Data extraction is a key part of financial data analysis. It’s the first step in the process, enabling accountants to access and work with the data they need to perform high-level and high-value work for their clients.
More often than not accounting professionals use Excel for applying formulas, ratios, and other analytics to financial data. However, getting data from accounting systems into a usable Excel workbook is an arduous and time-consuming task. Especially when it needs to be done on a frequent cadence, like every month.
This article will review why extracting data into Excel is such a challenge for practices and ways to simplify the process in order to save your firm time and money while improving the quality for your clients.
Why Data Extraction Is Challenging
Whether a team is performing due diligence or an audit or delivering monthly reporting, the professionals at an accounting firm are incredibly busy. It’s a people-first profession that requires both brain power and experience. Accountants are expected to be thorough and accurate in tight timelines. Enter the first challenge of data extraction: it takes too long!
Sure, many accounting systems offer reporting features that deliver extracted financial data. However, these reports rarely, if ever, match the needs of accountants who have their own set of standard templates, formulas, and calculations they need to run. The data in these native reports gets delivered with empty cells, inconsistencies, and missing information, requiring hours upon hours of manually manipulating the extracted data into a usable format. If data is delivered in an unstructured format like a PDF, add even more time.
In addition to being incredibly time-consuming, data extraction requires attention to detail. Even small errors in the data or formatting can lead to incorrect conclusions. Thoroughness and precision are key. However, the tedious monotony of extracting and formatting data is rife with opportunities for human error.
Another challenge often faced is incomplete information. When using native reporting features in accounting systems, key data may be left out. The system may provide its end results without the underlying data that lead to those numbers. For thorough analysis in certain practice areas, like forensic accounting and due diligence, those underlying data points are essential, but the back and forth with the business and accounting system may never quite deliver all the information needed.
Lastly, financial data is private, sensitive information. Accountants need to be careful about privacy and security when extracting data, limiting options that may be available for less sensitive data sharing.
All this boils down to one thing: before an accountant can even BEGIN the high-value work a client is expecting (and paying for), countless hours of extracting, formatting, and reviewing for accuracy must take place. Fortunately, there are things firms can do to simplify this cumbersome process.
Ways to Simplify Data Extraction
There are two main ways that practices can simplify the arduous task of data extraction: standardization and technology.
Establishing standard formats and templates for data analysis makes it much easier to know exactly how you need your data extracted. These templates can be powerful tools for upskilling your team, scaling your practice, and quality assurance for your client deliverables.
However, standard templates are really the second step in the equation. The first is to standardize the process – a much bigger challenge when clients all have variable needs, accounting systems, and data quality.
Enter technology. Data extraction tools save firms countless hours.
Data integration tools can streamline the data extraction process by automatically extracting data from financial accounting systems directly into Excel. This type of technology helps to standardize and automate processes even with all the messy variables that happen in the real world.
Automation tools like Strongbox, for example, can extract data from a variety of accounting systems, delivering the same output every time, regardless of what system the business may be using. This makes it very easy to establish a repeatable, standardized process because your team no longer has to rely on native reporting features that vary from system to system.
Additionally, the data in the Strongbox output is delivered as an Excel workbook with clean, flat data tables, meaning it’s ready to be pasted into your standard templates without the extra step of re-formatting manually. Data is also complete, including all the underlying data that native reports leave out. Accuracy also improves without the role of human error during the data manipulation stage.
Data integration tools like Strongbox streamline the data extraction process.
Save Your Firm Hours with Strongbox
Technology will never replace the need for talented accounting professionals. However, giving your team tools that let them get to work faster will enable your firm to grow in a sustainable way. Strongbox is one such tool.
Entrusted by the majority of the Top 25 firms, Strongbox integrates with the most used accounting systems and ERPs, from QuickBooks Online to Netsuite. With SOC 2 and GDPR compliance, customer data is kept safe and secure from beginning to end.
Contact our team today to find out how your firm can save hours in the data extraction process.