Most companies want to see how their company’s financial statistics stack up against their competitors. However, it can be difficult for accountants to locate this secure information to compare the data of other private companies with their own.
Benchmarking is a skill that helps accountants transition from CPA to business advisor and using the right software can make it much easier to make this transition. However, there are some important qualities to look for when searching for the software that will help grow a business or a practice.
Accuracy
For a benchmark analysis to provide insights that are meaningful to a business owner, the data must be 100 percent reliable and accurate. This can be challenging because every data set has something special added to it such as data sources, sample size and sometimes classifications.
Timeliness
In some cases, old data cannot be avoided but businesses are always running in real time and companies can financially change in less than a year. Benchmark information from the year before will yield inaccurate and possibly misleading results. It also takes much longer to analyze old data.
Relevancy
Different geographies, business sizes and industries have their own sets of circumstances and trends that can impact benchmark data. To maximize effectiveness, business owners need to seek out data that is granularly defined and corresponds to the analysis of the business.
Prioritizing Benchmarking
Understanding these qualities with sound benchmarking software will help business owners realize how to increase client engagement. Once accurate data is received, the next challenge is choosing which benchmarks to analyze so the business can be successful.
Depending on the industry and the company, everyone has a different measure for success. The above performance indicators can provide information that is highly specialized and financial metrics that can be universally important for every business. When all of this information is analyzed at the same time, it will provide a business with a high level review of its financial health. This is why having the best software possible helps benchmark important financial information for the future.