The Role of Financial MDM in Mastering Enterprise MDM

When most people talk about metadata they are referring to descriptive metadata, which provides basic information about a resource (such as title, author, date, description, format, language, or keywords) and is primarily used to search, browse, sort, and filter information about a given resource.

However, in the context of an enterprise finance organization, metadata refers to elements specifically associated with financial data, transactions, and processes. For example, chart of accounts metadata would include elements such as accounts, entities, cost centers, products, projects, and employees.

Financial metadata is used to define data dimensions, hierarchies, and properties that enable financial applications to aggregate, organize, analyze, and report on financial data accurately and efficiently.

Who needs financial metadata management?

There is a common misconception that financial metadata is only relevant to finance teams; however, financial metadata plays a critical role in data management both inside the finance organization and across the entire enterprise.

Financial metadata has the potential to impact the accuracy, integrity, consistency, and usefulness of the data that feeds your business applications and analytics company-wide. To maintain the quality of your financial metadata—and ensure your enterprise data is fit for use—it is critical to implement effective financial metadata management practices.

Let’s take a closer look at the role financial metadata management plays in enterprise data management and explore real-world examples of how you can leverage financial metadata management to improve enterprise-wide data quality, reduce risk, support decision-making, and maintain compliance with applicable regulations.

Here are 6 ways financial metadata management adds value to enterprise data management efforts.

Regardless of industry, financial metadata management impacts enterprise data management efforts in six key ways.

Increase Data Accuracy

Financial metadata management ensures accurate classification and storage of financial data.

Real-world example: Consider a multinational automotive corporation with numerous product categories, operating regions, and sales channels. To ensure accurate classification and storage of financial data, the corporation implements financial metadata management technology in its enterprise resource planning (ERP) system.

Leveraging this technology, the corporation ensures its financial data is accurate, consistent, and accessible using financial metadata management tools, including:

• Standardized product classification
• Hierarchical sales reporting
• Localized currency conversion
• Region-specific taxation rules
• Audit trail and data lineage

Maintain Compliance

Financial metadata management enables traceability and accountability, which is crucial for audits and regulatory compliance.

Real-world example: A healthcare provider implements financial metadata management technology to track and classify billing transactions related to patient services, insurance claims, and reimbursements. Each transaction is tagged with metadata attributes, including patient demographics, medical codes, service dates, and billing codes.

Financial metadata management tools enable the healthcare provider to create a transparent and auditable record of billing activities, which helps maintain accountability and compliance with regulatory requirements.

By accurately documenting billing transactions and associated metadata, the healthcare organization can mitigate risks associated with billing errors, fraud, and regulatory non-compliance, ultimately safeguarding patient trust and the provider’s financial integrity.

Reduce Risk

Financial metadata management identifies potential risks, such as data inconsistencies or inaccuracies, and takes proactive measures to mitigate them.

Real-world example: A popular retail clothing chain utilizes financial metadata management technology to classify inventory data by product categories, suppliers, and stock levels and tag each item with metadata attributes, such as product descriptions, pricing information, and procurement sources.

During inventory audits, the financial metadata management system automatically compares inventory records with sales data and purchase orders to identify and address discrepancies such as stock shortages, overstock, or pricing errors. This proactive approach helps the business optimize inventory levels, improve supply chain efficiency, and enhance its overall financial performance.

Support Governance

Financial metadata management makes it easier to enforce data governance policies, track data lineage, and ensure data quality and integrity.

Real-world example: A life insurance company implements financial metadata management and data governance policies to ensure compliance with regulatory requirements and protect sensitive policyholder information.

Using a financial metadata management solution, the company defines metadata attributes for policyholder data, including personally identifiable information (PII), policy details, and claims history. Each of these attributes is associated with specific data governance policies that define access controls, encryption requirements, and retention periods for the different types of data.

Financial metadata management technology enforces these policies by automatically applying access restrictions and encryption measures based on the metadata attributes associated with each data element.

Structure Financial Data

Financial metadata management defines and structures data definitions, data types, relationships between data elements, and other attributes that provide context for enterprise data.

Real-world example: A consumer electronics retailer implements financial metadata management technology to improve operational efficiency and financial performance by:

• Classifying sales transactions based on product categories, sales channels, and customer demographics.
• Managing inventory by structuring metadata to track stock movements, forecast demand, and optimize inventory levels.
• Tracking accounts payable, payment processing, and reconciliation of supplier invoices.

Facilitate Analytics and Insights

Financial metadata management facilitates advanced analytics, aiding in trend identification, risk assessment, and strategic planning.

Real-world example: A telecommunications company offers a variety of services, including internet, cable TV, and cell phone plans. Due to the range of services offered, the company relies on financial metadata management to streamline billing, revenue management, and customer payments.

By implementing a financial metadata management solution that supports advanced analytics, the company is able to leverage its financial metadata to identify trends in customer preferences and demand for services, detect patterns that may indicate high customer churn or suspicious account activity, and plan strategically to optimize pricing and allocate resources.

Financial metadata management is a key component in an enterprise data management strategy.

Financial metadata management creates a strong foundation for enterprise data management by providing the structure, governance, and intelligence to effectively manage and leverage financial data across the organization.

EPMware enables key users—from financial systems managers to systems administrators to CFOs—to leverage the power and simplicity of a technology-agnostic financial metadata management and data governance platform, aligning financial reporting with operations across the enterprise to drive the business forward.

Schedule a conversation to learn how EPMware empowers businesses in every industry to harness the power of their financial metadata.