Boost Your Financial Reporting with Analytical Dimensions

Boost your financial reporting with analytical dimensions

In today’s complex business landscape, organisations are sitting on top of a mountain of financial data. The importance of being able to analyse and interpret this data cannot be understated. Financial reporting based on analytical dimensions provides valuable insights and supports informed decision-making using real data. For external stakeholders, standard financial reports without analytical dimensions might be sufficient, but they are essential for deriving real insights and value from your finance reporting. In BrightAnalytics, the integration of analytical dimensions into comprehensive and insightful reporting happens flawlessly, taking away the hassle of manually gathering and integrating the data.

What are analytical dimensions in financial reporting?

Analytical dimensions are categories or attributes that provide additional context to financial data. For example, you can record a cost to a specific GL account and assign one or more analytical dimensions to the transaction line, such as the department responsible for the expense. These dimensions provide deeper insights into transaction origins and enable meaningful segmentation of financial data. Common examples include cost center, cost unit, location, department, business unit, and project.

When multiple analytical dimensions are used together, the result is multidimensional accounting —a structured approach to analysing financial data from different angles. This allows organisations to break down financial performance not just by a single factor, but across various interrelated dimensions, such as cost center and region or business unit and project. 

5 Key Benefits of Analytical Dimensions in Finance

Analytical dimensions provide a wide range of advantages, from enhancing business insights to enabling more precise decision-making. Here are some key benefits:

1. Improved Financial Visibility

Analytical dimensions provide a comprehensive view of your financial performance. By organising data into relevant categories, you can analyse profitability, expenses and growth at a granular level, making it possible to track cost ownership per dimension. For instance, a company could assess the profitability of a single project or allocate HQ insurance costs across different offices to gain insights into office-specific profitability. 

2. Data-Driven Decision-Making

Enhanced visibility enables controllers and CFOs to base decisions on precise data rather than intuition or aggregated figures. Data-driven decision-making minimises risks and increases the likelihood of achieving optimal outcomes.

3. Cross-Dimensional Insights

A major strength of analytical dimensions is the ability to combine multiple perspectives. For example, analysing data by region and business unit can reveal trends across regions for specific business units. This cross-dimensional analysis allows organisations to uncover correlations that could otherwise remain hidden in the aggregated numbers. In BrightAnalytics, users can easily explore multi-level dimensions to detect these trends and correlations. Using pivot views, it is possible to dynamically combine different dimensions and track them across multiple companies.

4. Well-Founded Strategic Planning

By leveraging dimensions such as cost center, department, and business unit, organisations can enhance budgeting and forecasting with greater granularity, leading to more well-founded strategic plans. Historical data segmented by dimensions can highlight patterns, helping organisations to predict seasonal demand, project cash flows, and plan capital expenditures more accurately.

5. Simplify Chart of Accounts

Analytical dimensions reduce the need for an overly detailed chart of accounts. By combining dimensions with account codes, organisations achieve flexible reporting without expanding the chart of accounts, resulting in fewer inconsistencies and more streamlined accounting.

The challenges & Best practices of Multidimensional Accounting 

While multidimensional accounting offers numerous benefits, it also presents challenges. Ensuring consistency in source data is essential for extracting valuable insights. This requires uniform booking practices across companies and departments, which can pose challenges for accounting teams. Additionally, managing multidimensional financial data can increase complexity, requiring advanced tools and structured processes to maintain data integrity and accuracy.

To overcome these challenges, organisations should implement best practices such as establishing standardized data entry protocols, leveraging automation to minimize manual errors, and investing in advanced reporting tools like BrightAnalytics that facilitate multidimensional analysis. Training accounting teams on the correct usage of analytical dimensions ensures consistency, while regular data audits help maintain accuracy and reliability in financial reporting.

Analytical dimensions in BrightAnalytics 

BrightAnalytics makes it easy to perform the analyses described above, thanks to its seamless integration with accounting software and ERP systems. Users can combine different filters to generate precise reports, view rolling data over time, or compare dimensions using pivot views. Additionally, BrightAnalytics supports budgeting on analytical dimensions and allows for the inclusion of non-accounting data, such as the number of FTEs per dimension.

Furthermore custom workflows can be implemented to allocate unassigned transactions to analytical dimensions via a specified method (as discussed in this blog). Finally, BrightAnalytics also offers a “Controlling – Dimensions” application, designed to handle complex and multiple sets of dimensions. This application provides unparalleled flexibility, enabling CFOs and controllers to unlock the full potential of analytical dimensions and retrieve nearly any type of report by default, thanks to the app’s inherent adaptability.

Conclusion

Analytical dimensions are essential for financial reporting and analysis. By structuring and enriching financial information with relevant context, companies can identify trends, uncover opportunities, and tackle challenges with greater accuracy and confidence. BrightAnalytics excels in making analytical dimensions both accessible and actionable, enabling organisations to transform their financial data into a powerful strategic asset.