Bookkeeping company offers predictive accounting - Accounting is typically a backward looking field, because it relies on historical data. However, that data can often be very useful for making future decisions. You may want to ask your bookkeeping company about predictive accounting and the value it could bring to your company.
Predictive accounting is the practice of using historic bookkeeping data to forecast future outcomes. Every business needs to project potential future outcomes to plan effectively, so it is a good idea to use previous financial records to observe trends. Here are some reasons to consider speaking to your bookkeeping company about predictive accounting.
You need to order inventory to meet future customer orders. If you don’t order enough, then you will miss out on potential sales and potentially create dissatisfied customers. On the other hand, if you order too much inventory, then you will need to pay unnecessary storage fees.
Your bookkeeping company can review old financial records to help you gauge customer demand. This will help you decide how much inventory to order each period.
Improve Customer Relations
Lisa Callaghan, the director for Interactive Accounting, told Accounting Web that her firm’s predictive accounting services enables them to improve customer experiences. Callaghan said that studying past customer activity allows them to better predict future client needs, which helps clients provide more timely and higher quality services.
Reduce Cost of Valuable Information
Many businesses pay a lot of money for information to make better managerial decisions. However, that information is often based on industry averages and may not pertain as well to their own business model. The data from your own accounting records can be the basis for much better decisions at a much lower cost.
Business Process Management (BPM) expert Gary Cokins is one of the many experts that states using BPM data is one of the most cost-efficient ways to procure the information needed to make future decisions.
Leveraging existing financial records is a great way to improve scalability by making changes to your business structure. You understand the amount of labor and assets needed to meet a goal, so you can easily assign more employees and communicate the process to boost returns.
There are many great benefits of predictive accounting, but there are some unfortunately challenges as well. Here are a couple of the difficulties that you will need to be prepared for:
Reviewing old financial data. You probably have years of financial data for your company. Going through all of that data used to be very cumbersome. Advances in cloud computing and new features in Quickbooks have allowed companies to analyze it much more efficiently. Unfortunately, many companies lack the technical prowess needed, so they should work with a company with the necessary expertise.
Deciphering trends. Studying financial trends is a sophisticated art that can take a lifetime to perfect. Your company should outsource the task to a bookkeeping company with the expertise needed to make sense of it.
Unless you have a professional accounting background, you will probably be better off hiring a seasoned accountant.
Predictive accounting is a very valuable practice that has only recently gained recognition. However, it is also a very complex discipline, so most companies are better off hiring a professional bookkeeper. My bookkeeping company offers predictive accounting services and we will gladly help to answer any questions that you may have about predictive accounting. Please do not hesitate to reach out to us if you need a professional bookkeeping company to provide a clearer understanding. We look forward to helping you!
Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you each month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.