“Data is everywhere.” How many times have you heard that? Well, you might think it’s an exaggeration, but it isn’t. As of 2021, there were 79 zettabytes of data generated worldwide. By 2025, more than 150 zettabytes of data will need analysis.
With so much data, finance managers are going to have to do some wrangling. (No, we’re not talking about cattle or sheep here). This is all about data wrangling and it’s actually a similar approach to the animal variety. Finance managers need to have a clear view of all data that’s collected and stored internally so they can make sense of it all.
But bad data is one of the biggest killers of business growth. What I mean by this is that incorrect or outdated information stops you from connecting with customers and being able to make accurate cash flow forecasts. It’s duplicate data that you’ll waste precious time and money fixing. It’s incomplete data that stops you from having clarity on your processes.
So, what does bad data look like in action? Imagine you want to introduce a new service to your customers but don’t have all the necessary data to understand their pain points and problems. You launch the service and find out it’s the wrong fit. Now, you’ve lost money, time and potentially damaged your credibility and lost customers, further impacting your cash flow.
The solution here is data cleaning. When you remove low-quality information, you can focus on the high-quality data that gives you more insights into your customers. This involves getting rid of irrelevant details e.g. baby boomer customers within a category or Gen Z customers when you’re targeting the latter. It’s fixing structural errors like naming conventions e.g. N/A and Not Applicable so categories aren’t mislabeled.
I also want to stress that the most effective kind of data wrangling is when you have the right data. It’s not just about relying on your ERP and CRM systems and hoping for the best. I asked Matthew Debbage for his opinion about ERP systems and data quality. He raised some great points:
“In many instances, ERP software isn’t correctly implemented across all functions, which leads to internal errors and failures. Another problem with ERP software is that businesses don’t properly integrate their ERP software across their entire technology stack. This happens because legacy systems are so outdated that they can’t communicate and integrate properly with ERP software. And that leaves companies stuck with data quality problems that often lead to misinformed decisions that expose their business to financial, legal and compliance risks.
Let’s also not forget that ERP software doesn’t always have important metrics you need to manage your cash flow, such as accounts receivable (AR) metrics. Without these metrics, companies are left with a huge blind spot that could put them at risk of increasing their DSO (days sales outstanding) and reducing their cash flow significantly.
It doesn’t help that 61% of late invoice payments occur because of incorrect invoices. And that’s happening because finance teams are relying on their ERP software as a catch-all for their data needs. But that software is missing vital information about your customers’ financial health, ability to pay invoices on time, outstanding debt, credit score, credit limit and other information that’s needed to make the right decisions for the business.”