Fall 2006 issue of Horizons

Supporting Business Efficiency with Technology

Bill Jones

Diana Rasmussen-Knapp

or the data to their full potential. Every company uses its accounting systems to track the accounts receivable aging. However, this action can be taken beyond a simple collec- tions task. Analysis of days it takes your customers or clients to pay an invoice could indicate a trend. A negative trend in the payment performance of a customer that represents greater than 50 percent of your company's annual revenues is a very significant business development. Contacting this customer may result in knowledge that they are unhappy with some aspect of your customer service or that they have experienced a downturn in their business. Having this knowl- edge presents the opportunity to implement processes to improve customer service with a goal to prevent losing this or any other customer's business. Another reaction might be to reduce dependency on this one customer before the sud- den loss of business. This trend may also indicate something less drastic, and simply changing the customer's credit terms or pricing may be justified. In some cases, the information that you are looking for may not appear to exist in your current system. An example might be the value of prompt pay discounts lost. Many systems will track discounts taken and make a journal entry to record this type of transaction. However, a custom report or query of your data may show that a discount was offered, but the pay- ment data may show no discount was taken. In some industries, discounts can amount to a significant dollar amount, and reviewing why discounts were not taken can indicate policies or controls that need to be modified or were not followed.

One of the hottest trends in information technology is the analysis of data. This trend is commonly referred to as Business Intelligence (BI) or analytics. Business intelligence can be defined as the collection, analysis and presentation of data to be used in making informed business decisions. The products used can range from everyday Excel spread- sheets and the common report to multidimensional OLAP (Online Analytical Processing) cubes using a variety of pres- entation tools. Most organizations do not realize the value of the data they have accumulated within their accounting or ERP (Enterprise Resource Planning) solutions. The informa- tion in their systems has value beyond the financial state- ments, reports used for preparation of tax returns, or reports given to auditors. Analysis of accounting data helps manage- ment in making better informed decisions.

Most companies utilize reports from their systems to operate their businesses. However, they do not utilize these reports

22 • summer 2006 issue