The last two years have thrown several curveballs — curveballs that have forced organizations to transform their strategies, investigate their own practices and contribute to the changing role of corporate finance in the business.
The accounting trends produced from the last few years are expected to continue into 2022, and an organization’s success in the new year will be greatly impacted by how finance and accounting (F&A) responds.
3 Accounting Trends F&A Teams Can Expect to Impact 2022
#1: A greater focus on meeting worker expectations and fostering employee satisfaction.
The latter half of 2021 brought with it a surge in worker dissatisfaction and resignations from organizations across the country.
In fact, in August 2021 alone, there were four million recorded resignations in the United States.
The movement – nicknamed “The Great Resignation” – has caused organizations to examine their own pay, benefits, and employee satisfaction levels — including how they can solve these issues. A report was released that investigated the working individuals that didn’t quit their jobs, unlike millions of other Americans.
Most notably, the study found:
- 13% of employees said their organizations didn’t meet their needs. These individuals were burned out, angry and very likely to leave.
- Feelings of disconnection run high. Only 18% felt a strong sense of personal accomplishment at work, and disconnected employees are eight times less likely to recommend their organization as a good place to work.
The scrutiny caused by The Great Resignation is expected to continue through 2022. Employees are an organization’s greatest resource and an essential component of its success. If organizations want to be successful, they will need to find ways to meet employee expectations and create sustainable work environments whether it’s in-person, virtual or hybrid.
#2: Heightened regulatory scrutiny into DE&I and corporate ESG policy.
Alongside the re-examination of worker satisfaction and benefits has been the emphasis on the importance of diversity equity, and inclusion (DE&I) and environmental and social governance (ESG) initiatives.
Corporate boards are now widely intensely focusing efforts onto ESG best practices, according to CFO Dive.
In 2021, 64% of directors linked ESG to their business strategy — up from 49% in 2020. It’s the number one topic that investors want to discuss with directors during shareholder engagements.
These directors acknowledge that corporate ESG policy will contribute to long-term stability and growth.
Additionally, these companies also know that the Securities and Exchange Commission (SEC) are preparing proposals for mandatory disclosures on climate risk and workforce.
#3: Though the supply chain is expected to level out, inflation will continue to rise.
Though the supply chain most likely will not return to complete normalcy in 2022, it is expected that there will be a more stable supply.
General Motors CFO, Paul Jacobson, said the company expects a more stable supply chain in 2022, “even if it’s not back to completely unconstrained”.
However, a recent Duke University survey revealed that CFOs expect, on average, higher-than-normal costs in 2022. In fact, one in four CFOs predicts that these elevated costs will continue through most of 2022, which means consumers and businesses alike can expect costs to remain high.
How Will These Trends Impact the Office of Finance?
Though the beginning of 2021 brought with it slight relief from the pandemic, accounting trends produced by COVID will clearly persist into 2022. The changing role of corporate finance means that the Office of Finance will have to find new ways to turn these challenges into opportunities for the business.
6 Questions Finance Leadership Must Ask in the New Year
- Does your Office of Finance have direct access to analytics and insights?
- Can finance leadership trust that the data they have access to is accurate?
- Does your F&A team’s technology stack align with the strategic goals of the organization? Is it outdated?
- If so, is your current tech stack contributing to fragmented employee experiences and employee dissatisfaction?
- Have you implemented automation created specifically for the Office of Finance?
- Are you utilizing your team’s high-level skills for strategy, or manual, low-level tasks?
There are three words that have been important, but now are of the utmost significance for organizational success in 2022:
Access to data.
If the organization – and departments across the organization – doesn’t have access to reliable, real-time data to inform and support strategy, they will be reacting to anything happens in 2022. Flexibility and proactive insights will be the key to success and survival in the new year, no matter the industry.
The Office of Finance must determine if their technology stack provides this access to data. Have organizations implemented automation to provide time savings and data insights?
Many organizations implemented automation after 2020, but have they optimized their processes and equipped their workforce with the necessary skills to support automation? Additionally, have they fully automated their financial close — or just one piece?
Though it won’t be like the previous two years, 2022 will present its own set of unique challenges to overcome and opportunities to leverage. Is your finance and accounting team prepared?
Now is the time to plan for 2022 and make sure that automation is in your financial plan for goals and the budget. Organizations that are not already planning for an automation project in 2022 are already behind.
Written by: Ashton Mathai