We have all heard the saying “A picture is worth a thousand words”. Although Frederick Barnard said this more than 100 years ago (and before the advent of digital technology), the sentiment still rings true today. Humans tend to process images faster and more effectively than words alone: 90% of the information transmitted to the brain is visual. People who follow instructions with illustrations do 323% better than those following text-only instructions. In addition, the Wharton School of Business found that while only half of the audience was convinced by a verbal presentation, the number jumped to over two-thirds when visuals were added to the presentation.

How does this apply to the world? Finance? Quite a lot, actually. of the finance sector is prepared for a transformation in the way he handles and visualize the data. How are finance teams visualizing data now and how can it be improved to make more meaningful business decisions?

Related: A Guide to Visualizing Data in Pitch Deck

The current state of data visualization in finance

Finance teams traditionally rely on spreadsheets and static reports to visualize data. These tools have merit, but often fail to provide the dynamic insights needed for real-time decision-making. Excel remains a staple, but its static nature can make quickly spotting trends challenging. Standard financial ratios are usually dense and demanding financial knowledge to interpret effectively.

Submit a monthly financial report created in Excel, filled with tables and figures. A CEO reviewing this report should analyze the rows and columns of data to identify them key performance indicators (KPI). It's a time-consuming method prone to human error and misinterpretation, but it's still quite common. Even a CFO, who is likely comfortable with spreadsheets, doesn't have time to wade through spreadsheets. Data visualization combined with automatic data refresh makes it possible for them to scan reports and quickly extract relevant data.

Why now is the time to change

Across industries, gathering data for analysis is easier than ever thanks to sophisticated technologies, but that doesn't mean it's automatically digestible and accessible. Finance departments that incorporate data visualization with automatic data distribution (and data refresh) into their operations will be competitively positioned in an industry where knowledge is power.

Benefits of improved data visualization

1. Extended meaning: When data is visualized effectively, it becomes easier for everyone in the organization to understand. Several tools allow finance teams to create interactive dashboards that can display real-time data, making it easier to track performance metrics and financial trends. This helps different teams across the organization digest data – from marketing to sales. It is useful for teams that want to better understand how their work is affecting the financial health of an organization.
2. Improved collaboration: Comprehensible data means that everyone can contribute to discussions about it. Visual data is more engaging and accessible to non-financial professionals, driving greater collaboration across departments and with stakeholders. For example, a visual representation of vendor spend across different retail locations can help CFOs and management identify where excess costs are occurring, giving them valuable information on cost-saving measures. In contrast, traditional spreadsheets can break down vendor payments, expenses, and cost per location in detail, but these reports can be difficult for non-financial stakeholders to interpret, which can hinder collaboration and decision-making across departments. .
3. Real-time strategic insights: Real-time data visualization empowers finance teams to focus more on strategy and less on manual data analysis. With tools that automatically sync and refresh with the latest numbers, finance teams can quickly analyze and interpret data, allowing them to spend more time on strategic initiatives that drive business growth instead of getting stuck on traction and reviewing outdated numbers.

Related: Dealing with data: 5 steps to get a much more efficient team

How to implement data visualization

Implementing effective data visualization in finance is a process that requires careful planning and execution. Here are the steps involved in moving the ball.

1. Assess current skills

Before you begin improving the way your business approaches data visualization, assess the current state of your data practices by taking stock of the software currently used for data analysis and reporting in your business. This helps you identify any limitations or gaps in functionality.

Then, ensure that all relevant data sources are identified, accessible and updated regularly and automatically. This includes financial data from ERP systems, CRM data and any other important data streams, and data quality is essential.

Finally, you must clearly understand the needs of the users. Collect data from interested partiesincluding finance team members, executives and other departments, to understand what data they need access to and in what format.

2. Set clear objectives

Setting clear objectives is necessary for a successful data visualization strategy. Objectives must match the overall business goals and address specific needs. Some objectives may include improving decision-making, increasing efficiency and fostering collaboration, but each business's goals will look slightly different depending on their needs.

3. Choose the right tools

When looking for the right tools, consider what will best support the goals you have set out. Look for platforms with powerful data visualization capabilities that are easy to use and integrate with your existing systems and can grow with your business. Tools should also provide customization options to tailor visualizations to specific needs and preferences.

Some examples of data visualization tools include:

• Integrated Business Intelligence (BI) Platforms.

  Integrated BI platforms are comprehensive tools that provide a wide range of data visualization and analytical capabilities. These platforms allow finance teams to create interactive dashboards that provide a quick view of key financial metrics. They can also perform advanced analysis, such as predictive modeling and trend analysis, to gain deeper insights into financial reporting.

AP automation tools are a great complement to BI platforms in a financial office. These tools simplify invoice processing by automatically capturing, validating and storing data, giving finance teams up-to-date information at all times and eliminating the need for manual data entry. When integrated with BI platforms, AP automation tools improve financial reporting by feeding accurate real-time data into dashboards and visualizations, leading to more accurate strategies and analysis.

• Online tools

  Online data visualization tools are increasingly popular due to their accessibility and ease of use, with some available for quick download. These tools are often cloud-based, making them ideal for businesses that need flexible and scalable solutions. They often integrate with various data sources, including cloud-based financial systems (this ensures that data is always up-to-date). Online tools also offer the advantage of being accessible from any device with an Internet connection, providing flexibility for remote and distributed teams.

• Specialized financial visualization tools

  Specialized visualization tools within financial technology platforms are designed specifically for the needs of finance teams. Online tools can be more cost-effective (they are often free or have a small cost), but they have limited capabilities, so specialized tools can be built within software platforms that have more extensive capabilities for complex and large data sets. These tools offer features tailored to financial data analysis, such as detailed financial reports, scenario planning and forecasting, and compliance reporting. These specialized tools often come with pre-built financial models and templates, making it easier for finance teams to get started.

Unlocking the story beneath the data empowers everyone

The power of data visualization lies in its ability to transform complex data into digestible insights that members outside the finance team can understand for more strategic action plans. For finance teams, this means moving beyond traditional spreadsheets and reports to embrace dynamic and interactive tools that make data accessible and understandable, empowering their teams by driving strategic decision-making and ultimately contributing to growth. business.