Tim Vine, European Head of Trade Credit, Dun & Bradstreet
Every single business is inundated with a new challenge, and opportunity, on a daily basis. Yet, businesses often forget that it is arguably the most important task to ensure growth remains consistent, and more importantly, central to the business’ operations. It’s a harsh truth that a business without growth potential will die off quicker than any potential opportunity. Businesses operate in a real-time world that requires real-time information,and with real-time information comes a swathe of data. Filtering this data isn’t the easiest of tasks but it is a necessary one.
The emergence of data from non-traditional sources like social media and the wider web has forced the importance of immediacy, and businesses must now use a platform that supports quick decisions and unlocks progression, while also avoiding risk. Data is everywhere and the need to use it to make informed decisions about compliance and credit is a key part of every business. Surprisingly, not all companies embrace this and that is a perception that must be changed. As firms turn to technology for the next step in their natural life cycle, data will become the bloodstream for all successes.
The impact of digitally-led services and quick emergence of raw data go hand-in-hand. Social media information can hold so much weight now because of its instantaneous nature. If there is breaking news it first goes on Twitter, Facebook or other online streams. Crucially, businesses must recognise the opportunity that this offers. Database information is important for digging into the history of a business, but Twitter might uncover an employee issue within the organisation. If one company is considering working with another, finding out the aforementioned information could potentially prevent a damaging financial decision. If it’s not clear yet, financial leaders really must sit up and understand that data courses through every single good strategy.
Blind businesses in a shifting society
For years businesses have relied on databases of information that offer the base information and knowledge. The problem with this approach is that it no longer fits the fast-paced, technology-led world that businesses inhabit. Data can, and should, be implemented across the entire organisation – particularly to aid financial decision makers. The pressure to continually succeed is vast and data can be the difference between taking on bad business and identifying new chances to succeed.
The modern day financial decision maker must drive a business’ data-led approach.Long-gone are the days where the chief financial officer is tasked to deal with simple balance sheets and the finances of the business. As data becomes even more accessible firms must recognise the doors it can open.Data leads to growth but only if it is harnessed, and it cannot properly enable business growth without the correct application.
Understanding that a data-shy business is a blind business is crucial.The explosion of big data has placed an even heavier emphasis on the need to embrace the digital age. The UK is undergoing massive shifts with the impacts of Brexit, and similar global, politically-driven impacts.Data can ensure that businesses continue to prosper in times of uncertain economic shifts.Figures from November last year compiled through our Brexit study found that the Brexit vote had severely impacted business opinion. 72% of the financial decision makers claimed they were planning for change post-Brexit to manage expected market and business fluctuations. Recent statistics from Eurostat, the official statistical office of the EU, offered positive figures (GDP figures were revised up in the Euro by 0.5% QoQ) but that is simply a testament to the global fluctuating markets and uncertain business sentiment.
Striking the perfect balance between traditional and non-traditional data
Trade credit – the purchase of goods and services – is a common transaction and businesses must continue to make the right decision.Identifying the smart risk by drawing insights from data is vital to this. The latest analytics can help financial decision makers access and analyse data to accurately decide how much credit can be extended to potential business partners. Meanwhile, traditional data provides the background information, payment receipts and board-level history needed to do this.
Digitally-native, millennial businesses will not offer the in-depth background information that some longer-lasting FTSE 100 companies can offer. Calling on non-traditional, programmatic contextual data like premiere news publications, periodicals and online sources from across the globe, social media, top business publications, government and regulatory agencies, blogs and commentary, in-depth industry-specific sources, research and expertise-oriented sources, local and region-specific news to give businesses real-time financial updates based on societal and cultural news will become even more important. Integrating both of these approaches together can help create a single vision of a business, and identify where the growth is.
Data can also mitigate potential risks in the increasingly volatile business world
Data isn’t only useful for spotting growth but can also help to ensure that businesses keep on top of compliance. Adhering to the rules and regulations of industries is not a choice but necessity. Yet, this isn’t always the decision taken by globally operating businesses. Take the example of BHS, the once British landmark chain that went bust and had to be liquidated. The acquisition by Philip Green was touted as a positive move at the time, and in fact it actually was– BHS’ profits grew in its initial years.
Fast-forward to the middle of 2016 and the retailer’s fall from grace was a difficult lesson that was preventable. The appropriate deep-dive background checks would have uncovered that Philip Green had been bankrupted three times prior to taking over. So much can fall under the radar and it often takes a microscope to discover the most crucial information. A data-less approach is one that will lead to businesses being the BHS of tomorrow. Preventing this now and implementing a data-led approach is a sure-fire way of mitigating risk.
Glass half-full vs. glass half-empty – perception will play its part in how future businesses operate
Every business is unique, and must stay that way if it is to separate from crowded markets and succeed. Simply following what the next best competitor is doing is not the correct approach.Our 2016 global outlook risk report identified blockchain, cyber security and deglobalisation, among other factors, as top influences in 2017. If businesses are to overcome said challenges, and find the opportunities hidden within, they must recognise that data is the only solution.A merge of non-traditional and traditional data will see the future CFO assess all opportunities and make the necessary bold decisions, in a business world that is becoming increasingly difficult to survive and thrive in.
“Original publication in Finance Digest Issue 1 https://www.financedigest.com/