lot of power: who to pay first, whether CapEx should be used and different funding opportunities. It gives you an advanced understanding of sales and turnover levels before the end of the month. This allows me to flex the budget and reallocate costs to ensure we meet our targets. Rather than waiting for the close or systems to update, you know how to reallocate costs to take maximum advantage of selling products.

How to implement real-time data: Ensure your infrastructure has the capability to receive and report real-time data. Automate as much as possible so the information is always to hand. Make sure you have the talent and the in-house processes to be able to utilise it effectively.

Don’t underestimate the potential of RTD

Andy Murray MAAT, finance lead, Manna Pro Products

Real-time data is the core foundation to a variety of key tasks within our Finance team, from weekly cash flow forecasting to revising forecasts. We use Dynamics, Oracle and Power BI to process RTD. We have a lot of data available to us, and we’re currently exploring its potential. We could utilise customer data from our CRM system on a sales and customer level. There’s a lot of information available concerning procurement that we could be making more of as well. These are the gaps we need to explore.

The biggest challenge we face is the limited staff resources to be able to take the time to implement further RTD advances. There’s definitely a requirement for further training to ensure we’re making the most of the software and data we have before we take RTD further – there are quite a few areas within our systems that we aren’t using yet, and these need to be explored.

The pandemic has highlighted a significant emphasis on the requirement and importance for real-time data. Fortnightly and monthly cashflows soon became weekly and even daily in some instances to ensure that creditor requirements could be met, and any pitfalls could be addressed.

Having access to real-time data and enhanced reporting within the month actually improved the monthly reporting cycle, reducing the month-end accounting close process by two full days.

Our time management has much improved. RTD automation has removed many manual processes. Information is more accurate and more user friendly, and the margin for error is removed. This has freed up time to add further value to other areas of the business, both within finance and in the commercial side of the organisation at a finance business partnering level.

RTD has become a new set-in-stone cultural attitude within our Finance team and company as a whole. I would like to spend more time exploring all other opportunities where we could benefit from using real-time data in other areas of the team or wider teams. I’m specifically looking to use this data in KPI reporting on both financial and non-financial aspects of the organisation.

How to implement real-time data: Do not underestimate the use of this data. There is real-time visibility that can be used to provide accurate, timely information, which is probably more important than ever given the current times. Management teams and Boards of directors will have been pleasantly surprised and become used to the value of real-time data. This can be used for strategic decision-making in the organisation.

Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.