Business Intelligence Opens New Opportunities for Accounting Firms

Rapid, actionable insights were once the promise of big data, but businesses soon learned that big data alone wasn’t enough to fulfill this vision. The key was in the transformation of data into usable information that can guide decision-making. This transformation is known as business intelligence (BI). Today, even small accounting firms have lots of data — but firms must use BI tools and processes to harness its full potential. 

BI is about the collection, management and transformation of data into insights that accounting firms can use to support their practices. The right BI tools, combined with an insightful BI strategy, are the core elements of this support.

What is business intelligence?

Business intelligence is a broad term that refers to the use of data to develop actionable insights. At its root is the idea that business leaders can make good decisions if they have high-quality information. If there’s not enough information, or there’s only poor-quality information, the result is poor decision-making. 

A shorthand expression for this is “garbage in, garbage out.” Poor-quality information can come from data with errors or data that’s interpreted in a way that’s no longer relevant to the company’s current strategy. Business intelligence should prevent “garbage in, garbage out,” instead leading to quality data in, actionable insights out.

Elements of business intelligence

Business intelligence uses many different tools, including some that are common in workplaces but not often seen as BI tools. Spreadsheets like those in Google Sheets and Microsoft Excel are, in fact, BI tools, as they can help summarise and visualise data to support decision-making. The simple ability to collect numbers in a comprehensible and meaningful way is, in this sense, business intelligence.

Most observers think of BI in terms of its more sophisticated tools, which are used for in-depth data collection, reporting and analytics. Data mining, complex data visualisation and online analytical processing (OLAP), which offers multiple perspectives on the same sets of data, are common applications of these tools.

How BI has developed

Business intelligence was originally the almost-exclusive domain of IT professionals, who produced reports for companies. In this early stage, BI was not something decision-makers directly used to gain insights. Over time, though, BI tools became more powerful and easier to use so that analysts and executives could access the data themselves and look at it from a number of perspectives. 

Now, BI often incorporates advanced tools that are easy for business professionals to use, even if they’re not trained in IT. BI gives accounting firms meaningful capabilities, like predictive modeling that offers “what-if” scenarios based on their current data and projections. 

Where BI is commonly used

BI started as a tool for financial insights, but its use has grown over time. Aside from this use, BI can also provide an essential perspective on an organisation’s operations. This represents a qualitative as well as a quantitative perspective, where businesses can connect data points to what’s happening to the firm in the real world.

Accounting firms can analyse their revenue pattern over the year and identify the impact it would have on their billable hours when they provide tax services to commercial clients on a monthly instead of quarterly basis. That’s just one example. If your firm has high-quality data on its operations, the right tools can convert it into actionable business intelligence. 

Common uses of BI in accounting

Business intelligence has a multitude of uses for accounting firms. The advances in BI technology can help firms serve as more valuable partners for their clients while optimising their own profitability. 

Gleaning insights from financial data

Accounting firms can quickly assess their financial performance in many key areas. Revenue reporting can identify which of the firm’s clients are meeting their benchmarks for invoicing, for example. BI can also help accounting firm leaders assess their personnel costs and relative value to decide whether they should adjust their human resources strategy. 

Visual report creation

BI helps accounting firm leaders gain a visual understanding of key data points. A simple bar graph can compare benchmark performance year over year for each client, showing who’s been billing more or less over a period of time. Pie charts, line graphs and point-form summaries of key points are essential tools for busy professionals.

Internal process assessments

Accounting firms can also use BI to quickly gain insights about their workflow, including pending transactions, overdue deliverables, upcoming deadlines and more. Adding to this point-in-time functionality, BI can also show firms where delays might result in delayed billing cycles or a longer timeline for revenue generation. Knowing where the friction lies in your internal processes is the first step toward streamlining your operations. 

Improved forecasting

BI, by definition, uses high-quality data to produce actionable insights. There’s little risk of the “garbage in, garbage out” phenomenon. As a result, you should expect superior predictive insights, which you can rely on to plan all aspects of your operations. This includes revenue and expense forecasting drawn from real data. 

BI can support accurate forecasting for accounting firms whose primary clients are in a specific industry and whose overall market is expected to expand or contract in the next six to 12 months. An accounting firm that primarily serves construction companies, for example, can use BI to predict an increase in its billable services if construction projects are anticipated to increase rapidly. 

BI can also show that firm where it might experience HR and other internal resource strain as it attempts to meet that new demand.

Pattern and trend identification

Perhaps one of the most useful capabilities of BI is to help accounting firms identify trends and patterns over a period of time. Year-over-year trend insights can show, for example, whether the firm has a predictable spike in revenue around personal income tax filing time. 

These trends show the financial effects of a change in the firm’s strategy. The flattening of the revenue spike at personal income tax time might be explained by a shift in focus to commercial clients that have varying needs and tax-filing dates. The firm’s BI should show, therefore, not just a flattening of the spike but also an overall increase in revenue during other times of the year.  

Top benefits for accounting firms that use BI

Accounting firms can greatly benefit from adopting a broader use of sophisticated BI tools. These apps can help accounting firms operate more efficiently while delivering more value to their clients.

Deeper insights

BI can help accounting firms look backward and forward in time to see trends that might be obscured in their simple monthly or quarterly reports. These insights can help firms identify and anticipate changes in revenue based on external factors and historic trends as well as operational challenges they may face in regard to staffing and resource management.

More useful advice

Accounting firms can use BI when advising clients, offering an in-depth analysis that makes them indispensable partners. As accounting firms become more reliable strategic analysts, their services become more valuable for their clients. 

Cost savings

BI is touted as an advance in analytics efficiency. With modern BI tools, it takes less time to produce reports than with less-sophisticated technology. BI also helps firms identify where they can cut back on expenses or improve their operations to reduce waste. This all adds up to significant cost savings. 

The importance of developing a BI strategy

As advanced as BI tools have become, they’re useful only if you combine them with an effective strategy. That strategy should help you determine how your accounting firm can make the best use of business intelligence according to its own goals.

Meaningful KPIs

A BI tool might come with a template of key performance indicators (KPIs), but that doesn’t mean they’re all relevant to your practice. In developing your BI strategy, you should focus on the KPIs that are actually relevant to you or your individual clients.

Effective use of technology and BI software

Even with a set of relevant KPIs, it’s possible to underuse BI software and other types of accounting technology. It’s critical to understand what the BI product you’re considering offers and how to effectively use the features that are most relevant to your accounting firm. 

Caseware Sherlock for business intelligence

Caseware Sherlock provides firms with deep BI insights within a secure, sleek user interface. You can even integrate a range of your firm’s data, including data from audit software like Caseware IDEA.

Sherlock brings automation front and center and seamlessly integrates with your Caseware engagements so you can glean insights at a glance. Sherlock is highly flexible and customisable, so you can tailor your data visualisation, create client profiles and benchmark your data to identify areas of strategic growth for your firm. Harness the power of data-driven BI across your practice for informed decision-making with Caseware Sherlock.