Every day, 2.5 quintillion bytes of data are generated from everyday activities such as logging exercise and sleep, writing up emails, and filing reports. One IBM report from 2016 shows that 90% of the world’s data was created within the past two years—and each year will bring exponentially more. Much of this data is created by businesses.
There’s one small problem: not all of this data is being put to good use. It costs money to collect, store, and analyse huge amounts of data, but business research firm Forrester estimates that between 60 and 73% of all business data goes unused for analytics.
Many SMEs are sitting on lots of data, but they’re frustrated by their inability to glean the insights they need. Still, all these numbers and records are critical to an organisation’s long-term success. The key to unlocking the value of historical data is to use the right tools and develop clean infrastructure that will allow you to interact with the data in a meaningful way.
Why do SMEs need to track historical data?
Historical data refers to any and all data about past events and circumstances. These records provide perspective and serve as a reference so that business owners can plot their next courses of action.
Historical data is useful as a reference, but it’s also necessary to satisfy compliance requirements. The Inland Revenue Authority of Singapore requires that companies keep the last five years of data to streamline compliance and make business more transparent. You have to keep records of financial transactions, bank statements, accounting records, source documents, and more.
Singapore is one of the EU’s biggest trading partners, so local SMEs that do business with countries from the EU are subject to both the Personal Data Protection Act (PDPA) and the EU’s General Data Protection Regulation (GDPR). Under these laws, all SMEs must also collect and store customer data to combat potentially criminal activity, such as money laundering or terrorism financing.
Lastly, the analysis of historical data allows businesses to gain critical insights. Accountants love this data because it helps us understand your past and maximise your potential going forward. We can help you predict future “weak spots” and capture new opportunities.
Historical data is traditionally messy and confusing
Unfortunately for many SMEs, historical data may be stored in bulky file cabinets, on shelves in no particular order, or even in boxes in multiple locations such as the home and office . Digital data might be kept in messy Windows folders, with no standardisation of filenames making things hard to retrieve. In the past, it could take hours to copy-paste records from one file to another, and days to collate the information into a useful report.
Storage and access present another challenge. An SME’s financial information and backup paperwork are cumbersome to store in file cabinets, and it becomes exceedingly difficult to find a particular document you’re looking for as the years go by and the files pile up.
Lastly, digitalisation isn’t as straightforward as it seems. Even though documents might be scanned and saved into a digital hard disk or to the cloud, that doesn’t guarantee they’ll be useful. One study shows that a large portion of disk space is used to store records that haven’t been referenced in months or years. Aside from that, 63% of employees in a Sigma Computing study reported that they couldn’t gather the insights they needed from data within the deadline assigned by their managers.
Gems in a mine are useless if there is no way to extract them. It’s only in recent years that software—and the computers that run them—have become powerful enough to organise and parse data efficiently. Now, rather than an archive room with stickers and numbering system to organise where everything is, accountants only need a laptop and wifi to build a deep understanding of their clients’ numbers.
How can firms access their historical data in a meaningful way?
Because SMEs can’t avoid their compliance obligations—and historical data is useful when managed correctly—it’s crucial to tap on digital-savvy accountants.
The responsibilities of an accountant have changed significantly in the past few years thanks to the advent of digital analytics and management tools. Some things we can help with: migrating your traditional processes online, making sense of complex financial reports, constructing graphical representations, identifying extraneous expenditures to reduce, and highlighting risky areas of your business.
We can do this by processing and analysing your digitalised copies of data. We might do this on our own, or with the help of artificial intelligence and algorithms. The non-accounting trained person with minimal finance experience can quickly get overwhelmed by all the tools on the market, or struggle to use them correctly. That’s what we’re here for.
In our hands, digitising old records assisted by OCR (Optical Character Recognition) means that documents become instantly retrievable with the powerful search function. For example, granular search filters in accounting software suite Xero allow us to find what you need in minutes or seconds, saving you hours of rifling through cabinets. On Xero, we can also attach a copy of the original file when viewing individual transactions. In addition to saving physical space, because it’s linked to a specific transaction, it becomes relevant and useful for you.
A service like Receipt Bank allows you to see every single expense that has been reimbursed, without having to hang on to folders of receipts. Another way we can help is by setting up tiered authorisations for your data. Different levels of employees will have different levels of access, which ultimately protects your data’s privacy and also eliminates delays caused by waiting for approval from a higher-up.
Need help digitalising your historical data?
At Harvest Accounting, we’re passionate about historical data. We see it as a critical business asset that can improve the way you run and manage your business.
If you have no idea how to begin making sense of your historical data, come get in touch with a digital accounting firm like ours. We’d love to help you transition your infrastructure from bulky folders to clean, well-organised software.