Simplify, simplify: riding out recession in accounting
With the UK facing a high risk of recession and persistent inflationary pressure, the Bank of England pushed through the biggest interest-rate increase in 27 years in August 2022. It’s a herald of what could be troubling times to come. With the combined impact of the pandemic, Brexit, and energy instability caused by the Russian invasion of Ukraine, shockwaves are likely to be felt across all sectors of the economy. Adam Zoucha, MD EMEA, FloQast
As a result, companies are re-forecasting and re-framing their growth strategies. Appropriate measures and a strengthened balance sheet are more critical than ever. That means CFOs and controllers need accurate figures and crystal-clear visibility at lightning speed to ensure faster answers, better teamwork, and smarter decisions. For corporate accounting teams, this translates into heightened pressure to perform at an excellent level.
The challenges on the horizon
This heightened pressure comes with a tougher operating environment. Accounting departments are likely to continue encountering slower recruiting and staffing, and while it's rare to see layoffs beginning with finance and accounting teams, they are not impervious to harsh macroeconomic climates.
There are also likely to be widespread pauses on accounting modernisation initiatives. ‘Now’s not the right time to invest in new projects’, or so the thinking goes. But that means the teams still using siloed, manual processes will continue to lack visibility across their close processes and feel the recessionary impact more strongly.
With recessionary changes, operational risk increases and pressure starts to mount, putting end-of-month processes and accuracy more at risk. But it’s not all doom and gloom. Corporate accounting teams can overcome these challenges, and even come out the other side with improved systems and workflows in place – if they follow the right strategies.
Finding the path forward
It’s easier to say than to do, but for those companies willing to innovate amid the challenge of a recession, the end results speak for themselves. So where should they focus their energies? What kind of innovation do we mean?
First off, businesses need to fully grasp the importance of data to ensure operationally excellent accounting. Accountants have always been data-crunchers, but in the information age, their knowledge and insight is just as important. They play a key role in helping senior leaders assess the health of the business and accurately forecast the best strategies for growth amid recession.
As a result, it’s essential to ensure your accounting function has rapid, round-the-clock access to high-quality, reliable data from across the organisation. The processes involved in submitting, filing, and reviewing invoices, expenses and receipts must be centralised, standardised, and quick.
It’s a shift in habits
Rather than piling administrative tasks onto an already stretched team, forcing them to chase up endless scraps of missing information, smart accounting software can do the heavy lifting of data management. Ideally, it will also enable smooth access for every member of the team. Moreover, it will provide helpful metadata, enabling the team to better track which tasks have been completed, which data still needs to be reviewed, and who’s responsible for what.
Ultimately, a clean, user-friendly data landscape means that accounting teams can report with confidence to senior leadership. This is always important, but particularly so when facing a recession.
Second, companies need to recognise where the true value of their teams lies. Hint: it’s not in their ability to impersonate robots. Although there’s a temptation to simply "stick with what we know," adopting a digital mentality allows finance professionals to conquer repetitive, mundane tasks – something controllers have been dreaming about! The reality is that automation can help lift the grunt work off your staff’s shoulders, freeing them up to complete more strategically valuable projects.
If that sounds like pie in the sky, think again. Where automated accounting technology deployments were once the preserve of the IBMs of this world, rapid advances in software-as-a-service over the last decade mean that intelligent automation capabilities are now realistically within reach for many small- and mid-sized enterprises. You don’t need a team of coders: you simply need the right tools for the jobs weighing down your team.
Time to escape the ‘close treadmill’
Part of the reason for the talent drain facing the industry is the unremitting pressure accountants feel on the ‘close treadmill’ – no sooner is one deadline clipped than the next one comes right around the corner. The right team is essential to operationally excellent accounting, so take the time to understand your people’s concerns and capacity, and take it seriously if they express a need for support.
It may not be realistic to hire new team members (or easy to find applicants if you try). But it is possible to improve working conditions – and therefore the quality of work – by investing wisely in tools that streamline key processes, reduce the red tape involved in completing regular tasks, and improve visibility and collaboration.