There are few industries where there are more applications of Predictive Analytics than finance and accounting. The ability to predict the future greatly simplifies a company’s financials, especially from a budgeting and planning perspective. This is what makes PA technology incredibly useful. A well-engineered Predictive Analytics engine can identify trends, patterns and trajectories that could easily elude even the most experienced data analyst.
The applications of Predictive Analytics in finance are many and varied. When all is said and done, companies can achieve better financial stability and agility. PA equips them with the data they need to act proactively—not just reactively. The right business insights allow a company to act with confidence. A custom Predictive Analytics engine can bring a tremendous ROI and elevated profit margin. So how exactly are companies using this technology?
Using Predictive Analytics to Predict Sales
Most companies rely upon product sales or service offerings, but there are so many factors that impact consumer habits. It’s a complex equation, with dozens of possible variables affecting sales volume. It’s simply impossible for a human analyst to equal the performance of a Predictive Analytics engine. This technology can accurately—and quickly—examine data from a wide variety of sources, arriving at a precise and accurate sales forecast.
An accurate sales forecast empowers companies, giving business leaders the ability to make critical choices concerning expansion, hiring and other key decisions. In cases where sales are predicted to fall short, companies can take action by implementing measures that will boost sales/conversions or minimize the shortfall.
Leveraging Predictive Analytics to Allocate Resources
Company resources are limited, which makes resource allocation a very challenging task. Businesses are tasked with identifying where resources are needed most and where those resources can have the greatest positive impact. A well-built Predictive Analytics platform can analyze your resources and all of the related metrics, giving company leaders the insights they need to make profitable decisions.
If your software developer integrates modeling capabilities, it’s even possible to run a scenario through your Predictive Analytics software platform to see which course of action will be most beneficial. This kind of insight ensures that every business decision is likely to be a good decision; one that’s backed by hard data.
Building a Budget With Predictive Analytics Software
Accounting departments spend a large portion of their time building the budget, particularly during the last few months of the fiscal year. Creating the annual budget is no small task, especially for a large company, which may have thousands of line items. Many of those line items involve predicted cost—not actual cost. This can result in a potentially significant differential when comparing budgeted costs versus actual expenditures at the end of the fiscal year.
Budgeting is quite challenging because businesses will encounter problems if they veer too far in any direction. If you underestimate costs, you could end up with a major deficit, which can be very problematic (especially if the money simply isn’t available.) Conversely, if you act conservatively and overestimate costs, you could end up foregoing extra staff, new equipment or other potentially-beneficial expenditures. This underscores the importance of making accurate cost predictions as you build the budget.
Fortunately, this is one of the top applications of Predictive Analytics in financing and accounting. PA technology is very adept at processing data from dozens of different sources. Due to the ability to spot subtle patterns and trends, the predictions can be extraordinarily accurate. The end result: a budget that’s on-point.
Using Predictive Analytics to Ensure a Smooth Expansion
Growing a company is quite the endeavor, whether it entails expanding to include new offices, hiring new staff or offering a broader range of products/services. Determining the cost of scaling up can be challenging; A faulty prediction can result in serious problems, such as layoffs or office/store closures.
Quite simply, you want your company to succeed as it upscales and grows. This is another area where a Predictive Analytics platform can be very useful. This technology is very effective at computing the many variables. Ultimately, it can help your business determine whether growth can be supported both in terms of financials and operations.
Predictive Analytics software can make sense of large data volumes, arriving at forecasts and predictions that are essential when making strategic business decisions. With data and hard numbers supporting your decision, company leaders can scale and grow with total confidence knowing that their efforts are likely to succeed in the long term. These are just a few applications of Predictive Analytics in finance and accounting. When it comes to money, the more information you have, the better. The results are more informed decisions and a higher success rate for your business endeavors.
At SevenTablets, our product, Sertics, is a powerful data lake creation tool that enables the power of Predictive Analytics. Our team also specializes in all facets of custom software development and mobile app development, including UI/UX design, mobile security and app testing. This means that you can move forward with total confidence, knowing that your company’s new data governance tools will be secure, user-friendly and configured to drive profits.
7T is based in Dallas, with regional offices located in Houston, Austin, and Chicago. Our clients span the globe, so we know how to overcome any challenges that arise from working with a company in a different region. To learn more about Sertics, Predictive Analytics, data lakes and our data visualization tools, reach out to the team at SevenTablets today.
Reach out to our team today!