Historical Data: Why Is it Useful to Have So Much Information?

One of the main objectives that companies must have today is to ensure that procedures are carried out — to a large extent — automatically. This may seem unlikely, but it is possible when companies have updated, segmented and broken down information, so that data adds value and automation to processes.

Getting these numbers to stop being simple figures and become results that speed up the organization is feasible when you have the right technology in accounting and finance — resource planning tools, also known as ERP — that allows you to both automate processes and reduce the margin of error.

First, these tools generate increases in operational efficiency. And it is no secret to anyone that there are many manual processes that are exhausting, complicated and take a long time, making  them inefficient tasks that place a heavy burden on staff.

An example is the issuance and reconciliation of invoices in spreadsheets. Although making a few payments or generating five or six  invoices  may not be too much work, we must recognize that these processes are also carried out by large companies that have to deal with hundreds or thousands of transactions daily. If it continues as a manual procedure, it would become impossible to complete, or it would require a specific team dedicated to the task.

That is why refusing to digitize these maneuvers generates many negative impacts. An example is the stress that is generated among the workforce, which can translate into data transcription errors, miscalculations, and more.

On the other hand, a cloud-based ERP eliminates these types of risks and problems.  Instead of making payments or generating invoices manually, the software can create them from scanned documents and schedule pending payments at a specific time and date.

This not only helps lighten the load on employees, but also allows them to have more time to dedicate to tasks of greater strategic and cognitive importance, such as data analysis and discovering new ways to improve performance.

In addition to these impacts on efficiency, the use of this software for administrative and accounting procedures results in companies gaining “new gold:” big data.

Each invoice, each payment and each operation generates data that is automatically collected and managed in the system for the creation of profiles and historical databases that serve as a reference in future decision-making.

This data entry can be done manually, but it carries the risk of losing information in the process that results in inconsistencies. A simple mistake in a figure, an extra zero or an unrecorded payment, alters all the balances of the organization and significantly affects the financial status of the companies.

In addition, by having manual data management, companies are highly exposed to fraud. Invoice fraud, duplicate invoice submissions, and billing for products or services that were not listed are some of the ways organizations fall victim to deception.

This is an upward trend at the business level. In fact, a global survey conducted by PwC indicated that 46 percent of organizations reported having experienced fraud, corruption or other economic crimes within the last 24 months.

Another aspect in which the correct use of data becomes essential is for compliance with tax regulations. This is because companies must be up to date with the declarations and deductions to be made, in addition to paying taxes, such as income tax (ISR), value added tax (VAT), and, where appropriate, the special tax on production and service (IEPS).

Therefore, it is important to use an ERP to guarantee control of the entry and exit of money in the company, issuing reports in real time and generating the information that will be sent to the authority at the close of accounting. The data generated by this process, in addition to guaranteeing tax compliance, allows for the automation of XML document reconciliation and validation of SAT blacklists. In this way, it issues an alert when payment will be made to a supplier that is on a blacklist, in order to avoid sanctions on the company.

This must be avoided at all costs, and ERP is an ideal solution. I believe that the ability to automate processes and manage the data that this technology ensure that the information is not  compromised as is likely when it is entered by hand in a spreadsheet.

In this way, companies increase their quality and value, improving the planning and creation of strategies and thus making the data work in favor of the organization. And yes, as time progresses and operations increase, the number of datapoints itself grows and the value that data has for the organization increases, thus making the data work by itself and generate results almost autonomously.

Finally, I want to highlight the level of operational savings that companies can achieve when they make use of data and its automatic management to optimize their operations. There are studies by specialized companies that show that companies that perform tasks manually with the potential to be automated lose up to US$2.2 million annually, in addition to facing costs of up to US $2.1 million for not reducing the margin of error.

Having precision in the data that will be used for daily operations is extremely necessary today and useful when looking to grow. Failure to do so goes beyond simply not taking advantage of the benefits that technology generates, but implies the loss of millions of bits of data that are very useful today and in the future.