Building a More Resilient Business With Finance and Accounting

BlackLine is a Business Reporter client.

Almost overnight, the impact of the coronavirus pandemic became the single greatest threat to global business continuity in living memory. One year later, the future remains uncertain.

The ongoing impact of the pandemic has resulted in increased pressure to maintain profitability and retain market share, and it is clear that business leaders are operating in a more demanding and unpredictable environment than ever before.

At a time when strategic decisions must be made fast—often to solve challenges that have no precedent—agility and data access are critical. Financial data often lies at the very heart of these decisions. But to what extent have business leaders acknowledged the crucial role that finance and accounting (F&A) can play in business survival and, ultimately, recovery?

To answer this question, BlackLine conducted a survey of 1,300 finance professionals and C-suite executives in seven markets. Unsurprisingly, we found that many respondents feel they are now under more pressure than before the pandemic, either because of a lack of resources or because the scope of what they are expected to do is changing.

Increasing pressure from the board

A third (33%) of global respondents say the pandemic has increased pressure on F&A to provide an accurate picture of company performance. In particular, pressure is mounting on those at the top, with a quarter (26%) agreeing that CFOs are facing more pressure from boards as a result of the pandemic.

However, businesses are beginning to recognize that real-time access to financial data can help them react quickly to volatile market changes. In fact, our research shows that financial forecasting, stress testing and analysis have moved up the corporate agenda in the last year. Nearly half (43%) of respondents say their organization has become more focused on scenario planning and stress testing as a result of the pandemic. And four in 10 (40%) say boards are increasingly calling upon finance departments to help.

Despite these trends, nearly a third (32%) of respondents say the finance function is not currently involved in scenario planning at all at their organization. More concerning still, over a quarter (27%) of C-suite respondents say they have no visibility into scenario planning, suggesting that some business leaders could be making business-critical decisions based on inaccurate or out-of-date information.

Forecasting and analysis is only as good as your data

Close to a third (30%) of respondents acknowledge that their organization simply doesn’t have the technology to properly analyze financial data in real time, making scenario planning more challenging. The fact that so many businesses still lack tools that provide proper visibility and control over financial data seems to be fueling a wider and more insidious problem: the diminishing trust that senior executives and F&A professionals have in the accuracy of their own organization’s data.

Overall, fewer than half (43%) of respondents say they have complete trust in the accuracy of their company's financial data, and a quarter also say they are not confident that all the data they use to make financial forecasts is accurate.

When respondents who did not completely trust the accuracy of their financial data were asked why, the main reason (cited by 37%) was their continued reliance on clunky spreadsheets and outdated processes that leave F&A teams in the dark until the end of the month. Compared with a survey conducted with the same audience in 2018, more people felt that this was a problem than they did two years ago, suggesting that digital transformation initiatives in F&A still have a long way to go.

Digital transformation: a renewed urgency

The good news is that the pandemic has created a renewed urgency around digital transformation and investments in technology. Close to a third (32%) say developments over the last year have made people at their company value real-time access to financial data more. Four in 10 (40%) want to improve financial planning, analysis, budgeting and forecasting through automation in the next 12 months. And a third (34%) say that investing in their company’s data analytics capabilities this year will help their organization retain a competitive edge.

There is no doubt that the velocity of change created by the pandemic will continue to impact businesses and our lives for some time to come. As businesses continue to adapt, finance and accounting is in a unique position to be a catalyst for change. F&A has the opportunity to lead the charge when it comes to being more analytical and data-driven—an approach that could be the difference between success and failure as we move from crisis mode and into recovery.

To read BlackLine’s study into how the global pandemic is reshaping roles and building resilience in F&A, visit: blackline.com/covid-F&A-survey

— Marc Huffman, CEO, BlackLine
_{This article originally appeared on Business Reporter. Image credits: iStock 127240412}