As organizations are beginning their financial planning for 2021, a large amount of focus has been placed on reviewing the events of 2020 and how finance and accounting (F&A) teams responded and adapted to them. Recently, Forbes released an article written by Jeff Thomson from CFO Network that predicts the most relevant finance trends in 2021.
Six Forbes Finance Trends for 2021
The article places a heavy focus on the fact that organizations are adopting more advanced technologies, especially in F&A departments. The rate of financial transformation propelled by technology has accelerated because of the roles and responsibilities the pandemic forced upon F&A teams.
#1: Implementing Automation to Achieve Financial Transformation Will No Longer be Debated
Thomson states that “routine, rules-based tasks” will inevitably become automated in 2021. Prior to 2020, experts were predicting a continued rise of automation and artificial intelligence in finance and accounting, but the pandemic greatly accelerated the adoption of these technologies. The pandemic caused many accountants to realize the shortcomings of their traditional tools as they moved to a virtual close, and their processes became extremely complicated. However, organizations that already had the tools to enable virtual work and automation in place fared better than those that did not. These organizations were able to leave repeatable, rules-based work to automation in order to focus on immediate value-adding tasks, like developing a financial response plan or devising cashflow strategies.
#2: Remote work will become standard procedure for F&A teams
Thomson points to a PwC survey facilitated in August that revealed 54% of CFOs planned to make remote work a permanent option. Trintech’s CEO, Teresa Mackintosh, also predicted this trend in early 2020, when the effects of the pandemic were still unfolding, stating:
“The COVID-19 crisis has exposed us to several key learnings, but one of the biggest is to continue investing in the processes and technologies to support a remote workforce. This not only includes our internal processes and technologies, but also the customer-facing solutions that we are bringing to market to help the Office of Finance automate and streamline their financial close processes virtually.” –Teresa Mackintosh, CEO of Trintech
However, in order to enable successful remote work, CFOs must do two things.
- Commit to providing the right tools for their staff
- Focus on promoting collaboration and teamwork across the entire organization
Especially among F&A teams, investing in proven technology that drives financial transformation is key to these two factors.
#3: Environmental, Social and Governance (ESG) reporting will become increasingly important
Though this finance trend was already gaining importance before 2020, it will become even more relevant to the future of finance in 2021. Thomson states that finance teams and senior management are better able to correlate improved organizational performance and sustainability implementation. For example, when organizations move to the Cloud, they decrease their costs and lessen their environmental impact. To that end, ESG will be thought of as a benefit for organizations rather than a cost.
#4: Enterprise Risk Management (ERM) becomes a finance responsibility
An insight that was known before COVID-19, but reinforced by it, is that organizations must take a proactive approach to risk management. The planning and development of risk management strategies largely falls to the Office of Finance to handle. This means that, in order to properly mitigate risk, F&A teams will be required to evaluate their control framework and evaluate how to prevent and mitigate all risks (whether financial, social or environmental). As traditional accounting tools do not enable these teams to effectively prepare risk management strategies, financial transformation will be crucial to supporting organizations when it comes to risk.
#5: Diversity, Equity and Inclusion (DE&I) will not only become a competitive differentiator, but also a core value
It is becoming universally accepted that DE&I initiatives should not only be a focus for the Human Resources department, but the entire organization. The Wall Street Journal found that the top 20 best-performing companies with the highest DE&I scores created better performance results than those with the lowest DE&I scores. Taking this approach to talent acquisition is perceived not only as a best practice for finance and accounting teams, but the morally “right” thing to do.
#6: Upskilling is the next step for the future of finance
A few years ago, Dell Technologies released a report that predicted 85% of the jobs that will exist in 2030 haven’t been invented yet, and the rapid rate of automation adoption is currently validating that prediction. Thomson supports this point by emphasizing the emergence of finance trends like intelligent automation, Robotic Process Automation (RPA), data analytics and blockchain. With these trends, the future of finance (and accountants) relies on skills like continuous learning and pivoting from value stewardship to value creation, as Thomson calls it.
2021 will provide significant opportunities for finance and accounting to demonstrate the importance of their contributions to the organization, beyond reporting and disclosure. It is imperative that F&A teams be ready to step into their roles as strategic value-creators in the organization by embracing comprehensive Record to Report solutions that leverage advanced technologies like Robotic Process Automation and Artificial Intelligence and look at the digital workflow across the organization holistically.
To explore Forbes’ insights in full, read the article.
Discover how F&A teams can increase value for their organizations with technology initiatives.
Written by: Ashton Mathai