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How data analytics can boost advisory services

In accounting, we talk all the time about the value of being a “trusted advisor” to your clients. We also talk about the increasing importance of advisory services, especially as automation renders computational work easier and less time consuming. There are many tools that firms can use to bolster their consulting capabilities, and data analytics should be one in your suite. With powerful data and the ability to gain insights from it, you can provide detailed, actionable guidance to your clients.

Investopedia defines "data analytics” as “the science of analyzing raw data in order to make conclusions about that information.” While that may sound a bit broad, it’s helpful in understanding that analytics is not just a technology initiative; it also involves the human ability to interpret information in context. One data point may mean one thing for one client but something totally different for another. Technology is an essential part of assembling and collating data, but you can’t rely on apps alone to provide insights that will leave your clients wowed. Data, no matter how accurate and detailed it is, must be analyzed by humans and converted into a plan of action that helps the client achieve their goals.

CPA Firms have a leg up on many other industries when it comes to gathering data on our clients. By the very nature of our profession, as was noted in a helpful overview of data analytics on this site, “clients entrust us with large amounts of confidential data.” The rise of cloud-based accounting software has only increased the amount of data available to CPAs. Odds are your clients don’t even realize how much data they have about their business, let alone how to turn that data into meaningful insights about how to better run their company. That’s why accounting firms who are able to accomplish these tasks stand to become ever-more valuable to the businesses they serve.

Analytics
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Turning data into insights

Raw data is just that: raw. It is often unorganized, hard to interpret and overwhelming. If you want to provide streamlined advice to your clients, you need to be skilled at both analyzing data and packaging it in a way that is comprehensible and compelling to clients. The best data-based guidance will use numbers to reveal, confirm, or dispute an insight into how a business operates, providing a new level of understanding upon which to base decisions. In basketball, for example, analyzing years and years of spatial data uncovered that mid-range jump shots were some of the least valuable shots a team could take. As a result, general managers sought out an increased number of three-point shooters and at-the-rim finishers to increase their offensive efficiency. Today, NBA teams take more threes than ever before.

The same sort of analysis can be done on clients. Let’s say you have a client who is a retailer — they have brick-and-mortar locations, as well as an ecommerce presence. While they can have a larger product mix online, limited in-store space requires stocking a small portion of their inventory. If you can run the numbers and tell them which items are languishing on their shelves longest, you can make their in-store operations more profitable. Once you begin leveraging these quick and powerful takeaways, your clients will be more open to engaging in an advisory relationship. Remember to keep in mind the human or subjective aspects of your clients’ businesses at all times. The numbers may not lie but they also are just a part of the picture. The best advisors are those who combine clinical analysis with an empathetic human touch. Be mindful of all aspects of your clients when offering them guidance.

As data analysis becomes more widespread, the firms who are familiar with the systems and processes related to it will have a leg up on those who don’t. If you’re not already analyzing the data you get for clients to look under the hood of their business, it’s time to start doing so. That data should be combined with other factors about the types of companies you serve — if you serve a particular industry, you should be familiar with its workings and pain points — in order to make your clients better. That’s how you become a trusted advisor.

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