How Better Data Management Can Transform Budgeting for Payments Providers

Budgeting season is stressful for any finance professional – but it can be especially so for those wrangling data and spreadsheets at payments providers. The daily operations of companies in the payments industry leaves stores of critical data across numerous systems, third parties, departments, and more. The more transactions that occur, the more data there is to import and transform.

When financial professionals prepare to analyze all of this disparate, differently formatted data during budgeting season, it can quickly become a nightmarish landscape of spreadsheet hell. 

Foreign exchange solutions provider Ebury ended up with more than 30 spreadsheets during their budgeting season after acquiring another company. Just their monthly reports took more than 10 days to complete. 

Manual, error-prone data processing can quickly lead to bad decisions, even if every member of your finance team is trying their best. Last year, a study found that 9 out of 10 finance leaders knowingly made decisions based on bad data.

In this article, we’ll discuss strategies for improving data management during budgeting season. We’ll look at what it takes to set your company up for success in the coming year, with better budgets and more accurate forecasting.

Centralize Your Data

The key first step in getting data ready for budgeting is to centralize all of it. For payments providers, it is much easier said than done. We mentioned earlier how the daily operations of any payments company lead to data stores in many locations, including third parties that may or may not have the required data in a consumable format.

If you haven’t yet centralized your data, you’re not alone. In 2021, Deloitte found that only 11% of CFOs said that their organizations centralize financial data and use advanced analytics for scenario planning. Another 37% manually aggregate data and perform modeling offline.

There are several key steps to centralizing your data into a unified database for better budgeting and forecasting. The process will vary somewhat depending on your business and data sources, but could look like the following: 

• Identify all the required data sources
  Comprehensively review all the systems, providers, and departments that generate necessary financial data, including accounting software, CRM systems, and payment gateways.
• Extract, clean, and standardize the data
  You will need to extract data from each of these sources, and prepare it for entering your database. This can be done manually, or with APIs or other tools. Be sure to address any inconsistencies, errors, or missing values in your data.
• Integrate your data
  Once you have all your data prepared from all of your sources, you will need to combine them into a centralized database or data warehouse.
• Develop data governance policies
  If you don’t have these already, you should establish guidelines for data access, security, and maintenance, especially with more regulations on the horizon.
• Build visualizations and dashboards
  While you could stop at the previous step, it helps a lot to use a tool that can help you visualize and analyze all of the centralized data. You can create interactive dashboards and reports that inform strategic financial planning and decision making.

That process may seem overwhelming, and rightfully so when APIs and database management might not be your speciality. That’s where platforms like Abacum can be a strategic solution. By integrating with your ERP, HRIS, BI, CRM, spreadsheets, data lakes, file storage systems, and more, all of the relevant data is imported into a centralized system for budgeting and reporting. This saves financial teams a ton of time, while reducing the likelihood of errors from manual data management.

Ebury, who we mentioned earlier, centralized their data into Abacum, and used their in-platform features for planning, budgeting, and forecasting. By doing so, they eliminated all of their spreadsheets, shaved 7 days off of their reporting timelines, and reduced their calculation errors by 99%.

Prepare for regulatory changes

There are imminent changes on the horizon for payments providers: Payment Services Directive 3 (PSD3) and Payment Services Regulations (PSR). PSD3 and PSR are European Union regulations that introduce new requirements for payment service providers. As of the publish date of this blog, PSD3 and PSR have not yet been signed into law. 

When these laws take effect, payments companies will be able to collect and analyze much more data, and use them to better inform their budgeting and forecasting activities. The types of data that will be available will include:

• More detailed transaction data
  These new regulations will provide more detailed information about individual transactions, such as the type of payment method used, the merchant category code, and the location of the transaction.
• Comprehensive customer data
  Payments providers will gain access to more comprehensive information about customers, including their spending habits, preferences, and risk profiles.
• Improved competitive landscape data
  Companies will gain access to data on the overall payments market, such as the volume of transactions, the growth rate of different payment methods, and the competitive landscape.

However, these will come with major regulatory obligations, including stricter requirements on how payments providers must collect, store, and use customer data. They will require providers to obtain explicit consent from customers before collecting and using their personal data, as well as implement greater security measures. 

It’s critical to be ready to take advantage of these new data sources, while also dealing with a greater volume and complexity of data. To prepare your team, you’ll want to:

• Make sure everyone fully understands the new requirements
  Take the time to help your team familiarize  themselves with the specific data that PSD3 and PSR require payments providers to collect, store, and use.
• Create new policies and processes for data governance and security
  Establish clear guidelines for data collection, storage, access, and use to make sure you stay compliant with the new regulations.
• Update your budgeting and forecasting models
  Improve the accuracy of your projections by incorporating the newly-available data into existing budgeting and forecasting models. You also want to be sure your models take any new requirements into account.

Financial planning and forecasting platforms like Abacum provides you with robust tools to fuel your compliance efforts. They can help financial professionals with seamless integrations that can deliver new data once available. Using a platform as a single source of truth means you won’t need to update multiple processes and data sources to be compliant with the new regulations. You can also take advantage of multi-dimensional modeling based on granular insights to improve your overall revenue forecasting when the new regulations take effect.

Harness the Power of AI and Automation

Transforming, cleaning, and centralizing your data into the right solution is a huge undertaking. When you’ve completed that work, you can maximize the return on your efforts with the power of AI and automation.

It would be easy to dismiss AI as an innovation that exclusively serves newer industries, but research shows that it’s also set to have a dramatic impact on FP&A teams. In a recent study, Gartner found that just 10% to 30% of organizations report significant financial benefit from artificial intelligence, but that a whopping 71% of finance workers believe it’s important to work with the latest technologies. 

There are several tangible benefits that FP&A workers can gain from automation and AI, including:

• More accurate budgets, that can be adjusted automatically based on real-time performance or any other criteria that’s important to your organization.
• Higher quality presentations, which help stakeholders across your entire business make better decisions. 
• More nuanced forecasting, which automatically considers several scenarios and based on real-time data.

Add the Right Technology to Your Stack

There are over 30,000 software-as-a-service (SaaS) companies on the planet in 2024. That’s an overwhelming number of options to choose from when you need to solve a business problem. When it comes to extracting, transforming, and analyzing data, it’s easy to look at all of your options and simply stick with Excel. 

While you may be comfortable with an endless number of Excel spreadsheets for data analysis, there are some serious risks in doing so, including:

• Human error when analyzing large data sets. Even the most experienced FP&A professional is prone to human error when entering large amounts of data into a spreadsheet manually. 
• Challenges of analyzing data in real time. Data in a static Excel spreadsheet is only as current as the last edit. 
• Regulatory compliance, which requires long hours of tedious, but important tasks to ensure accurate and timely reporting.

These are just a few reasons why adding technology to your processes is important. However, choosing the right technology is critical to ensure stakeholder alignment across your organization. If leaders across your organization aren’t equipped with usable, yet powerful tools, they’re more likely to default back to their original ways of working. 

Building a finance tech stack is a high-stakes and often overwhelming task. Tech stacks quickly lose their relevance when they’re not addressing the needs of the business. To help you build a tech stack that meets your organization’s needs today and can grow with you in the future, here are a few tips: 
H3: Audit your tech stack regularly

Identify and mitigate any glaring integration issues that may be slowing your teams’ processes down. Additionally, audit your most heavily-used tools across your tech stack to ensure that they’re easy enough for any business user to extract data from.

Re-train your end users 

SaaS platforms evolve constantly. Occasionally they evolve too much and become difficult for business owners to use. Julien LaFouge, CFO of fintech company Spendesk, says that finance professionals would see huge increases in efficiency if they used even 50% of their tools’ full capabilities. 

To give everyone across your organization the knowledge they need to leverage software, take a closer look at application usage across your organization. If usage of a critical application is down, provide training sessions to ensure every user knows how to use the tool and are aligned on the importance of the data they’ll extract from it. 

Look for tools that provide the most accurate data

This may seem obvious, but some platforms provide more accurate insights than others. While some options promise seamless integrations with your most widely used applications and services, there’s often a level of distrust with the quality of data that many platforms generate from those sources. When you’re considering renewing or purchasing a service, read user reviews to get a clearer picture of the data integrity that you can expect if you were to move forward. 

Final thoughts

The payments industry is incredibly complex. Teams often work long hours managing high volumes of data across numerous sources. In some cases, they make recommendations based on data they’re not completely confident in. In others, they need to analyze over 30 spreadsheets from just one cross-border trade platform. 

This makes it critical for finance leaders to equip their teams with the tools and technologies that can reduce the amount of manual work they do on a daily basis. With the right tech stack, finance teams can spend more time diving into critical analyses that can help business units across the organization make critical business decisions that are informed by accurate data. 

While it’s impossible to solve the biggest data integrity and management challenges in FP&A overnight, you can make tremendous strides by getting alignment across all departments. This, in concert with the right people and technologies, will set your organization up to make better and more informed decisions for years to come.  

WWant to see how Abacum can empower your teams with the insights they need? Schedule a demo.