What are 5 key issues facing accounting and financial management today?
Digital transformation is becoming imperative for all areas of an organization. However, increased pressure on finance and accounting departments is leading to greater investment in digital solutions to provide the necessary strategic and operational insights to support financial decision-making.
Finance faces unique challenges , both in terms of supporting corporate goals and optimizing productivity among teams.
With pressure coming from every side, determining areas of focus can be difficult. A recent report by The Hackett Group has highlighted multiple issues and areas of priority for finance leaders in the coming year.
In this blog, we will discuss 5 key issues affecting accounting and financial management, and how digital transformation can improve finance’s ability to provide key strategic advice to other departments and at the executive level – keep reading to find out more.
1. Finance teams struggle with strategic tasks
The Hackett Group highlights the need for scenario planning capabilities – finance and accounting teams must work closely with other teams to offer insight that informs agile strategy – from the allocation of resources to the execution of plans.
The need for strategic advice from finance is only set to grow as organizations face increasingly turbulent markets and look to the CFO to lead the way with a coherent and data-led strategy.
Of course, being informed by data is key, and the single source of data truth that ERP provides across key functions is unrivaled when it comes to leading the organization with strategy.
Solution: CFOs should also focus on digital solutions that help reduce the level of manual and administrative tasks through automation, so this time can be repurposed for analyzing financial data and using this to form strategy.
2. Forecasting remains a challenge for the financial department
Forecasting future financial scenarios is difficult; it requires organizations to be capable of rapidly assessing their financial plans, budgets, and allocated resources to successfully pivot on a month-to-month or even weekly basis, based on external or internal changes.
The effects of constant and rapid change mean finance departments are under pressure to shift from traditional forecasting approaches.
Financial teams must adopt more flexible rolling forecasts and scenario plans that enable teams to realign priorities on the fly. It remains true that legacy systems will struggle to provide this flexibility, but digital and Cloud-based ERP and financial management tools will help.
Solution: Greater collaboration of accounting and finance with other key functions through ERP and financial management systems will ensure that all functions operate with the same single source of truth and can update their plans, based on data, as soon as the strategy is agreed upon, rather than creating a manual workload.
3. Legacy processes can’t keep pace with Cloud’s proven benefits
Digitization is the order of the day, and in many cases, that means replacing legacy systems that stand in the way of flexibility and integration.
The need for improved capabilities like up-to-the-minute data analytics has already seen a projected increase in Cloud adoption in areas such as enterprise performance management, where almost 45% of such deployments, according to Dresner, are now entirely Cloud-based.
By leveraging solutions such as Cloud-based financial management software, an entire organization can rely on a single source of truth that allows for better planning processes and succinct financial management when reporting performance to senior stakeholders.
CFOs must also hear out their end users, those in their office who use their financial management systems every day. Ultimately, your tech stack will affect their productivity when doing work.
Solution: CFOs must recognize the inefficiency of Excel, its inability to handle process-based tasks, its practical limits in a digital world, and its failure to keep up with trends such as AI and migrate to Cloud-led financial management.
4. CFOs must re-evaluate talent strategies
With the rapid advancement of data science and its role in financial management systems, new skill sets (from cybersecurity experts to data analysts) have reassessed the importance of reskilling and upskilling to underpin transformation efforts in finance and the wider organization.
This new focus on talent management will require finance to collaborate with HR, combining knowledge bases and data to come up with strong long-term strategies to attract necessary talent as well as retain current talent.
“Gartner research shows that five digital competencies are key and applicable to back-, middle-, and front-office finance work. They are technological literacy, digital translation, digital learning and development, digital bias management, and digital ambition.”
Solution: With an increased need to forecast and strategize, the CFO must ensure that key financial talent isn’t being asked to do more than is currently possible with the tools at their disposal. Strategy can never be realized or even formed properly without adequate tools and capabilities to make this possible and realistic.
5. Legacy processes are still error-prone and lack productivity
The resolution to common financial challenges may lie in automation as it shows an ability to reduce manual data consolidation tasks greatly, as well as improve data accuracy and reduce errors, which is key to forming strategy and ensuring compliance.
Gartner reports that “Nearly three out of five accountants (59%) make several errors every month as already excessive workloads grow heavier still.” According to Gartner, “workflow automation remains key [as a digitalization initiative]. Process automation has brought speed, efficiency, and cost optimization to finance.”
The Hackett Group attributes the successful transformation of the finance function to the broader implementation of automation and cognitive tools, even AI, much of which sets the pace of tech implementation for the rest of the organization.
Solution: Finance and accounting teams must invest in automation to refocus on strategy and enable the reduction of error-prone processes, which result not just from manual tasks but also from unmanageable workloads that require productive solutions.
How can Unit4 help you tackle these trends?
Unit4 creates enterprise technology designed to create new ways of working for your teams. Our ERP Financial Management solutions deliver control and visibility across the whole record-to-report cycle, within a single integrated ERP platform.
Unit4 Financials by Coda helps transform financial accounting, billing, procurement, and asset management – with a dedicated, standalone, best-in-class solution. Suited to large organizations whose operations may require complex accounting configurations or processing of varied transaction volumes, with interoperability across multiple channels.
Consult our product pages to find out more about how these solutions can help you or to talk to sales.
Frequently Asked Questions (FAQs)
What is the most challenging aspect for accounting and financial management?
The key challenges finance and accounting professionals face include:
- Technology replacing some of the traditional accounting functions
- The need to learn new skills, including the use of AI
- The importance of developing soft skills
- The need to provide real-time data to aid financial decision-making
Monitoring and managing risk are a critical challenge for finance departments, and you should always be on the lookout for possible gaps in security. The most challenging aspect of financial management in today's economic climate is the increasingly strategic role CFOs must play to help the C-suite plan for organizational growth.
How is automation impacting financial teams?
Automation handles repetitive tasks such as data entry and invoice processing. When empowered with automation, finance and accounting teams can reduce human error, ensure accurate and compliant financial operations, lower operational costs, and refocus on strategic initiatives such as financial planning and analysis.
