Chances are you’ve heard the phrases ‘real-time financial data’ or ‘real-time accounting’ in the last few years. Cloud-based accounting has changed the way companies receive and monitor their financial information. Startups entering their first year off the ground benefit from seeing financial transactions and data as they happen, which is where the real-time factor comes in to save the day. 

Transparent and up-to-date financial data lays out where a business stands compared to its competitors. Operating a SaaS startup in a heavily saturated market means that as a founder, you must keep a close eye on cash flow, burn rate, and total income in the early stages to stay afloat. 

At Zeni, our smart-powered AI delivers real-time bookkeeping services with in-the-moment financial data for startups. Check us out with a free demo here.

What Is Real-Time Financial Data?

Instantaneous – that’s the simple definition of what ‘real-time’ means in terms of business. What exactly does it do for you, though? Is real-time data different from what traditional finance firms offer?

Yes! There is a substantial difference between the two in terms of timing and the benefits for startups looking to have a firm grip on their finances. 

Getting a peek into your company’s financial standing as it’s happening gives your budget breathing room, allows for adjustments on the fly, and acts as a base for future business expansion or planning. 

What Is Considered Financial Data?

In terms of startups and businesses, financial data consists of:

  • Balance sheets
  • Income statements
  • Cash flow statements
  • Assets
  • Liabilities
  • Expense statements
  • Shareholders’ equity

These reports contribute to a company’s final numbers, including net income, gross profit, and runway.

Real-Time Vs Traditional Financial Reporting

Accountants are responsible for financial reporting, typically reconciled at the end of each month. But their delivery time of these numbers takes upwards of a month. Previous numbers bleed into the following month, like opening and closing costs. It’s easier to get a complete picture when all data regarding your finances are up to date.

For example, your profit and loss statements may not accurately reflect the current financial status of your company by the time the data is available. In contrast, you may have accrued more revenue than initially projected. Extra funds mean expansion could be on the horizon. Real-time financial reporting would be available as revenue rolls in, giving you ample time to start planning.

Benefits of Real-Time Accounting and Financial Data

Real-time accounting goes hand-in-hand with instant financial reporting. Active accounting uses a cloud-based accounting system where a company’s financial information is transmitted to the cloud, processed, then relayed back in just a few minutes. 

There are various benefits of real-time accounting and financial reporting, but here are the top five advantages we think matter the most for startups.

1. No Financial Reporting Delay

During an economic downturn, your company may need funds sooner rather than later. With up-to-date and instantly accessible financial reports, you can prepare for investor meetings on the spot. Cash flow problems are the number one killer of startups; real-time reporting gives you a leg up on any future cash flow issues with active transaction tracking. 

2. Accurate Profit and Loss Numbers

Maintaining and increasing profit margins are long-term goals for startups. When your loss outweighs profit, you must make budget adjustments to balance the loss — preparing a budget before the quarter’s end provides better stability and possibly a larger opening balance if immediate adjustments are implemented. 

3. Fraud and Error Detection

Accountants are in charge of finding and correcting errors in your books. Finance-related mistakes can cause significant problems if they aren’t detected immediately. Consistently updated transactions allow founders or financial advisors to catch and correct issues before they snowball. Fraudulent activity on any company account can be flagged and treated immediately as well. 

4. Precise Business Decisions and Planning

Startups need to keep a close eye on their burn rate. Investors want to see their money used strategically. If your cash outflow is higher than your inflow, your financial team can jump into action to prepare solutions. If your startup is just getting its feet wet, having a precise runway number is the difference between taking off and shutting down before you have the chance to make an impact. 

5. Forecast with Current Information

Current numbers pave the way for more accurate forecasting. Using forecasting tools gives you a glimpse of your company’s financial future. Is your runway ending soon? Is your closing balance going to be negative two months from now? There’s no need to put a guesstimated number in your forecast when your accounts are up to date.

Using Real-Time Accounting and Financial Data

Real-time financial reporting and accounting produce accurate numbers to help founders stay ahead of any cash flow problems, make profitable business decisions, and ensure all accounts are error-free. Traditional accounting and CFO services rely solely on a single person or team to work through all your data slowly.

Zeni’s innovative accounting software offers real-time accounting, bookkeeping, and CFO services. Our financial professionals work hand-in-hand with our AI software to deliver accurate and quick data to our clients.