How Is Data Analytics Used in Accounting

Written by: BUSINESS

How Is Data Analytics Used in Accounting?

The word big data is trending nowadays in the world of finance. It describes the massive data available on the internet that is growing at an exponential rate. It will have a crucial effect on enhancing profits, productivity, and risk management. However, this data is of no value until processed and analyzed. It is where data analytics will come in to play.

It will allow you to use such big data and arrive at meaningful conclusions. Various industries know of the benefits data analytics can bring to them. One such field is the field of accounting.

Millions of accountants worldwide already use data analytics software to assess the performance of a business. However, the role of an accountant is to stretch beyond these responsibilities. They come up with ways to use data analytics to take them one step further than their competition.

Data gives them a set of tools that allow them to strengthen their partnerships with business professionals. Today, we will share with you the role of data analytics in accounting. Some of these roles are listed down below:

Accurate Tax Calculation

Accountants can work in various roles. One role that accountants are famous for is as a tax accountant. It is the job of a tax accountant to ensure that the financial books are legal. If they are, he or she will need to report it to the IRS. Data analytics can make the life of an auditor a little bit easier.

A Tax accountant can use data analytics tools, whether working externally or internally, to monitor large sets of data. It also allows them to come up with conclusions that are more accurate and error-free. It is the job of a tax accountant to help their clients and companies identify tax-saving and analyze tax issues.

There is an increase in demand for these professionals worldwide. Many students worldwide want a promising career in this field. There are many options available online for students. For instance, one can enroll in LLM taxation online to become a legal professional specializing in tax laws.

Come up with Better Investment Decisions

Accountants who provide financial advice are the ones who benefit the most from data analytics. Imagine investing in a property but losing all your money in the coming months. If you had an accountant who used data analytics to advise you not to invest in said property? It could have saved you thousands of dollars.

These accountants use analytical data to which allows them to create models to know of the investment opportunities that are lurking out there. They do it by analyzing the behavioral pattern of consumers and their investment decisions. Imagine someone invests in property and earns a margin selling it a year later. The accountant will know of it with the aid of data analytics tools.

To Come up with the Right Decisions at the Right Time

Business decisions and actions are an outcome of the prescriptive analysis. It is an accountant that uses data analytics to create a prescriptive analysis of future business opportunities. Also, data analytics helps accountants to raise a question when a business owner makes poor financial choices.

They can use this prescriptive information to create a bigger picture for the owner on what decisions are feasible in the present and what will be best for the business in the future. It is all about taking informed actions at the right time. The prescriptive analysis relies on software and tools that have mathematical capabilities.

Tools such as python, SAS, and open NLP are a few that have mathematical data analytical capabilities. After all, accountants can make excellent data scientists. If you are an accountant wanting to know how to become a data scientist, you can always enroll yourself in an online degree. When you become one, you will see that you will take your accounting and data analytics game to the next level.

To Come up with Behaviour Reports

A behavior report will allow an accountant to analyze the spending habits of a customer. They can provide valuable feedback to the web designers on what encourages the user to buy said product. A crucial factor to look for in a behavior report is the bounce rate. These are users that open up a specific website but do not interact with it. They move on to the next website.

A behavior report through various data analytics tools will allow an accountant to know how visitors progressed through the website, how many clicks it got, how many viewers stayed on for a specific amount of time, and much more details. After seeing this information, an accountant can come up with a feasibility report. He or she can then take it to the owner to show them if their online strategy is working or not. It will allow the owners to make more informed financial decisions about their marketing budget.

Conclusion

People always misunderstand data analytics as a descriptive analysis. However, it is a prescriptive analysis of something. With the advancements in technology, data analytics is now more crucial than ever for companies who want to make accurate decisions and bring in profits. And what better way than to hire an accountant to take handle all your analytical data without any hassle.

Last modified: January 14, 2021