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What is Financial Master Data Management

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Master Data Management systems are offering solutions that are difficult to ignore in today’s complex business world. MDM systems aid organizations to improve the consistency and quality of critical data assets. These range from asset data, product data, customer data, and location data. This offers a myriad of benefits ranging from streamlining operations to increased accuracy of a business’s reporting and analysis.

What is Financial Master Data Management?

Financial Master Data Management is a system that collects and compiles separate data within an organization and provides complete, accurate and consistent information to the end users; the business partners as well as the employees in the organizations. An MDM tool compiles an organization’s data to guarantee that:

1. A business sees an increase in its reports’ accuracy while keeping costs low.

MDM systems ensure consistency across varying reporting platforms and reflected data even in a changing business environment. It's one thing to update information, but this information needs to merge and work in tandem with existing information across all platforms within an organization. For example, a change of address in the CRM system should also be accessible from the billing department’s software to ensure invoices are sent to the correct address.

2. An organization’s reconciliation costs are minimized

Reconciling data discrepancies can be tedious and time-consuming. MDM systems ensure a business's financial and reference data is well stored and managed to reduce these discrepancies. This results in a shorter reporting turnaround time.

3. Days sales outstanding are reduced

Most organizations aim to reduce their days sales outstanding (DSO) and open corresponding accounts receivables. Despite putting their best efforts in place, businesses still find themselves with payment delays, disputed invoices and order errors.

Financial MDM tools provide an invaluable resource that holds and updates your data consistently ensuring that such errors are significantly minimized.

Why MDM is necessary

Most businesses today have their data across several different systems and software, while these systems are useful, they have some downfalls such as:

Duplicating information.

Creating various platforms of disjointed information.

Retaining outdated information that is no longer relevant to a business, its operations or its customers.

Failing to capture data updates across the various data platforms.

These limitations make it harder for an organization to figure out its metrics and key performance indicators.

Simple metrics such as an organization's workforce, best product on the market and most profitable accounts become difficult to tabulate or report accurately. Consequently, this slows down the process of mitigating and implementing solutions to counter and correct any obstacles.

Data Used by Financial MDM systems

Most software systems comprise of data shared across several applications. These data can be grouped into six categories:

1. Unstructured data

This is data found in email, magazine articles, product specifications, white papers as well as marketing items and PDF files.

2. Transactional data

This is data associated with business transactions such as sales, deliveries, claims, invoices and other non-monetary and monetary transactions. They are time-based and are required for analysis by other systems.

3. Metadata

Metadata is simply data about other data. This can be in the form of XML documents, logs and column descriptions, reports and configuration files.

4. Hierarchical data

Hierarchical data is central to understanding the relationships between metadata. This data is stored as part of an accounting system, or separately. Examples of this are organizational structures and a company’s product lines.

5. Reference data

This is data used to categories other data, even beyond an organization in terms of countries, time zones, payment plans, and currencies.

6. Master data

This data is central to a business. It remains constant over long periods of time and can include reference data. Master data describes transactions but is not transactional in itself.

Profisee has been recognized in the Gartner MDM quadrant report. The Gartner MDM report listing came after an evaluation of the top vendors in Master Data Management tools. At Profisee, our goal remains to provide an affordable and accessible approach to data management.

Author Bio: Douglas Pitassi is a freelance writer and small business blogger.

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