In Part 1 of this article, we looked at the analytics and metrics available in Finagraph and how they could be used as a way to talk with your clients about improving their financial performance. In this part, we look more at how to actually use Finagraph, including getting data into the system and how to share the reports from Finagraph with others.
Donny Shimamoto will present the sessions, Modernizing Accounting Services: Architecting Your Strategy and 8 Keys to Optimizing Your Tax Practice, at Accountex2016.
Analyzing Your Own Data
If you want to upload your own data, or a client’s, adding a business is easy: enter the business name, Zip Code, and NAICS code. I liked that once I entered the full Zip Code, it showed me which city it was for—a great accuracy validation feature. And then when it comes to NAICS, I can type a word and it will show me the available options.
The only downfall I can see from this lookup method is that when I search for “accounting,” only “Other Accounting Services” shows up. “CPA” or “Bookkeeping” also apparently aren’t NAICS categories. But once I type in “Account,” then I see that the category for our profession is actually “Offices of Certified Public Accountants.”
I first thought the question mark to the right of this field was going to explain what a NAICS code is, but it actually brought up the hierarchical listing. So if you’re not familiar with these codes, you can just browse through the listing to find the most appropriate code.
Getting Data Into Finagraph
The next step is to link to an accounting system. It defaulted to QuickBooks (all desktop versions), but there are also options for:
- Dynamics GP (beta)
- QuickBooks Online
- Sage 50 and Peachtree (US Edition, beta)
- Xero (beta)
- Microsoft Excel (for exports from other accounting systems)
I chose QuickBooks Online and was prompted with the now familiar authorize screen when connecting QuickBooks Online to other apps. Once I linked to QuickBooks Online, I was presented with a screen showing Finagraph gathering the data (“Identifying key inputs”) and then analyzing it (“Processing”).
Apparently, each Finagraph is a point-in-time view of a company. So each time you want to view an updated report, you have to create a new Finagraph (uses the same link and data gathering process shown above). This seems a bit cumbersome to me, especially since the data gathering can take a while, especially if you have a lot of data in your accounting system. However, since this was information I was providing to lenders, I could see the potential benefit of having a static snapshot of the company and being able to refer back to that (rather than the current data) if there are questions.
Sharing a Finagraph
To share a report, you can just press the “Get Sharable Link” button and you get a link that you can send to someone else. There is an option to have the link expire and you can manually force it to expire, so you have some control in case the link gets into the wrong hands.
Using Finagraph to Become a Trusted Advisor
Based on what I’ve seen, I see no reason that would give me pause in utilizing Finagraph with my clients. If the client doesn’t speak enough “financial-ese” to read the report, you can still use the tool as part of your analysis of their financials—to identify discussion points for problems areas or potential problem areas. If you’re like me and aren’t up to date on the ratios, Finagraph provides the descriptions and formulas for the computations. That provided me with enough information that I could figure out what policies or business practices should be looked at to determine the problem and affect the metric.
This could then drive a healthy discussion with the client. By showing an interest in the client’s actual business—not just their recording their financial transactions—and talking with them about how to improve their business practices, you start to position yourself as a trusted advisor.
If you’re in audit, it may also be interesting to include running a Finagraph as part of your analytic procedures to see where the client’s financial ratios diverge from those of their industry. This also allows you to identify problem areas, which you can then discuss with the client and potentially offer them additional services. These services may include helping do a deeper analysis to identify root causes and suggest recommendations based on how you’ve seen other clients address similar problems.
So I definitely recommend checking out Finagraph. It is a great analysis and benchmarking tool that can help you provide more value-added analysis for your clients—and it’s free!