2021 Finance Trends that Will Impact Your Close Process
With 2020 in the rearview mirror, we are looking to 2021 as the year of recovery and revitalization. Gartner has also referred to 2021 and beyond as “resetting everything” — from responsibilities, risks and rewards, to how technology is viewed throughout organizations. With so much change and disruption, companies are looking to 2021 to start building from 2020 and how they can take the best from the worst times.
Standing the test of time, Seneca’s quote “Every new beginning comes from some other beginning’s end,” holds true as we evaluate the status quo and gain perspective on previous assumptions and ways to work. There are five key finance trends to keep an eye on in 2021 as they relate to your financial close process, which should be viewed through a lens of resetting throughout the year.
Finance Trend 1: Continued Remote Work Through 2021
There is no question that we were forced to achieve within a few months what some thought it might take years to do with the transition to a fully remote financial close process. Some would say that necessity is the mother of innovation; this will be something that will likely continue throughout 2021. However, we must take into account the things we learned from 2020 and evaluate if there are better ways to work remotely.
No longer viewed as a productivity drain, 54% of CFOs plan to make remote work a permanent option. While we have crossed the initial hurdle to achieve this, the focus is now rethinking and leveraging a mostly remote team as a differentiator – something to be used as a collective advantage. Companies large and small are evaluating their future corporate culture “while the floorboards are up,” as stated by Drew Houston, founder of Dropbox.
This will have a direct impact on verticals like e-commerce and retail, where the traditional brick and mortar businesses have been thrust into the e-commerce world with increasingly complex reconciliations to then follow. Collaboration and tracking of month-end close tasks will continue to be a highlight of 2021 as organizations reset to a better future.
Finance Trend 2: Accounting’s Role as Strategic Advisor Continues to Evolve
With a renewed focus on cash flow, continued increases in regulation, and rules around Paycheck Protection Program (PPP) reporting (in the US), we expect to see accountants’ role as a strategic advisor in the organization continue to evolve and accelerate throughout 2021. Typical accounting firms will likely see a large portion of their revenue from advisory services as organizations continue to adapt. Two to three thousand accounting jobs were added in December, further highlighting the criticality of the accounting role and expected needs going forward.
Finance Trend 3: Automation and Artificial Intelligence (AI)
AI encompasses a wide range of topics, from self-driving cars to receipt processing automation. With over 25 different flavors of Artificial Intelligence falling under the AI umbrella, it’s important to distinguish the abstract from the concrete. Ask core questions, like with any new technology, such as “what will I be able to do tomorrow that I can’t do today”, “how does this make our job as accountants more accurate”, or “does it remove manual tasks we’re doing today?”
The impact of AI on accounting, and within the month-end close, will likely become more pervasive and ingrained in our processes, providing the decision support and automation needed to help drive better business decisions throughout 2021 and beyond. With much of the technological underpinnings now available, we anticipate companies and services to continue adopting AI strategies throughout their solutions to improve their customers’ experiences and provide world-class services.
Finance Trend 4: Data Analytics and Integration
The trend for frontline workers to have democratized access to data will likely only accelerate as employees continue to work remotely and data and tools become better suited for the average user. This includes how easy your accounting team can access the data needed during the month-end close to perform as efficiently and effectively as possible. This process used to be cumbersome and IT-involved, but with new technologies available, the end-user has immediate access to data to make decisions like never before. We anticipate this finance trend continuing through 2021 and beyond.
Accessing financial close data – like GL balances, sub-ledger transactions, etc. — will continue to get easier as new technologies enable ease of data acquisition and transformation. It’s important to understand where your organization is on the IT maturity spectrum, find the best solution for now, solve immediate needs, and find what will scale as your organization continues to grow. This could mean starting with an automatic file load from your desktop today to a straight-through GL ERP to close the system feed in the coming months.
Finance Trend 5: DE&I Will Be a Differentiator
Diversity, equity, and inclusion is something that we care deeply about here at Trintech. We have spent time evaluating our own policies and programs and will continue that effort into 2021.
We are stronger together, bringing different backgrounds and life experiences to the table when solving problems – providing the best experience possible for our customers and employees. Not only is it just the right thing to do, but research from the Wall Street Journal shows that having a diverse and inclusive workforce benefits the bottom line with “the 20 most diverse companies in the WSJ study [having] an average annual stock return of 10% over five years, versus 4.2% for the 20 least-diverse companies.”
A diverse and inclusive workforce benefits productivity and ROI, but it also contributes to a happy and healthy work environment. Catalyst, a non-profit that works with companies on issues related to inclusion and gender disparity, surveyed 2,100 employees in 2019 and found positive experiences of inclusion explained 49% of team problem-solving abilities, 35% of work engagement, and 20% of intent to stay at the organization.
Financial close processes can only become stronger and more robust as organizations leverage different perspectives to drive better solutions to more complicated problems, benefitting customers and organizations alike. We expect this trend to continue beyond 2021 as organizations strive to do their best for their communities, employees, and customers.
By keeping these five trends in mind, accounting teams can learn from the uncertainties of 2020 and build resilience into 2021. Watch this joint webinar with Auxis and Trintech to discover how modernizing close processes and evolving accounting roles can enable organizations to remain agile and competitive.
Written by: Michael Uram