Kijk in het hart van je bedrijf met analytische reporting

An analytical accounting system lets you look into the heart of the business. You know exactly what is profitable and what isn't.
Associate Director  - Reginald Nobels

Even though analytical accounting isn't mandatory, it is a tremendous source of information for your company's decision-making. In this article, we list the major benefits of analytical reporting. Real opportunities that, as a Finance Manager, you definitely shouldn't miss.

A quick refresher on analytical accounting

As a business owner, CFO or manager, you probably know what analytical accounting is. Yet many finance teams still don't use it, and miss out on big opportunities as a result. With this approach, extra information about the origin of a cost and/or revenue is added to journal entries. Using analytical levels, you can give every account a strategic breakdown, for example by product or service type, by branch, by region… Without analytical bookkeeping, you lose this extra dimension to dig deeper into your costs and/or revenue. 

Look into the heart of your business and understand what drives your results. Analytical reporting helps you take strategic action to take your business to the next level. 

1) Profitability: the core 

One of the main benefits of analytical accounting is that you know the exact profitability of your business. You need to know exactly where you are highly profitable and where you are not, and act on it. The example below shows a report that uses a breakdown of offices by region as the analytical level. This lets us see the different profitability per office. Thanks to this table, we notice that Antwerp shows low profitability on gross margin compared to the Edinburgh office. Without analytical accounting, you would only see the positive gross margin of more than four million, while some offices are actually not profitable. By acting on this information, you can increase your profitability.

Curious about the reports you can build with analytical levels?
Take a look here!

2) Anticipation: spot opportunities and issues instantly 

When you analyze at the analytical level, a single glance at the breakdown immediately shows where an opportunity or an issue can be found. This lets you take very targeted action on specific products or activities that are highly profitable, or not profitable at all. 

Benchmarking within your own company

For example, when you use your different activities as an analytical level, it becomes immediately clear which revenue and costs originate from each activity. This makes it possible to compare the results of one branch with the company's other branches. You can then set up an internal benchmark that tells management far more than the overall figures alone.

3) Risk management: costs and revenue

Without an analytical level, you can only cut costs across the board through general initiatives. When you look at costs per level, you can use a selective strategy to reduce or optimize them. When downsizing costs, you can check per analytical level exactly where you want to save. This helps you better understand your costs and save or optimize resources in a more targeted and safer way.

The same applies to knowing where your revenue comes from. You learn much more than a single overall revenue figure. On top of that, analytical levels can be combined to look even deeper into the heart of your business. By creating matrix levels, a company can, for example, find out which product type sells best in which region, or check whether certain efforts are in line with the budget. 

Conclusion: from overview to insight

Convinced that analytical reporting is a must-have? Start making the right strategic decisions today with detailed, granular reporting based on analytical accounting. Accurate, objective figures let you react quickly by managing risks and spotting opportunities in time. 

• Identify profitability right down to the heart of your business
• Instantly find out where a deviation in your figures comes from
• Learn the best practices of your most profitable levels and apply them to other corresponding activities
• Take action on loss-making levels
• Avoid misinterpreting business results
• Use matrix structures for more in-depth management reporting
• Stay focused on the big picture and optimize your business results

Excited to set up analytical reporting for your business? Great! Always think carefully about which analytical levels will benefit you most. A good test is to sketch what your company's ideal reporting would look like. Then, starting from that sketch, work out which analytical levels you need to produce this reporting.

Analytical accounting in a nutshell

1 Create your levels in your accounting software
2 Book your invoices analytically
3 Connect to EMASPHERE
4 Analytical levels are imported automatically
5 Extend your current reporting with your analytical levels