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Artificial Intelligence in Finance & Accounting

Artificial Intelligence (AI) is one of the most rapidly emerging and progressive technologies globally. We can define it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent

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Introduction to Fundamental Analysis

What is fundamental analysis Previously, we discussed technical analysis to evaluate investment opportunities and spot trends that can help us predict the possible price movements of financial instruments. Fundamental analysis is another tool that investors

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A Guide to the Net Promoter Score (NPS)

The NPS metric is a proprietary analytics instrument developed by Fred Reichheld, one of the owners of the NPS trademark. The theory was first developed in 2001 as an attempt to present a single survey

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Introduction to Technical Analysis

What is technical analysis? Technical and Fundamental Analysis are the two most common ways of performing research on any trading vehicle (incl. stocks, commodities, currencies, ETFs). Traders use these tools to evaluate investments and spot

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Artificial Intelligence in Finance & Accounting

Artificial Intelligence (AI) is one of the most rapidly emerging and progressive technologies globally. We can define it as “the ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” (Britannica, https://www.britannica.com/technology/artificial-intelligence) Over the next few years, AI will have significant influence not only in accounting and finance but also in most business sectors. However, there are many uncertainties around the subject, so organizations are hesitant about implementing AI technology. That is why it is essential to be aware of the risks to increase acceptance gradually. How Does AI Transform Accounting and Finance? Already, there are many AI solutions available for businesses to employ, and many other, more reliable and efficient, are being developed as we speak. We can categorize them into four main types: assisted, augmented, automated, and autonomous. Autonomous AI relates to solutions that act autonomously and can adapt to different situations.

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How To: Track Debt Covenants with the Magnimetrics Platform

As we discussed in our last article, debt covenants are provisions within financial agreements such as loans or credit lines between lenders and borrowers that restrict certain activities like dividends and asset sales to protect lenders’ interests and maintain their risk exposure at acceptable levels. If you are not familiar with debt covenants, I suggest you take a look at the article before you continue. Build a Covenants Tracking Report As you might know already, we recently launched our online FP&A platform in beta, and you can request a free account here or at the top of this page. Let me show you how you can build a reusable debt covenants tracker in half an hour. If you prefer to play around with the finished project, it is available as a public template on your Magnimetrics Dashboard! After securing your free spot on our platform, you can go to the

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What are Debt Covenants? Why do Lenders Insist on Them?

A covenant is a promise that restricts or impairs the ability of one party to act in some way. When a company raises debt, it is usually subject to conditions, restrictions, and terms known as debt (or financial) covenants. The purpose of debt covenants is to protect creditors by ensuring that borrowers act responsibly and make payments on time. By imposing strict conditions on borrowers’ activities, they limit their freedom to operate. The nature of these covenants varies widely but usually includes principal payments, interest rate changes, levels of financial leverage, working capital requirements, material contracts, mergers & acquisitions activity, and limitations on distributions. Understanding Debt Covenants Lenders take on a calculated risk when they provide debt capital to businesses. Each potential borrower has a unique inherent business risk. When lenders offer loans, they use debt covenants to manage the risk they assume. Debt Covenants are guidelines imposed on borrowing

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5 Effective Ways to Reduce Customer Churn for Your Fintech Startup

The Fintech industry is one of the fastest-growing industries due to the competition. Almost by default, all of the big players in the Fintech industry are well-funded and backed by investors with deep pockets. As a result, startups in Fintech are battling over every customer and are not afraid to pay top dollars for customer acquisition. For Fintech startups, the cost of acquiring a customer is between $5 and $300. There are even some startups that spend as much as $800 per acquisition. That speaks volumes about why Fintech companies are doing all that is in their power to retain their existing customers.  Customer churn is one of the key metrics used by investors to evaluate the health of a Fintech business. It is one of those things that can attract or drive away investors. It is the difference between surviving until the next series of funding or going bankrupt.

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9 Best Practices to Simplify Your Accounting Month-End Close Process

An important financial event for any organization is the month-end close process. Whether the business entity you work with is a corporation, small business, or non-profit, closing the books is universally important. This activity indicates an organization’s revenue, debt, accounts payable, and profits. For newly minted accountants, the first-ever accounting month-end close process is a rite of passage. Over time and with experience, some accountants can turn this seemingly mundane activity into a work of art by seamlessly weaving in technology, processes, and communication.  Here’s a look at some industry best practices that empower accountants to fine-tune their skills and understand how technology can accelerate their career success.   1. Have the Right Attitude toward the Month-end Close Month-end accounts closure may not feel like the most exciting job for a new accountant, but it is extremely critical for accountants to take it seriously. Executives and investors leverage the data captured in

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Introduction to Fundamental Analysis

What is fundamental analysis Previously, we discussed technical analysis to evaluate investment opportunities and spot trends that can help us predict the possible price movements of financial instruments. Fundamental analysis is another tool that investors use to arrive at a number (fair market value) that we can compare to the security’s current price, thus determining whether it is undervalued. This type of analysis focuses on both the macro and microeconomic factors that can affect the price of a given financial instrument. In contrast with technical analysis, which only considers the historical price movements, the fundamental analysis uses company financials. It considers related economic factors to arrive at an intrinsic value and decide whether it is profitable to invest in that company. Traders prefer fundamental analysis when evaluating stocks, but it is also helpful with other financial instruments, like bonds and derivatives. The “fundamental” idea is to use publicly available data

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A Guide to the Net Promoter Score (NPS)

The NPS metric is a proprietary analytics instrument developed by Fred Reichheld, one of the owners of the NPS trademark. The theory was first developed in 2001 as an attempt to present a single survey question that is easy to administer to vast numbers of subscribers and easy to track and interpret. The primary objective is to infer customer loyalty based on users responding to a single question. This results in a metric that works simply and transparently, which makes it popular and widely adopted. We can apply the Net Promoter Score concept to many things – our organization as a whole, but also individual products, locations, specific web pages, even employees in our customer support department. Implementing NPS in our customer experience strategy allows us to use industry benchmarks to see how we’re doing compared to our competitors. This will help us better understand our target client base and

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Introduction to Technical Analysis

What is technical analysis? Technical and Fundamental Analysis are the two most common ways of performing research on any trading vehicle (incl. stocks, commodities, currencies, ETFs). Traders use these tools to evaluate investments and spot trends, which indicate good opportunities for trading. Fundamental analysis tries to weigh all the information in a given market (such as company financials, the general economic environment, global and domestic, competitors, how the interest rates are moving, and others). On the other hand, technical analysis assumes the price of the security has already reflected all available information. We base this kind of analysis on historical data and statistical trends in price. In some cases, the volume movements of trading instruments also play a role. In other words, technical analysis uses the notion of supply and demand forces to predict future investment opportunities. Traders prefer to use technical analysis to focus more on short-term movements. This

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Your Customer Satisfaction (CSAT) Score Can Make or Break Your Business

We all know happy customers come back to do more business with our company. They also provide priceless word-of-mouth marketing by sharing their experience with others. Clients who rate our products and services as highly satisfactory are usually the ones that promote us to their colleagues, friends, and family. This improves both our conversion rates and profitability margins. To fully grasp the importance of Customer Satisfaction, we need to understand that keeping an existing client happy usually costs much less than converting and onboarding a new prospect. One way to track such performance is the Customer Satisfaction (CSAT) score. By figuring out where the metric is low and improving the customer experience, we can improve our processes and ensure our customers are happy. After all, the worst thing we can have is a customer saying to others, “don’t use this, it’s horrible,” “customer support is horrible,” or anything like this.

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Customer Lifetime Value (CLV) – an Essential Business Metric

When we are trying to optimize the experience for our customers, there are many metrics we can track and aim to improve. The Customer Lifetime Value (CLV) shows us how much money a customer will bring to the business on average over the entire time they remain a paying client. Whether we decide to refer to the metric as CLTV, LTV, or the most popular CLV, it helps us calculate the overall value a customer has to the business, showing us their worth to the company. Knowing this metric is instrumental in planning how much we can invest in customer acquisition and retention. If one customer has a high CLV, there’s a higher probability they are fans of our brand and will continue to buy our products and services in the future. On the other hand, a low CLV customer indicates it was a passive one-time purchase and will be

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