When it comes to the future of finance, professionals in the field demand new performance measures beyond the financial, said ACCA recently when releasing a survey of more than 3,000 finance professionals globally.
According to the survey jointly conducted by ACCA and Chartered Accountants Australia and New Zealand (CA ANZ) in association with PwC, respondents report too much focus on past financial performance and limited insight to the other data needed for ESG purposes.
- Only 16% of respondents said ESG forecasting was ‘fully integrated’ in their financial planning and performance process.
- 82% said stakeholders needed new performance measures beyond the financial.
- Just more than half (56%) of respondents said they currently give ‘equal’ focus to financial and non-financial areas, such as operational objectives.
“Performance drivers are no longer just financial – sustainability and non-financial disclosures need to be integrated into planning and performance processes to create a multidimensional picture beyond the constraints of annual planning cycles,” said ACCA chief executive Helen Brand OBE. “For many organisations, this will mean transformation of planning and performance management processes and culture.”
“The role of financial professionals and CFOs is increasingly holistic and value centric, and accordingly they need to develop new forms of performance measurement for investors, analysts and capital markets, over and above pure financial measures,” said C.A ANZ chief executive Ainslie van Onselen. “Financial professionals need to continue to develop the skills to build a business and value case for change and investment.”
The three organisations recommend that planning and performance models should be data-driven, agile and use real-time data where possible when it comes to the future of finance, according to the survey report.
The process should be forward looking, with scenario planning and integrated forecasts. Data and technology are key to achieving this and, where feasible, should be integrated in the organisation’s Cloud-based application architecture, ACCA noted.
This is currently a potential stumbling block when it comes to the future of finance, with the research finding this to be ‘disjointed’ and organisations still relying on spreadsheets and not harnessing new technology efficiently, the accountancy body added.
According to Brian Furness, partner and global head of finance consulting at PwC, there’s a huge opportunity for finance teams to drive value and a more rounded view of organisational performance through collaboration, digital innovation and data analytics.
CFOs can lead this move by focusing on a set of broader metrics and value drivers for the organisation rather than limiting themselves to the traditional financial performance agenda, he advised.
“To do this, finance teams need to collaborate across the organisation and externally, and become more comfortable with exploring and analysing non-traditional data sets such as supply chain, logistical and operational data, all of which provide insights into future performance,” Furness pointed out.
While traditional annual plans give a point in time, a more agile approach to planning is needed in times of uncertainty and greater stakeholder expectation, he added.