BlackLine recently published a report titled, Finance & Accounting: in a Post-COVID World: Navigating the Changing Landscape. The report noted that 43% of respondents to the study say their organisations have become more focused on scenario planning and stress testing as a result of the pandemic.
FutureCFO’s discussions with finance leaders in Asia identified similar conditions. At a recent roundtable, one CFO commented she can’t recall a period in recent years where her team had done so many “what if” analysis than in 2020. Another CFO pointed out that COVID-19 has elevated stress testing to a whole new level.
According to Terry Smagh, senior vice president & general manager, Asia Pacific & Japan, BlackLine, the company undertook the study is to understand and recognise the critical role that financial data plays in informing businesses about strategy and continuity, the poor visibility if any, and the lack of real-time access to data. “Just as important is the ability to respond to volatile market challenges,” he added.
The report noted concerns by respondents to the survey, including the inability to effectively collaborate (27%) which could lead to data inaccuracies (24%). Also mentioned was the inability to gather data quickly to respond to unpredictable markets which are 28% and remote working leading to greater vulnerability to fraud (33%).
Smagh opined that some of the concerns had to do with the years of the approach of work within the finance function. “As creatures of habit, finance professionals are feeling the strain. As a mission-critical function, the finance job has been done in an office setting. You rarely hear finance people working remotely if at all,” he observed.
The visibility conundrum
The pandemic has exposed gaps in the policies, the processes, the technologies that finance and accounting rely on. In the new normal, response time to changes is as critical as the accuracy of data.
“We all are moving so differently in this new COVID-19 era. So, while challenging, it has also created an opportunity for executives to reimagine the finance function. I am not saying to go rip off the technologies that they have already got in their organizations but try to leverage and see what can work with them,” explained Smagh.
COVID-19 accelerates finance transformation
While Smagh acknowledged that COVID-19 gave reasons for leadership to kick finance transformations into overdrive, he also confirmed that technology limitations have been central to many barriers that finance & accounting (F&A) teams faced during the pandemic.
Remote working placed new barriers to the finance team including virtual meetings, the need to access systems and data remotely, and the adapting to changes introduced by automation in the name of efficiency – during the lockdown.
Then there is the issue of data coming from too many sources at speed.
“If data is coming from multiple data centres, from a variety of locations, that needs to come together in a structured manner and technology is the enabler to help that happen,” commented Smagh.
He is adamant that technology be a catalyst for change. “We need to do it (integrate technology into the workflow) so that we can take care of our people, we can be more flexible and more importantly more agile in making sure that you know, we are competitive in this market,” he concluded.
Alleviating concerns
For Smagh, talent is the most important asset of the organisation. Leaders need to ensure that the finance team is skilled well and that the team is given the right resources to be successful.
Thinking automation is passe. “We should start implementing and scaling automation to help increase the accuracy and reliability of financial data. When you talk about efforts to accelerate digitalization, you need to look at investments in technology, and ask how this will help us,” opined Smagh.
He also suggests comparing your organisation to your peers in other markets, identify the right set of benchmarks for your business.
“If you bring all that together this will help the organization be more agile,” concluded Smagh.
Other key data points from the Blackline survey:
- Approximately 1 in 2 Singapore-based C-level executives is completely confident in the accuracy of their company’s financial data, slightly lower than the global average of 56%.
- This percentage was even lower among F&A professionals. Only 28% were completely confident in the accuracy of their company’s financial data.
- The top reasons for this lack of trust included not knowing if the right processes were followed due to WFH (33%), data coming from too many sources (31%), reliance on outdated processes and clunky spreadsheets (29%).
- However, almost 2 in 5 (39%) Singapore respondents agree that organizations need to focus more on 'worst-case' scenario planning moving forward.
- 36% agree that there is a need to increase their finance headcount in finance to focus more on valuable activities such as data analysis and forecasting.
Click on the PodChat player above to listen to the full dialogue with Smagh.
- Briefly, what was the purpose of the survey?
- If you compare the global data versus those of Australia and Singapore, do F&A professionals in Singapore and Australia vastly differ from their counterparts in North America and Europe?
- Some of the key concerns raised by the survey ability to effectively collaborate (27%) which could lead to data inaccuracies (24%), inability to gather data quickly to enable to respond to unpredictable markets (28%) and remote working leading to greater vulnerability to fraud (33%). Why do these concerns exist when technology has been in used for many years to support F&A?
- The survey noted that 33% of C-suites concerned about visibility into financial planning scenarios and stress testing. Given that many likely have ERP systems in place, are these systems inadequate for what-if scenario planning and stress testing? What kind of tools are needed to do financial planning and stress testing?
- The survey noted that C-suites seem more confident (50%) on the accuracy of financial data compared to F&A teams (28%). Why the disparity?
- Finance transformation has been talked about for some time. Where are F&A teams today in terms of digital transformation? Where are the successes and the holdups?
- Given that remote working is here to stay (for a while longer anyway), what should CFOs and F&A leaders in Asia do to alleviate these concerns?
- Finally, what are your thoughts for F&A in 2021?
- What is the role of BlackLine in all of these trends?
