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.
