2020 was a difficult year for all business organizations but especially so for their financial and accounting units. COVID-19 introduced big changes in the way people live and work. Finance professionals especially CFOs need to prepare and position their companies to be resilient and competitive in the future while also addressing the short-term concerns introduced by the crisis.
Writing for Forbes Magazine in a Dec 2020 issue, Jeff Thomson of the CFO network and CEO of IMA (Institute of Management Accountants) enumerated some of the trends that finance and accounting teams can expect and prepare for in 2021.
Thomson predicts the following:
Specifically, remote financial close became a reality for most finance departments. Those who had automated processes progressed more than those who did not. Whether the remote financial close is here to stay or becomes a hybrid approach, financial leaders can make greater investments in cloud computing and software.
2. Remote working will become the norm for finance teams. According to a June 2020 survey of consulting firm PwC, 54 percent of CFOs plan to make remote work a permanent option. It is a two-part process to have a successful remote working arrangement. CFOs should provide the right tools to their staff. Second, teamwork and collaboration is needed among individual teams and cross-functionally throughout the whole organization.
Employee engagement and productivity can suffer with the lack of in-person contact. With the help of both HR and IT, CFOs need to build and maintain corporate culture. Open communication with all of the employees, virtual events, and employee town halls are key.
3. Environment, Social and Governance (ESG) reporting will become more important. This has been an accelerating trend even before the pandemic started. ESG will gain new focus, serving as an important organizational risk mitigation tool, and fulfilling consumer mandates for greater corporate social responsibility.
In his Forbes article, Thomson discussed how “intangible assets” – environmental risk and/or impact were rapidly becoming much more important for finance professionals in measuring and reporting the performance of a company. Today, with the implementation of sustainability measures, finance teams and senior management can connect improved organizational performance.
ESG is now perceived as a benefit for organizations rather than a cost. A report published by Institute of Management Accountants entitled “Finance Function Partnering For the Integration of Sustainability in Business,” provides a blueprint for how finance functions can integrate financial and non-financial reporting and successfully work cross-functionally.
4. Enterprise Risk Management (ERM) becomes a finance accountability. One thing that the pandemic has taught is that a crisis can emerge suddenly and cripple all plans and expectations for the future.
The Committee of Sponsoring Organizations of the Treadway Commission’s (COSO) Enterprise Risk Management Framework – allows teams to anticipate to prevent crisis management by focusing on managing risks and preventing or minimizing issues before it occurs, emphasizing Governance and Culture, Strategy and Objective Setting, Performance, Review and Revision, and Information, Communications and Reporting.
This year, organizations will focus on mitigating risks – be it environmental, reputational, or other. The role of finance will become more crucial than ever. In using COSO ERM framework properly, management accountants can prepare for disruptions and natural disasters with plans and procedures ready for business continuity and remote work.
5. Diversity, Equity and Inclusion (DE&I) will be a competitive differentiator, in addition to being the right thing to do from a core values perspective. The Wall Street Journal ranked companies in the S&P 500 by levels of diversity and inclusion in 2019. They found that the top 20 companies had better performance results on average than the lowest-scoring organizations.
Firms that value DE&I enjoy its benefits as well – enhanced corporate reputation, more innovation and ease in attracting top-tier talent. Its initiatives can make a better and stronger corporate culture and more engagement from the employees.
6. Upskilling is the call-to-action. A global survey conducted by IMA of finance and accounting professionals, posing questions related to COVID impact on staffing, revenue management, upskilling and reskilling. A key finding was the professional’s concern about whether their skill will still be relevant in the post-COVID-19 era – 12 percent of survey respondents believe their skills will not be relevant anymore, and another 10 percent are unsure. ‘
That is why associations like IMA are pointing out the importance of continuous learning and offering different courses – in data analytics, blockchain, and other technologies, to help professionals gain the skills needed to compete in the new post-COVID world of work.
One of the things that can enable companies to meet the challenges of the coming year is their agility and flexibility. These can be provided by cloud technology that integrates various business units and allows the user access to important company information from wherever they are.
The development and distribution of vaccines across the world will bring back economic activity and recovery for businesses and nations. Finance and accounting professionals will be in a better position to ride this recovery if they anticipate the above-mentioned trends and act accordingly.