What is Financial Analytics Software?
Financial data can provide crucial insights into a company’s financial health and help plan future strategies and business goals. Financial Analytics Software has made financial analysis focused, robust and relevant for businesses. Financial Analytics software allows financial planners and decision makers to have both a bird’s eye and granular level view of the company’s financial performance and thus improve decision-making.
Why is Financial Analytics Important?
The financial service sector is one of the most data-intensive sectors. It regularly handles data that are high in volume, velocity, and variety but also high in the veracity quotient, which means they have high value and a meaningful impact on business performance. The high-veracity data analysis requires advanced technology and tools. Financial analytics software aids the process by providing solutions that leverage data for improved decision-making.
Financial analytics software ensures that the data streams are structured and real-time by using efficient data conversion, mining, and predictive analysis techniques. The data visualization tools make it possible to consume the analysis efficiently.
Financial Analytics Software help organizations in:
- Judicious financial planning and forecasting to meet constantly changing business needs
- Collecting and storing high varsity data for visibility and usability
- In-depth insights regarding financial status and thus improving visibility and profitability
- Accurate evaluation of resources and efficient measurement and management of cash and equipment for practical accounting efforts
However, any data-driven transformation that an organization aims to achieve should consider following aspects:
- Defining a data strategy – A comprehensive data strategy aligned to the business goals should be the starting point for organizations before they dive into the analytics
- Choosing A Right Platform – Organizations need to choose a platform that is:
- Flexible and Scalable
- Specializes in Security
- Navigating Data Silos – Before the organization can analyze their data, they need to ensure that the data collected across the organization is integrated, they can choose a platform that does it for them or can do it themselves
The next step is to identify a platform that meets all the prerequisites.
What are the Three Types of Financial Analysis Tools?
The financial statements of a company are based on general accounting principles and primarily consist of the Income Statement, Cash Flow Statement, and the Balance Sheet. These financial statements are prepared based on accrual accounting or cash accounting. Financial statement analysis is done in three ways:
- Horizontal – Horizontal analysis reviews the company’s financial statements over a period of time and compares the historical data to detect growth trends and patterns
- Vertical – Vertical analysis expresses each line item in the financial statement as a percentage of a base figure
- Ratio Analysis – Ratio analysis provides insights regarding equity and calculates Price/Earnings ratio, EPS, and Dividend yield
Financial Analysis software automates these steps and extracts insights that help make better business decisions.
Advantages of Using a Financial Analytics Software
Financial Analytics Software provides data-driven insights including the following:
- Providing access to real-time data from myriad sources
- Filtering high-varsity data and providing relevant analysis in a time-sensitive manner
- Allowing teams to work confidently with data-backed decision making with mitigated complexities and risks
- Aiding clear, concise financial reporting by accurately tracking revenues, expenses, and profitability
- Forecasting financial trends with accuracy
- Tailoring reports and data to meet the specific needs of various stakeholders
- Better financial planning and budgeting
Best Financial Analytics Software 2022
1. Zoho – While Zoho is popular for its CRM, Zoho’s Analytics solution offers in-depth financial analysis with visual analysis of data in real-time with interactive pre-built dashboards, seamless integration with other tools, collaborative analytics, pre-built visualization, and other relevant features.
Aimed at the finance and accounts team, strategy planners, key decision makers, and CFOs this tool helps visualize raw financial data into charts and graphs, understand trends, and gain insights with the help of AI and makes collaboration across functions seamless for better financial reporting and analytics.
2. Fathom– Fathom offers insightful reporting, three-way cash flow forecasting, effortless consolidation, group benchmarking, integration with accounting software, and other features through its all-in-one reporting and forecasting solution. Aimed at both financial analyst teams, accounting officers, CFOs, and business owners Fathom make financial data analysis simple and accessible to all.
3. Cube Software – Cube allows you to unify your data into a single source of truth by integrating all your tech stacks including ERP, CRM, HRIS, Business Intelligence, etc., and provide instant analysis. Cube allows users to streamline manual data by allowing spreadsheet access, validation, and audit trails thus reducing errors and time taken to arrive at effective financial decisions.
4. Broadridge Data Aggregation and Financial Reporting – Broadridge’s Data Aggregation and Financial Reporting allows you to align and enhance your entire enterprise with comprehensive data, actionable intelligence with flexible delivery options. Their financial management tool aims at better client retention and loyalty. Broadridge offers data on demand with its seamless API integration and propriety, centralized repository of fully reconciled data (asset under management, cash balances, transactions, etc), and allows users to have a holistic financial view across asset classes.
5. Digital on Demand – A PwC Product, Digital on demand has intelligent automation to accelerate financial transformation. Accelerated financial transformation with scalability and downloadable assets including bots, workflows, and visualizations which can be customized are other features.
The AI models and automation perform complex calculations on the raw data and provide results that can be relevant to everyday work. Process maps help identify assets and automation helps optimize financial processes.
6. Asset Map – A software as a process solution offering financial planning professionals insights regarding wealth management, investment, and insurance markets. It helps users visually organize finances in a clear graphical layout for easy insights, track financial priorities, and aid advisory practices through intuitive search.
7. ReadyRatios – A fairly easy-to-use software that allows users to input data in the form of financial statements and convert it into ready ratio tables created in accordance with IFRS and US GAAP guidelines. It also allows users to upload data in XBRL format as well and creates detailed reports. No financial knowledge is required to use this software solution which provides 40 ratio indicators, conditional comments, tables, diagrams, and summary.
8. Earnix– Earnix offers solutions aimed at insurance carriers and financial institutions and enables them to use data modeling and AI recommendations to effectively meet customer goals and needs. Data scientists can use it to connect, integrate and deploy the best models for pricing and products. Third-party integration allows better data management, and every user in the organization is empowered to make accurate decisions.
9. eFront – eFront is a software solution for the alternative investment sector which addresses the specific needs of each asset class, investor type, and requirements. This platform provides comprehensive multi-asset investment insights to investment professionals and helps them in making better decisions. Some of the decisions it can help with are fundraising, fund administration, and reporting to data analytics and services.
10. eMoney – A planning-centric platform that empowers financial advisors to plan better and deepen client engagement. Financial advisors can manage the client’s life cycle, track progress, take data-driven decisions, and manage compliance and risks. Large enterprises can choose solutions like APIs, Configurations, and Integrations to scale their financial planning and provide better value to their customers.
11. Equisoft – With solutions aimed at insurance and wealth management organizations, Equisoft offers holistic financial planning software which meets all compliance requisites and provides comprehensive financial portraits. Their platform offers integrated or modular front-end and back-end systems for manufacturers, distributors, and advisors. The platform tools address the ends of the value chain and are the largest integrator of the Oracle Insurance Policy Administration System.
12. Nasdaq IR Insight – Aimed at IR teams Nasdaq IR’s solution ConnectIR provides IR intelligence to enhance ROI, ensure continuous investment and provide superior client service. The platform allows users to engage with ESG stakeholders, monitor global markets and peers, analyze ownership, messaging, opportunity, and strategy, inform and share reports with the Board and execute key IR program workflows.
13. Reorg – Reorg provides solutions in the areas of credit intelligence, data, and analytics. Proprietary data analysis helps financial professionals, traders, portfolio managers, and investment bankers to make calculated business decisions. Their proprietary tear sheets allow financial analysts to stay ahead. Their data sets include SEC filings, company financial reports, transcripts, etc at a centralized location, easy workflow and access to real-time market intel and analysis allows decision makers to make important strategic decisions in a time-sensitive manner.
14. Spreadsheet Server – An alternative to native ERP tools which provides real-time reporting and enables users to address multiple business needs across reporting, budgeting, planning, and controllership. With the flexibility to export ERP data to Excel, automate updates, customize reports with the report creator, and format data, the next step of analyzing data is made much easier.
15. iConnect – IRIS iConnect® is a spreadsheet-based add-in solution that updates real-time information in your spreadsheets, provides easy access to rich data including numbers hidden in the footnotes, allows you to engineer financial models with accurate data, and allows easy peer comparison. Its multilingual feature makes it accessible and allows analysts to use this MS Excel plugin to access and analyze data across industries and geographies.
There are several other financial analytics software solutions aimed at specific business needs which provide insights to make effective financial decisions.
Financial Planning and Analysis Challenges faced by Decision-makers
Financial forecasting and planning are often arduous tasks for decision-makers. Traditionally used spreadsheets for data collection and storage create data silos. Financial decisions taken more on intuition than based on accurate data led many companies to miss out on optimizing their business processes and profitability.
Some of the key challenges faced in financial planning include:
- Disintegrated data across the organization- Organizations need a proper system of integrating data collected across the organization and creating synchronized financial plans involving other functions. Only a comprehensive financial plan and cross-functional collaboration can result in effective forecasting which is relevant to the business. Cloud-based financial analytics software addresses this effectively.
- Financial modeling relies on true data which is traceable, latest, and accurate, and more often than not the various versions of spreadsheet-based data sharing have severe limitations concerning relevance and accuracy
- Manual tasks like account reconciliation and closure are time and effort intensive which can be better utilized for analysis and insights and financial analytics software allow that freedom
While these challenges are mere indicators and not all-encompassing, they still paint a picture of the struggles and challenges of financial reporting, planning, and forecasting.
With the advancement of technology and the exponential growth of the Fintech industry, financial reporting and analytics can leverage data to make improved business decisions and ensure financial sustainability.
Financial Planning and Analysis need to be integrated and mature in terms of using purpose-based solutions rather than excel and spreadsheets. Identifying the business drivers from line items and arriving at relevant insights promptly which are not short-term fixes but address the long-term financial goals of the business, is the way forward. Forecasting and modeling cannot be based on data silos but need comprehensive data from various sources to create robust financial plans for the organization.
Financial analytics solutions, such as those mentioned above, can help companies leverage data to make impactful business decisions. Data available in the public domain provides great insights and aid financial analysis and planning. IRIS iConnect is especially powerful because it leverages structured data from across the globe, assisting businesses in conducting analysis at a more granular level, allowing easy modeling, and more.