Financial analytics provide detailed insights into the financial performance of a company. This includes the company’s revenue, profits, operational efficiency, liquidity, solvency, and other finance-related transactions.
It helps you answer various business questions related to the company’s stability and strength in the industry. Plus, it also allows you to research, model, and forecast every aspect of the business.
In this overview article, we have described why financial analytics are important and how they help companies improve income statements and business processes. We have also compiled a list of financial analytics tools and services that allow investment and fund managers to build reports, find potential investment opportunities, and vet those opportunities.
Table of Contents
Why Is Financial Analytics Important?
In today’s highly competitive market, businesses need more than just plain reports and financial statements. They need smart data that can help leaders make informed decisions and accurately estimate future growth.
Over recent decades, companies have recognized that finance brings more value to the business than just providing conventional profit-loss statements year after year. More and more businesses are now hiring chief financial officers (CFOs) to track financial strengths/weaknesses and propose corrective actions.
CFOs provide significant input in the company’s capital structure, investments, and how it manages its income and expenses. They use various financial analytics to measure and manage tangible assets like cash and equipment. These analytics provide deeper insights into the company’s financial status and help CEO and CFO improve the profitability, cash flow, and business value.
By merging internal operational data and financial information with external data such as demographics and social media, finance analytics may answer critical business questions with more accuracy and speed.
These are some of the basic questions finance analytics can help answer:
- What’s the profit margin on products and services across sales channels and customers?
- How can business operations be made more efficient?
- What’s the risk exposure with high-revenue-generating customers?
- How does customer relationship impact working capital?
- Is the company investing in the right opportunities based on revenue and operating profits?
- Which customer segment has the potential to offer the highest profit margin next year?
- Which upcoming events may negatively affect the stock price?
Overall, financial analytics can help businesses improve their operations and decision-making strategies for future growth.
Key Financial Analytics
Let’s explore the key financial analytics that any company, regardless of size, should be using.
1. Product profitability analytics: It’s a way of finding profits made by individual products, instead of analyzing the business as a whole. This gives profitability insights across the range of products, so the company can take appropriate actions to protect its profit margin and grow it over time. For example, if some products are contributing to over 80% of the company’s profit, they may want to advertise those products more aggressively.
2. Client profitability analytics: Most businesses fall within the 80-20 client profitability rule, which means 20% of customers account for 80% of the profit or 20% of customers account for 80% of the client-related expenses.
By knowing which customers are generating the highest revenue, businesses can extract valuable insights, such as customers’ location and what products they are using the most. That knowledge can help acquire more customers in the same area and improve popular products.
3. Cash flow analytics: This involves utilizing fixed and real-time indicators like Working Capital Days, Cash from Financing Activity, Cash Return on Invested Capital, and Cash Conversion Cycle. Nowadays, most businesses use regression analysis tools to estimate future cash flow.
4. Predictive sales analytics: Predicting future sales can help in managing the peaks and troughs of the business. For example, most companies do extremely well in holiday seasons compared to other months. By analyzing trends in past data or applying predictive methods such as correlation analysis, those companies can improve their sales estimation for the next holiday season.
5. Shareholder value analytics: This shows how much return the business provides to its investors. It is one of the most crucial financial analytics for public companies. Every quarter result and interpretations of those results by media, analysts, and shareholders determine the value of the business in the stock market.
Shareholder value analytics also accurately evaluates the financial consequences of strategies implemented by the management. This analytics is often used alongside other metrics such as Economic Value Added, Year-on-Year Customer Growth, and Profit Growth.
6. Value driver analytics: This helps management sort through their operations to determine critical strategic levers. For example, if growth drivers are important to the company, management can direct strategic planning to focus on growth plans. In other words, value drivers show whether strategies are grounded in the reality of operating performance.
Financial Analytics Tools & Services
Tools like Microsoft Excel, Word, and PowerPoint are widely used to create financial models, reports, and presentations for shareholders and clients. However, many businesses use advanced financial tools to make sense of an increasingly complex world. Below are examples of modern data platforms that allow analysts to go beyond spreadsheets and visually analyze the financial health of an organization.
9. Asset-Map
Best for: Financial advisors
Price: Starts at $94 per month
Asset-Map is designed for professionals who provide remote or in-person advice in investment, wealth management, and insurance markets.
The software generates a detailed report, displaying all of a household’s entities, financial assets, liabilities, insurance policies, and cash flows. This gives advisors an effective way to address gaps in financial strategies and uncover new opportunities to improve their clients’ wealth structure.
Key Features
- Dynamic reporting of financial parameters
- Identify funding gaps toward financial goals
- Personalized branding options
- Integrates with CRM, Planning, and Portfolio tools
The platform has pre-built templates for retirement, education, and long-term care plans. It also allows advisors to track their progress and see whether their strategies are actually helping clients.
According to the company, new advisors who use their platform (with over six households) outperform non-users in Asset Under Management, Life Insurance, and annuity revenue at scale.
8. GoodData
Best for: Companies looking to distribute analytics to end-user workflows
Price: Free for up to 5 workspaces and 100 MB/workspace
GoodData financial service solution gives organizations smart access to data and analytics insights through their existing apps and workflow. This cloud-based platform directly connects to the company’s database, instantly delivering data to analytics.
Key Features
- Easy to brand, embed, and customize
- Analytics can be embedded into any application or website
- Automated, real-time query generation
- Advanced security and data privacy
Using its drag-drop self-service, users can easily create custom reports, dashboards, and visualization, or modify existing projects. Every report and dashboard is optimized for mobile, tablet, and desktop, and can be shared via scheduled emails, access rights, and file exports.
It has a flexible pricing (pay as you grow) model. You can scale analytics efficiently in three dimensions (data volume, users, cost) without sacrificing performance (like data speed and IT agility).
So far, GoodData has helped more than 140,000 financial firms drive growth, minimize cost, and enhance customer experience.
7. ThoughtSpot
Best for: Getting instant insights into your products and services
Price: Based on the company’s size | Free trial available
ThoughtSpot is a powerful analytics platform that leverages artificial intelligence and natural language processing to find data insights. It allows users to search through billions of rows of data in seconds. The data be anything, from social media posts and books to stock prices and loan rates.
Key Features
- Auto-analyze billions of rows of data
- Identify consistent patterns in noisy data.
- Intelligent query generation
- Easily scale up and down to meet business demand
The platform provides quick and easy access to granular insights. AI-powered algorithms discover personalized, relevant patterns hidden within data and deliver them in seconds. Admins can use Query Analytics pinboard to track query-level performance metrics, such as:
- Power users and usage metrics,
- Trends and top searches in a specific location
- Poor performing user queries
The Query Visualizer explains what’s happening in the background. For example, it can show how search terms are converted into executable SQL or how joints are applied.
Founded in 2012, ThoughtSpot has become one of the most successful business intelligence analytics search tools. Large companies like Daimler, Hulu, OpenTable, Royal Bank of Canada, and Walmart use this platform to allow employees and customers to take advantage of data.
6. Portfolio Analytics by FactSet
Best for: Analyzing risk across asset classes
Price: Depends on the size of your business | Free version available
With FactSet Portfolio Analytics, you can measure performance, risk, and behavior for various portfolios and asset classes. It combines all the information and flexibility you need to analyze your portfolio across asset classes and strategies.
Key Features
- Analyze your current and historical risks
- See what affects the performance of your portfolio
- Measure relative and absolute Performance
- Track data workflows and monitor internal data checks
The platform makes it easy to split the revenue sources of your business across countries and sectors and find the underlying assets of any fixed-income fund, ETF, mutual fund, or other internal assets.
The attribution models built for fixed income, equity, and risk allow you to evaluate relative performance. This helps you understand how crucial parameters like group allocation, security selection, and currency variations affect your portfolio.
5. Board
Best for: Small- and medium-sized businesses to plan, simulate, and forecast on a single platform
Price: Based on the number and types of users in the organization | Demo available
Board is a decision-making platform that supports financial planning, reporting, dashboarding, visual analysis, data mining, and predictive analysis. It helps you make better decisions through more meaningful and straightforward insights from your data.
The platform combines Business Intelligence tools with Corporate Performance software, giving you the ability to monitor and manage all performance planning and control processes, including budgeting, profitability analysis, forecasting, and financial consolidation. You can seamlessly connect all processes across the organization and automate tedious tasks to save time.
Key Features
- Easily navigate revenues and expenses
- Efficiently simulate your financing needs
- Conduct gap analyses between current data and past data
- Effectively manage allocation, reconciliation, and consolidation
Board has numerous functions to make extremely detailed analyses, detect hidden patterns, identify the drivers behind changes, and understand the perspective trends. It consists of advanced charts and interactive maps, which provide the best visualization options to make sense of the data.
Unlike other Business Intelligence tools, Board focuses on a unified approach. It offers planning capabilities and Corporate Performance Management (CPM) reporting within the same platform, allowing business leaders to make more informed decisions.
4. Qlik
Best for: Augmented analytics and expense management
Price: Starts at $30 per month
Qlik turns various financial and accounting data into powerful analytics that help you minimize expenses, improve profitability, manage risks, and make more informed decisions.
It unifies siloed data and delivers comprehensive and accurate financial analytics insights. You can dig deeper into operational processes and contract data to find the actual cost of doing business while identifying new ways to increase margins and attract more customers.
Key Features
- Ad-hoc and BI standard reporting
- Pre-built visualization formats such as heat maps and scatter plots
- Pattern recognition and data Mining
- Augmented Intelligence and insight suggestions
The tool comes with an Associate Engine, which allows you to combine complex data from different sources and run highly flexible financial simulations. For instance, you can view the largest cost variances in the last year and then pinpoint the factors that drove them.
Overall, the platform gives you everything you need to solve complex problems and make smarter and more transparent decisions while mitigating risk and fraud.
3. Jirav
Best for: Growth companies to forecast finances in minutes
Price: Starts at $250 per month | Free trial available
Jirav is a cloud-based financial planning and reporting platform designed for small and medium-sized organizations. It allows businesses to analyze historical data and create precise financial models and plans.
It has numerous pre-built templates to create interactive reports, customizable dashboards to develop financial insights, and data connectors to centralize all financial data operations.
Key features
- Builds driver-based financial models
- Efficiently combines financial and operational data
- Forecasts sales, revenue, and cashflows
- Compares multiple scenarios
Jirav merges historical performance with projected business operations, giving a comprehensive view of the entire company. Users can instantly see planned versus actual growth in the business and share dashboards with other team members to streamline collaboration and feedback.
2. Sisense
Best for: Visualizing data and improving operational productivity
Price: Depends on the company size | Free trial available
Sisense is a data analytics tool designed for financial managers to help them spend less time gathering data and more time modeling scenarios and forecasting growth. It gives a 360-degree view of business so analysts can understand every product, customer, and daily operation and make strategic decisions with confidence.
Key Features
- Analyze complex data with or without code
- Customer relationship management tracker
- Augment with machine learning and predictive analytics
- Generate real-time insights on live data
The platform allows you to easily clean and manage big data from different sources. The reports on the dashboard are updated regularly. Uncover hidden patterns, visualize them, and share the outcomes with your team members. It can answer some very important questions, such as
- How effectively does the business generate profit on total revenue?
- Which products have the potential to grow at 20% CAGR for the next five years?
- What are the estimated sales projections in California this year?
You can create robust analytics as per your company’s requirements and empower everyone to make informed decisions — without any technical expertise.
Overall, Sisense is a highly customizable, AI-powered cloud platform that infuses intelligent analytics at the place and at the right time. Over 2,000 companies use this platform to discover trends, patterns, and anomalies that occur in the business.
1. Zoho Financial Analytics
Best for: Data visualization
Price: Starts at $30 per month | Free version available
Zoho Analytics is a self-service business intelligence platform that allows you to analyze your business data and build detailed reports and dashboards for informed decision-making.
You can easily build powerful reports such as Balance Sheet, Profit & Loss, Cash Flow Statement, and Shareholding Pattern for your business any time you want, without seeking any professional help. Analyze reports with your team members, make real-time changes, and devise actionable plans.
Key Features
- Unifies various business data like marketing, sales, support, etc.
- Allows you to build and analyze reports with your team in real-time
- Includes 75+ pre-built visualizations
- Embed reports anywhere
The platform also allows you to merge data from numerous sources and build cross-functional reports. For instance, you can merge your financial information with CRM data to create a lead report.
Unlike other analytics, Zoho has an AI-powered assistant named Zia. It uses Machine Learning and Natural Language Processing techniques to uncover hidden patterns within massive, complex data. It can also answer your questions in the form of reports and KPI widgets of your business data.
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Frequently Asked Question
What are the benefits of financial analytics?
Financial analytics solutions have been proven effective in minimizing human errors and streamlining the financial transactions of a business. It offers tons of benefits in terms of business profitability management, direct and indirect tax management, risk management, balancing capital investments, regulatory compliance, and ongoing performance accountability.
These tools offer data-driven insights, which help business leaders make smart and informed decisions. Modern financial tools allow CFOs to analyze financial activities, collaborate with team members, generate interactive reports, and visualize complex data — all in one place.
What are the types of financial analysis?
Organizations use different types of financial analysis both internally and externally. The most important ones are:
- Horizontal Analysis measures how financial figures, such as sales and operating profit, change over time.
- Vertical Analysis lists each line item as a percentage of a base figure within the statement, making it easier to compare the financial report of one firm with another, and across sectors.
- Liquidity Analysis indicates how quickly the assets of a firm get converted into cash. It measures the short-term solvency of a business.
- Trend Analysis is often used to predict future outcomes based on what has happened in the past.
- Valuation Analysis involves estimating the fair value of an asset, whether it’s business, fixed-income security, real estate, commodity, or equity.
How much do financial analysts earn?
In the United States, the average salary for a financial analyst is $68,000 per annum. Analysts with more than ten years of experience make about $85,000 per year.
EY, Apple, The Department of Commerce, and World Bank, are among the top-paying companies in the U.S.
What’s the future of financial analytics?
According to the Verified Market Research report, the financial analytics market will reach $11.02 billion by 2026, growing at a CAGR of about 11.2% from 2021 to 2026. Cloud-based tools are expected to witness the highest growth during the forecast period.
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