What is meant by Variance analyses?
Variance analysis is an important tool in financial and business analysis used to identify and evaluate differences between expected and actual results. These analyses help companies understand variances in financial metrics, performance measures, or budgets, and determine the causes of these variances. Insights from variance analysis enable companies to take appropriate actions to improve performance and adjust their business strategy.
Typical features of software in the area of variance analysis include:
- Data Integration: Integration of data from various sources such as accounting systems, ERP systems, and other business applications.
- Variance Calculation: Automatic calculation of variances between expected and actual values based on defined criteria.
- Visual Representation: Visualization of variances through charts, graphs, or dashboards to easily identify trends and patterns.
- Root Cause Analysis: Analysis of the causes of identified variances through drill-down functions or detailed data analysis.
- Notifications and Alerts: Notifications or alerts for significant variances from defined thresholds.
- Historical Comparisons: Comparison of current variances with historical data to identify long-term trends.
- Reporting: Generation of reports and report templates for variance analysis for internal communication and decision-making.
