Financial analysis software is a tough field because it scales from the basic analysis of accounting data in the general ledger up to powerful enterprise machines capable of slicing and dicing data from across the Internet and the far reaches of the largest multinational company. Added to this is the separation between analysis packages intended for internal accountants that have the support of massive IT and computing hardware resources, and those for small accounting firms serving SMB and sole-proprietor clients.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
Though this scaling issue does make for some markedly different analysis software packages, there are a basic set of five features that any effective financial analysis software package should encompass:
The ability to draw data from any general ledger. Proprietary packages have the advantage of doing a good job drawing data from their own product suites, but are of little or no value to accountants whose clients are already set up on other GL platforms. Accountants should have the flexibility to work with any general ledger the client presents with at least some rudimentary analysis.
Comparisons to industry data.This is a simple subscription service that nonetheless dramatically enhances the value of the analysis. Whether it is comparison with other users of the same analysis feature-a nifty and unique feature of Thomson's Financial Analyzer CS-or with RMA data, it is an important feature.
The ability to communicate reports in a variety of formats.The days of email reporting in PDF format are rapidly coming to an end. Accountants need to be able to communicate and collaborate on analyses, not just compare notes via email. A basic feature should be an Internet portal or intranet collaboration system.
The ability to update information dynamically. Except for the smallest of client companies, information can change so rapidly that waiting for printing and distribution can mean lost opportunities. Immediate, real-time update of reports should be an important feature for any analysis package.
Recommendations in context.Whatever the analysis infers, it needs to be tied to goals and budgets or it becomes a simple wish list of goals never to be achieved.
All eight of the solutions profiled for 2007 meet most, if not all, of these basic requirements, and are geared to the needs of accountants servicing diverse clients in a variety of for-profit and nonprofit environments.
Financial Analyzer CS
Financial Analyzer CS is designed to seamlessly and easily transfer client demographic and accounting data from Client Write-Up CS or Trial Balance CS in order to quickly analyze financial performance, and then compare that data against both the compiled results from other participating Financial Analysis CS users or against the Risk Management Association industry data from its Annual Statement Studies.
Tightly integrated with the CS Professional Suite, Financial Analysis CS also prints reports directly to Engagement CS and to FileCabinet CS for paperless processing, and allows client access to the reports via the NetClient CS portal on the accountant's Web site.
It enables the accountant to review, analyze and compare clients' financial data, tracking material changes in client balances to fulfill audit requirements. The data is then converted to graphs and conditional text for ratios to make financials easier for clients to understand, and captured in a PDF file for email transmission to the client as well as the creation of client and firm dashboards that allow professionals to aggregate information in a single location. The Client Dashboard enables firms to view client data in a single customizable view, including client contact information and documents. The Firm Dashboard aggregates critical firm data, such as technical/system information and links to relevant documents/ reports.
Financial Analyzer CS gives the accountant enhanced capabilities to advise both small and large clients, as well as niche clients in similar businesses (e.g., doctors, restaurants), by offering a variety of options for analysis and comparison (current ratio, revenue per customer, operating or production costs, and more). Additional user-defined categories can be used to track and compare specific balances for clients in a particular industry or to create custom ratios.
Its tight integration with other CS professional products makes Financial Analyzer CS an effective tool for that suite. Its clean style, effective use of charts and data and the ability to compare with multiple sources of industry data at a cost-effective price make this a strong choice for basic, but practical, analysis.
ProSystem fx Profit Driver
ProSystem fx Profit Driver is a financial diagnostic and analytical solution for accountants that transforms client data into an interactive strategic planning tool, enabling professionals to instantly show their clients outcomes of what-if scenarios, and develop detailed plans for reaching goals.
Profit Driver integrates with ProSystem fx Tax Engagement and Tax, as well as data in spreadsheet form. This data is used for dynamic budget versus actual reports that enable the use of projections while budgeting. Accountants can review the drivers for the budget in up to 40 consecutive periods, use them as the basis, and from there, spread the projection to create monthly or quarterly budgets; enter actual results throughout the year to track performance; annualize the statement at year-end and append to the prior-year model.
Profit Driver is designed to provide both insights from existing accounting data and benchmarking against industry standards covering thousands of scenarios, including verticals, broken down by asset size, sales size and historical data. The industry data from RMA is scheduled for an update in late 2007. Profit Driver also offers a one-page Scorecarding capability, presenting the health of a company and an evaluation of its financial position.
A unique goal-seeking feature of Profit Driver offers an interactive system to define specific financial objectives and clearly identify the steps needed to achieve goals in such mission-critical dimensions as debt, cash flow and working capital, instantly allowing the accountant and client to evaluate, forecast and implement strategic business decisions to achieve desired results.
Though designed for use with the CCH engagement and tax systems, ProSystem fx Profit Driver contains enough unique features to make it worthy of consideration for accounting firms seeking to enhance their client support and value-added services.
Sage Accpac Insight, Version 5.3B
Sage Accpac Insight uses Universal Database Access functionality to integrate information from Sage Accpac ERP and Sage Pro ERP systems as well as other ODBC compliant databases into reports based on critical operational and sales data, as well as customer, product, vendor, employee, project and geographic data.
Insight converts data from the accounting system into a single data warehouse, capturing data needed for business intelligence and combining the data from remote offices and disparate departments. It uses this data warehouse to allow budgeting, scheduling and other business management in addition to analysis. While Insight can work without the Data Warehouse module, its capabilities will be limited.
Eight modules provide additional functionality suited to the scope and needs of the client, from basic reporting capabilities to full-feature enterprise consolidations. Author is a required module for all implementations that creates new templates for Microsoft Excel; Viewer allows reports to be run quickly against the reporting database; a Web Deployment Server publishes the reports on the company intranet or on the Internet; an Enterprise Budgeting module creates complex budget models containing multiple worksheets; the Consolidations module produces merged accounts for statutory or management reports; the UDA module extends the capabilities of analysis and modeling to other databases; and the Alerts module automates the reporting process by scheduling data updates and report refreshes.
The upcoming version 4.0 will include new features for Microsoft Office 2007 compliance as well as new features for reporting, filtering for Sage Accpac ERP data and report generation and presentation.
Sage Accpac Insight is a powerful tool that converts ERP data into analytical and budgeting reports invaluable to the medium-to-enterprise market. Its ability to utilize data beyond the accounting system makes it a more flexible tool than many of its competitors, and must-have software for Accpac ERP system users.
Caseware Scenarios 2006
CaseWare Scenarios displays an integrated income statement, balance sheet, cash flow, business drivers and analytics on a single screen. Its core purpose is to enable accountants working with data from client engagements to create multiple scenarios using actual data or other scenarios as a starting point, incorporating what-if and goal-seeking functionality.
This allows firms to see immediately the financial implications of changes in variables such as interest rates, sales and days receivables, or to ascertain how certain variables must be adjusted to reach any given goal. Scenarios may be used to present information clearly to clients, to identify how firms may grow their businesses, address problems or take advantage of proposed loans.
It can also, through tight integration with CaseWare Benchmarking, demonstrate how a firm has performed relative to its peers. And it allows for integration of process improvement initiatives through tracking compliance with best practices.