What is your financial data telling you?
For many organizations, the answer isn’t very clear. Despite the fact that big data is big business—with the data industry anticipated to approach $77 billion by 2023—companies often find it challenging and overwhelming to make sense of huge volumes of complex financial data gleaned from multiple sources.
For many, data visualization is the key to turning financial reports into actionable, decision-making tools that drive value and enable long-term growth and profitability.
A Picture Tells a Thousand Words
Data visualization is a graphical representation of data—using charts, diagrams, maps, and other visual elements that go beyond presenting the numbers to telling a story. The objective of data visualization is to help the business spot trends, patterns, exceptions, and opportunities more easily, then make informed business decisions based on actionable insights.
While it’s useful for a variety of industries and functions, data visualization is especially helpful for transforming the value and effectiveness of financial reporting. It allows decision makers across the organization to interpret and understand large quantities of financial data more quickly and accurately, which leads to better decision making that can propel the business’ growth and success.
At its core, data visualization is a story-telling device. It turns numbers and facts into visual stories that empower both financial and non-financial users to make key business decisions, without wading through complicated and confusing spreadsheets with endless columns of figures. Given that about 65 percent of people are visual learners, enabling employees across the workforce examine, understand, interpret, and apply financial data more effectively in their respective functions can prove to be a significant competitive advantage.
Tailoring Data to Your Audience
Whenever you’re presenting information, it’s always vital to keep your audience in mind. That’s especially true with financial data. Who will be digesting this information? What is their skill and knowledge level when it comes to financial data?
The beauty of data visualization is that it allows you to customize the graphical presentation of data to the needs of different audiences within the company, ensuring each function has the information needed to make the best decisions. Rather than share traditional, one-size-fits-all financial reports that can be difficult for non-financial users to understand and interpret, the finance team can develop data visualizations that are tailored and meaningful for each group.
For example, the sales staff might benefit from visual dashboards that show how sales are trending in their territory or region, how sales of a particular product compare to the previous year, or whether certain customer segments are exhibiting a noticeable change in buying patterns or other behavior. The manufacturing team will want to see a completely different story, focused on understanding how inventory levels are trending by product or whether product returns are up or down.
Another benefit to using data visualization for financial reporting is the ability to integrate data from multiple sources and platforms across an organization or industry. Access to contextualized information can help the business spot trends, issues, and opportunities that aren’t readily apparent when looking at data from a single source—then connect the dots, draw conclusions, and determine what to do in response.
Putting Data Visualization to Work
There are two primary types of data visualization, and both can help turn your financial reporting into more actionable insights.
Exploratory data visualization digs into the numbers in an effort to understand the “what, when, why, and how” behind the data. It enables the users to drill down across periods of data, different levels of granularity, or through different categories. It’s like having a ready and flexible analytical tool that you can navigate right at your fingertips.
Explanatory data visualization is more straightforward and focuses on sharing the important data points to tell a story. It can summarize and highlight key insights that can be shared especially during higher levels of discussions among key business decision makers such as the management or the board of directors. It’s about presenting the data you’ve determined is most essential to share.
Both exploratory and explanatory data visualization are useful in financial reporting and analyses because they enable the company to understand what is driving the data, share useful insights across the organization, and make decisions on how to best allocate resources, address problems, or capitalize on opportunities. Both forms of data visualization also can help you zero in on the metrics that matter most to your business, ensuring that your teams stay focused on the performance measures that are most meaningful to your organization.
Getting Started with Data Visualization
Data visualization is quickly shifting from a nice-to-have to a must-have capability for organizations that are eager to turn their financial reporting into a powerful decision-making tool. But with so many data visualization technologies and tools available, how can your business best leverage this capability to transform your financial reporting?
Teaming up with a partner that’s highly experienced in using data visualization for financial reporting is a great first step. Scrubbed provides financial reporting that incorporates state-of-the-art data visualization, helping our clients make the most informed business decisions based on actionable insights. We also offer free consultation on financial reporting, as well as accounting*, corporate finance, tax compliance and other professional financial services.
If you’re ready to turn your financial reporting into a powerful decision-making tool using data visualization, contact the financial reporting experts at Scrubbed at [email protected] or 800-837-5160.