What is Visibility in the Business Context?
In business, visibility refers to the extent to which a company can estimate its future performance. While it is a very broad term that applies to both short-term and long-term performance, having visibility into the organization greatly helps management to run a business better.
- Visibility refers to the extent to which a company can estimate its future performance. Having visibility into the organization greatly helps management run a business better.
- Visibility is often used with regards to upcoming sales and earnings figures of a given quarter and is highly scrutinized as an indicator of a business’s success.
- It is often categorized as high visibility or low visibility.
High Visibility and Low Visibility
Visibility is an important concept in business since it is used and communicated both internally to executives and management and externally to shareholders via annual reports or press releases.
Visibility is often used with regards to upcoming sales and earnings figures of a given quarter and is highly scrutinized as an indicator of a business’s success.
Visibility is often categorized as high visibility or low visibility.
1. High visibility
High visibility refers to how confident the company is in their predictions of future performance. It is highly desirable and indicates that a company is likely to perform well or better in the future.
2. Low visibility
Low visibility is used to describe a company’s low confidence in its future performance. It often takes place during periods of economic downturn, which affects all sectors.
Low visibility is often brought up less by the company and its management for obvious reasons. However, as with all its dealings with shareholders, companies need to be realistic in their assumptions.
Short-Term Visibility and Long-Term Visibility
Visibility in business applies broadly and can refer to both short-term and long-term visibility without a specific timeframe. Whether a company uses a short or long-term analysis of its visibility often depends on the firm itself and its business model or the industry.
A company that uses short-term visibility, while others in the industry use long-term visibility, will undoubtedly be questioned or scrutinized by stakeholders and vice versa.
External Factors Affecting Visibility
Due to its nature, visibility can be strongly influenced by external factors such as macroeconomic events that impact the global or industry environment. For example, during good economic times, high visibility may be common, as companies can confidently and accurately project earnings and sales.
Low visibility is more likely to occur in poor and uncertain economic times when the economy is weak. Often, the external factors are outside of the control of individual companies, so they must be ready to deal with challenging issues.
How to Improve Business Visibility
Businesses certainly run better when their management enjoys the benefit of visibility, which makes maintaining the accuracy of numerical data and the processes that produce and report on the data especially important.
Getting accurate figures and numerical data is by no means a simple task, but it is a crucial part of maintaining visibility.
Capturing Receipts and Expenditures
To obtain accurate financial data, it is important to ensure that expenses and receipts are correctly captured or recorded as they are incurred by the business. Real-time capturing of expenses enables the business to realistically monitor its cash flow.
A business needs to adopt a well-structured and user-friendly system that makes it simple for employees of all levels to submit expenses. It is also important to make sure that the data generated is accessible across different departments to enable cross-departmental collaboration in determining visibility.
Some solutions include implementing a cloud-based expense reporting system to capture, record, and track expenses anywhere, and utilizing mobile applications to allow users to store receipts and submit expenses digitally.
After capturing expenditures, reports from the data are generated. This ensures that the company’s management can spot any discrepancies in the spending reports, which the finance professionals at the company can then address. Automated expense solutions can help bridge the gap between spending and visibility.
CFI offers the Certified Banking & Credit Analyst (CBCA)™ certification program for those looking to take their careers to the next level. To keep learning and advancing your career, the following resources will be helpful: