The key to a future-proof finance department? Non-financial data!

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Big data has taken the world by storm. Both the amount and the variety of available data are booming. Needless to say that a wide range of organizations and departments are looking into how they can leverage that data. Finance departments are no different. However they must be well aware that they have to look beyond merely financial data. A rule of thumb: all data that can have an impact on financial performance, is worth taking into account.

Examples of such information include supply chain data, HR trends, and product quality issues. But even something as seemingly far-fetched as weather data is worth taking into account. Bad weather can have a dramatic impact on services and sales of certain products (and can boost sales of other products). However, with more and more fine-grained weather data available, retailers and the hospitality sector are already relying on that data to efficiently adapt their services or stock, which is reflected in their financial performance.

The importance of non-financial data is one of the key findings from an FSN survey of nearly 1,000 senior finance executives, published in a report titled “The Future of Planning, Budgeting & Forecasting” When you only take into account financial KPI’s in building financial forecasts, you’re leaving a wealth of information untouched.

It’s evident that inserting non-financial data in your forecasts can help your team drive faster, more accurate forecasts. The sheer volume and variety of non-financial data is a treasure trove of information about future performance. It shouldn’t surprise you then, that investors are starting to demand such data in company reports. If data is a means to reflect the reality as accurately as possible, it’s a good idea to have as much relevant data at your disposal as needed.

Investing in tools and applications that can monitor and model the impact of non-financial data on financial performance is a smart move. You’ll have the edge over the competition if you insert the agility, accuracy and responsiveness in your forecasting that is needed in this era of fast change and disruption.

If you want to know more about how finance teams can generate more accurate, faster forecasts and plans from a wealth of corporate intelligence, you can download and read Chapter 1 “Non-Financial Data – The Forecasting Game Changer” here.

In our next blog, we will explain why Financial planning and analysis (FP&A) is critical. Stay tuned.