Financial Literacy and Why Your Business Should Embrace It

  • Data
  • 26.09.2022 10:55 am

Today’s world runs on data and nowhere is that more apparent than inside large and small corporations across the country. Businesses are always seeking to catch attention and define their brand as something distinctly more appealing than their competitors. Despite this, many businesses are falling behind in their data literacy endeavours.

Are you wondering what financial literacy is and how it can benefit your business? Let’s look at some of the reasons why businesses should always look to bring data-literate people on board and ensure that existing staff is up to the task of data interpretation too.

What is data literacy in accounting?

Data literacy is often defined as the ability to analyze, interpret, and understand data. That might sound simple on the surface, but the reality is a bit more nuanced. Data literate people can look at raw data and visualize what it means in the bigger picture. They can manage the information and ensure that it is valid while also interpreting the data in meaningful ways that meet their business's over-arching goal. Finally, individuals who are data literate can argue with the data in question. This means that they can apply the data to real-world issues within their companies and explain why it supports their goals.

One form of data literacy which is especially important for businesses is financial data literacy. Data literate accountants are able to streamline the finance management process to save clients even more time and money. They can also use their financial data to help strategically align different departments and provide detailed business insights which help businesses not only make informed financial decisions but also guide their business operations across the company. Small mistakes can cause millions in damages, and working with a team which is data literate in business accounting can help safeguard your business. You might also consider accounts payable solutions which use dependable software to make managing finances much less complicated.

Beyond the specialized knowledge, accountants must possess, it is critical that you understand that other employees likely do require some degree of data literacy, too. According to MIT, nearly one-quarter of today’s workers don’t feel like they understand how to use this type of information, which could significantly impede business growth and lead to costly, preventable mistakes.

Data literacy makes decision-making easier

Perhaps the most important reason to focus on data literacy within your business is to empower leaders and workers alike to make smart decisions. Sometimes the ‘common sense’ solution doesn’t translate into the best decision, and data can help everyone with access to it understand why something is done the way it is.

For one example of how data literacy helps people make good decisions with the goal of improving productivity and bettering profit, consider the plight of a trucking business as it seeks to save money and improve efficiency. Large trucks are often left idling for extended periods of time. This might initially seem like a waste of time and gas, but the truth is that there are reasons leaving them on is more cost-effective than always turning them off. Once employees have access to data about gas use and idle time, they are better equipped to decide when to leave the truck idling and when to turn it off. This can save fuel – and money – in the long run.

Data-informed the decision above and enabled employees to act upon their knowledge and make the best choices for the company. They were able to understand the information because they possessed some degree of data literacy. When you invest in data literacy, you are helping management and frontline workers alike make informed decisions rather than making snap judgements or simply ‘winging it’. These improved decisions, in turn, influence a business's productivity, efficiency, and even worker morale as employees see how their efforts are positively influencing the company.

Invest in current employees as well as new hires

While it is always a good idea to seek data-literate people when hiring, it is also important to focus on your existing pool of talent. Current employees understand their jobs and the business, so upskilling them makes it easier (and cheaper) to achieve data-driven results than opting for all-new hires might be. Investing in workers is a good way to boost job satisfaction too, which may positively affect turnover and further benefit businesses.

Also consider the adjustment period many new hires experiences as they attempt to adjust to corporate culture and learn to work well with existing teams, a process which is not always a smooth one. Why not work on giving employees who already fit in the opportunity to improve their skills and contribute to the business in a different way?

Data literacy is an important part of today’s businesses and can positively impact an organization’s productivity, job satisfaction, and decision-making ability.

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