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Data Analytics Blog

Data Is My Parachute

Two of my passions in life are data and skydiving. One is work related and the other is my hobby but both share common characteristics. Both require a tool for me to be successful. In skydiving it is my parachute and at work it is data. My parachute allows me to control my fall rate, steer to my landing area and land softly whereas data allows me to gain knowledge of an organization, provide information and insight to help guide the organization and allows for monitoring all aspects of the organization to guide it towards its goals.

As I rely on my parachute in skydiving, I rely on data at work. To run a business without relying on or monitoring data would be like jumping without a parachute. The organization would be proceeding with no guidance. Without analyzing the data, the organization is missing valuable information that will help in the decision making process on how to guide the organization towards its targets.

In skydiving there is a reserve parachute, and in an organizations data can work as a reserve parachute. When an organization has controls in place like a main parachute in skydiving and the controls fail, the data can be used to lessen the impact. The data will show how, why and when the controls failed and can be used to guide the organization until the main controls are repaired. Skydiving has taught me to always have a reserve I can trust and I take this lesson into all the organizations I work with.

Having a parachute for your organizations in the form of a well structure data environment will allow you to successfully guide your organization in the direction you want and lessen the impact on your business if controls fail.

Like parachutes, data is not a one size fits all. Please contact me to discuss how we can use your data to provide you a parachute for your organization.

 

Analytics for Small Businesses

Often small business owners are focused on cash flow and developing the company and not on analyzing their data. This is understandable however knowing how data analytics can help small businesses will assist in the goals of managing cash flow and developing the company.

There are several basic analytics that small businesses can embrace:

  • Accounts Payable Duplicate Payments – This analytic will identify any duplicate payments that have been made. Small business owners and staff are often working long hours, thus increasing the possibility of entering an invoice twice when being pulled in a thousand different directions. If the business is focused on growing or taking new products or services to market, the accounting may take a backseat to the other business activities. Finding duplicates will allow the business to recoup funds and help with short term cash flow.
  • Vendor Master File Review – Businesses in the start-up stage are often being bombarded with many new vendors and there isn’t always time to gather all the vendor information required prior to paying an invoice. This leads to incomplete data in the vendor master file. This can lead to duplicate vendor records being set up for a single vendor resulting in duplicate payments or fraudulent use in the future. An incomplete vendor record could cause tax issues by assigning the incorrect tax rate or missing data that will be needed in a GST/HST audit. Developing an analytic to identify data quality issues in the vendor master file will save time and reduce potential costs (duplicate payments and tax assessments/penalty).
  • Inventory Analysis – Tracking inventory levels is key to reducing carrying costs and ensuring the business has the correct amount of inventory on hand. Conducting analytics on inventory will help identify products with a slow turnover rate, obsolete products and improve the ordering efficiency. If raw materials are ordered too soon there is a financial cost and a cost for physically storing the materials. Ensuring that the materials are ordered at the optimal time will reduce these costs.
  • Payroll Analytics – Ensuring that payroll and all related deductions are handled correctly is vital to small businesses. Payroll analytics can be used to ensure deductions such as benefits, CPP and EI are being calculated correctly. Analytics can also be used to ensure taxes are being captured correctly and all pertinent information is being stored. It is important to remember that the underlying data captured in the payroll system will be used in the event of tax audits and to create the year-end tax reports such as T4s.

With over 14 years’ experience in the data analytics field, I’ve seen the problems small businesses can have if they do not review their data regularly. Completing analytics in the above areas will ensure the business is running smoothly and prevent future problems that may be caused by issues with the data. Analytics can be easily implemented to prevent and monitor for any issues that may arise.

 

Analyze Before being Audited

Lately I’ve noticed a new trend in data analytics where clients are asking for analytics to be performed on their data prior to or during an audit. The principle behind this is to “know the unknown” before the auditing party whether it be CRA, external auditors or external vendors discovers the “unknown”. This has proven to be a great method for reducing risk and being proactive in responding to and reducing audit findings.

Often in today’s busy business environment, we do not take the time to analyze our valuable data which is being produced and stored. It’s not until someone comes calling that we then decide to take a look at the data or in most cases blindly hope all is well. With all the talk lately of big data and data analytics we tend to pass this off as a “nice to have” project or “I’ll get to it later”. We often forget that we, the business, are not the only stakeholders that use and rely on our data.

The idea of analyzing your data before an audit has several benefits:

  • Cost savings – depending on the type of audit that is being performed, interest and penalties may be applied to any finding. These costs can be reduced if issues are detected early. There are also opportunities to find any missed revenue such as unpaid customer invoices or missed tax credits.
  • Time savings – analyzing the data prior to sending it will ensure that population is complete and accurate preventing wasted time to re-extract data or search for more information as the audit is progressing. As well, it ensures you have all the information at your fingertips should there be any additional requests.
  • Risk reduction – if there is an error which you can find and correct prior to the audit, the risks are minimized. Risk of penalties or noncompliance to contractual terms can be reduced.

Being proactive and analyzing data prior to an audit will help to make the audit go more smoothly and could potentially lead to cost savings.  This gives the business a chance to dive into their data which is a task that is often overlooked or put off.

In response to this current trend, we have developed specific analytics to address the completeness and accuracy of data for audits as well as analytics to look for cost savings and efficiencies within your business. As more parties will be relying on your business’s data, analytics will continue to become an important part of your business processes.