The fast-paced nature of modern business has made the need for up-to-date financial data more important now than ever. This is because having access to the latest financial information could be the difference between sinking and swimming, and is crucial for businesses who want to stay competitive in changing markets. In more recent years, the integration of advanced financial technologies has also meant businesses can gather and use vast amounts of real-time data far more efficiently, further boosting their ability to perform. 

Looking ahead, we will explore the role of real-time data in strategic decision making, look over the advantages that real-time data can bring to companies who embrace it, then consider some challenges that business owners may face when handling large amounts of financial data with the aim of helping entrepreneurs understand the value of using it to shape their strategies. 

The Role of Real-Time Data in Business Decision-Making 

There are plenty of real-time financial metrics that businesses may find beneficial to track if they are aiming to maximise their growth strategies. Profit and loss statements, accounts receivable and payable, and cash flow data are among some of the most important metrics to track, and for good reason: 

Decision Speeds: 

Having access to up to date, accurate financial data, at all times of operations can have a profoundly positive impact on how businesses make their decisions. This makes the response time between recognising an issue within the business, or alternatively, a potential opportunity that could be seized upon, infinitely smaller than if a business had to wait on traditional means to see their financial figures. A simple way to illustrate this is if a retailer spots a surge in demand for a particular product through real time sales information, they can promptly adjust inventory levels to maximise profits, surpassing rivals who rely on slower traditional analysis methods. 

Decision Accuracy: 

Being able to react quickly to problems or opportunities is important, however being able to do it with confidence of outcome is also vital if a business wants to succeed in the long-term. Having access to current financial figures means business owners can adapt their strategies based on how well they know they are performing in contrast to what would otherwise have only been projections. This is ideal because it means both budget allocations are more accurate, and the financial forecasts that those businesses are creating can be accurately adjusted to match shifting conditions. 

Enhancing Risk Management with Real-Time Financial Data 

The ability to manage risk effectively has always been important for any business, and as more and more real-time data becomes available to every industry, it is becoming much more achievable. Advancements in Financial Technology (Fintech) tools for accountants and SMEs in particular have made data more accessible, even to the layman, and once obtained can be used to dramatically improve a business’s risk management: 

  • Obtaining Real-Time Financial Data: The ongoing development of Fintech tools now means that businesses can obtain real-time financial data from numerous accessible sources. Between Open Accounting and Open Banking software, to cloud-based financial management tools like our very own Pulse, entrepreneurs can now access and view their finances like never before. 
  • Risk Identification: Having a complete picture of your financial data allows businesses to quickly pinpoint and address risks that may be on the horizon, this is typically achieved by proactively monitoring financial transactions as they occur, rather than reacting to older statements after the fact. Detecting issues early on means businesses can respond promptly, potentially avoiding minor financial hiccups from escalating into major issues. 
  • Taking Proactive Measures: It is just as important to be proactive in the case of a trending downturn, as it is when a potential opportunity comes around, and this is precisely where access to real-time data shines. Contingency plans can be developed in advance or a chance at expansion can be capitalised on in the knowledge that there are enough funds to cover the costs and the business can continue running its operations smoothly. 

Competitive Advantages Through Real-Time Data 

The bonuses of real-time data are multipronged, and by using them to achieve improved operations and positive growth, you also gain advantages over competitors who are not effectively using insights to their best advantage. If it is your business that may not be doing so, below are some key things that should make you consider the worth of real-time data: 

  • Market Trends: When using real-time data, businesses can stay aware of market trends through the monitoring of product and service sales, as well as consumer feedback and retention. By analysing numerous metrics, such as social media feedback and changing market conditions, companies can adapt their strategies to suit. This might involve altering their product development or services, or even changing supply chains in order to meet consumer demands. Wherever the data takes you, your business should be ready to make quick, decisive decisions that will keep it ahead of the competition. 
  • Operational Efficiency: Operational efficiency can be improved dramatically by dissecting real-time data and taking actionable insights from it. Regardless of the industry, data can be used to monitor and optimise anything from production schedules to staff allocation. Retailers for example might shift staff numbers around based on a department’s sales data, depending on if it is over or understaffed, or a manufacturing firm may aim to reduce downtime by shifting machinery schedules. Data can be collected on any metric, and once insights become available, action that would otherwise have been missed can be taken. 
  • Competitor Analysis: Possibly one of the most crucial things a business can do to remain afloat is to stay informed about their competitors strategies. Collecting real-time data from sources like market reports and competitor websites, businesses can keep track of their competition’s actions, and respond quickly to any changes in products or pricing strategies that they can see are effective. Remember, it is highly likely that your competitors are doing the same to you, too, so do not shy away from any edge you can get! 

Challenges and Considerations with Financial Data 

By putting in the effort to obtain, understand, and then use real-time financial data, business owners can work to bring about significant changes in their organisation. The main goal of data utilisation is overcoming obstacles and achieving success, however there are some obstacles that excessive amounts of data can also present, especially when that data involves finances: 

  • Data Overload: In our blog about presenting financial data, we discuss how easy it is to lose important insights amongst the vast incoming waves of data. It is easy to become overwhelmed and not gain anything if the data is misrepresented or misunderstood. For financial data, software like Pulse is the perfect example of a tool that can take enormous amounts of data and filter out the noise, presenting metrics like profit and loss ratios or liquidity numbers in easy to understand visual formats. 
  • Privacy and Security issues: Handling vast amounts of real-time financial data can be a cause for concern amongst users unfamiliar with the robust security measures that are involved in making platforms like Open Banking and Open Accounting safe. If a business does choose to start using financial tools, they should ensure compliance with regulatory bodies such as the GDPR, or general data protection regulation. Ensuring robust cybersecurity measures are in place, as well as privacy policies that protect sensitive information from breaches will also go a long way to maintaining customer trust. 

Parting Thoughts 

While the influence of real-time data has effectively transformed how modern businesses build and act upon their strategies, if not taken seriously, or the actionable insights gleaned from it not used properly, the data can become a proverbial double-edged sword, which is why business owners should take it seriously. By accelerating their decision making processes and honing risk management using the data, enterprises can quickly gain an edge over their competitors. Looking forward, it is clear that the role of real-time data will become even more valuable, especially as Artificial Intelligence (AI) and Machine Learning (ML) capabilities progress – which seems to be at a scarily fast rate currently! 

Understanding Financial Data With Pulse 

Our innovation Fintech tool, Pulse, will break down your business’s profit and loss, turnover, margin, and liquidity metrics into easily understandable insights. Our service integrates with Open Accounting and Open Banking platforms to pull and aggregate all of your financial data into a single bespoke dashboard. Key metrics are displayed through useful mediums like bar charts and line graphs to produce valuable financial insights for the user. Visualising data for accountants and business owners has never been easier, sign up to Pulse, and start experiencing the benefits of our cutting-edge financial software today!