Unlike platform-specific analytics, accrual-based accounting data provides a holistic view of a business’s financial performance – a key component for determining accurate, actionable and strategic business KPIs
When it comes to digital insights, businesses are often overwhelmed with data from various sources. From Shopify dashboards to Amazon sales reports, we’re never far from a data point or performance metric. Yet, amidst this wealth of information, a fundamental gap still exists – a lack of connection between operational data and the company’s financial performance indicators.
That’s why CFOs, corporate finance teams and business leaders need to rethink their approach to accounting not just as a compliance function, but as a core component of their data analytics and key performance indicators (KPIs).
Risks of omission of accounting data
The democratization of access to data has enabled businesses to track performance across multiple sales channels with unprecedented ease. However, this ease comes with a caveat: each platform offers its own version of the truth that is often hidden and sometimes misleading.
For example, while Shopify reports revenue based on orders processed, Amazon only does so on shipments. A company that sells on both platforms runs the risk of mixing revenue recognition methods within the same set of books. This discrepancy can also create a fragmented view of a business’s financial health, leading to decisions that are based on incomplete or worse, inaccurate data.
Many retail and e-commerce businesses tend to focus primarily on customer-centric metrics, such as product sales volume or individual product margins. Although critical, these metrics often lead to a myopic view of a company’s performance. This tunnel vision ignores broader, equally vital metrics—such as total revenue, gross and net margin, sales tax, platform fees, and more—that together paint a much more comprehensive picture.
This omission is not simply a matter of missing out on a more complete understanding of the business. it highlights a more serious problem: the risk of significant financial inconsistencies arising from insufficient attention to accounting data. It can even lead to financial recalculations that damage confidence, investor confidence and market value.
This is where accounting data comes into play. Unlike platform-specific analytics, accrual-based accounting data provides a holistic view of a business’s financial performance. It matches receipts to actual bank deposits, adjusts pending orders, accounts for expenses and chargebacks, and recognizes liabilities such as sales tax due. In essence, it offers the ultimate source of truth—a comprehensive snapshot of where a business really stands financially.
Furthermore, the potential of accounting data extends beyond sales reconciliation; this is key to generating accurate, actionable KPIs. As businesses operate across multiple platforms, from e-commerce sites to social media channels, platform-specific reporting tools fall short, too often fail to capture overall business operations and often overlook critical data points that have significant impact on the company’s bottom line.
Relying on incomplete KPIs isn’t just a matter of inaccurate reporting—it’s a strategic misstep. Financial insights derived from accounting data enable businesses to make better informed decisions, optimize operations and ultimately drive growth. By integrating accounting data into day-to-day analytics, businesses can monitor their financial position in real time, adapt quickly to challenges and take advantage of opportunities.
Adopting a new way of thinking and using technology
Effective use of accounting data requires a change in mindset. Traditionally, accounting has been viewed as a retrospective activity—a necessary evil for tax preparation rather than a tool for strategic decision-making.
This perception needs to change. In today’s business environment, accounting needs to be proactive, not reactive, and as close to real-time as possible. It should inform day-to-day operations, not just monthly or annual sales tax returns. For CFOs and finance teams, this means taking a more integrated approach to financial management that includes automating and streamlining accounting processes to ensure that data is not only accurate, but also easily accessible for analysis.
Not surprisingly, technology plays a crucial role in this transformation. Adopting cloud technology platforms can automate the reconciliation of sales and payment data across multiple channels, transforming the accounting function from a historical record-keeping task to a real-time source of strategic intelligence. By ensuring that sales, fees, taxes and other financial data are accurately recorded and reflected in the general ledger on a daily basis, businesses can achieve a level of financial oversight that was previously unattainable.
In effect, this approach transforms the accounting platform into a dynamic dashboard that provides not only a snapshot of a business’s current financial health, but also actionable insights that can drive growth. From identifying trends in sales and expenses to optimizing cash flow and managing inventory, up-to-date and accurate accounting data offers many benefits.
For example, by automating the flow of e-commerce and retail sales and payment platform data into accounting systems, businesses can gain a clearer view of their financial performance, allowing them to make data-driven decisions with confidence. This is not just about efficiency; rather, it’s about equipping businesses with the tools they need to thrive in an increasingly competitive environment.
In a world full of data, the businesses that succeed will be those that can distill that information into strategic action. At the heart of this is accounting data—the source of truth for business success. With accurate, timely accounting data, businesses can unlock a deeper understanding of their operations, financial health and market position.
