Finance leaders are moving into 2024 with cautious and measured optimism, well aware of thechallenges that lie ahead. But with these challenges come opportunities and solutions, so asfinance and accounting teams jump into 2024, here’s what to prepare for and how to excel in2024.
Accounting teams that leverage technology are better able to adapt to changes and challengeslike some of the unexpected supply chain and revenue interruptions seen in the past fewyears. So, what are the biggest challenges facing accountants today? Cash flow, hiring newtalent, adapting to new tax and regulatory changes and continuing to adjust to remote workremain some of the largest hurdles for accounting teams.
Cash Flow
Often when there is economic hardship, or signs that it’s pending, companies movequickly to ramp up liquidity by implementing cost containment, while implementingcost containment measures and deferring planned investments. Some of that focus onimproving cash flowwill persist into 2024 – especially when it comes to capital expenditures.
Management and consulting firm McKinsey & Company says that boardrooms haveshifted their focus from earnings before interest and taxes (EBIT) to cash – andthat has translated into responsibility for cash management at all levels of thebusiness. But some of those cost-cutting measures have slowed, particularly thoserelated to workforce and operations. Businesses are more confident in generatingrevenue from the changes they made in 2020 to products or services offerings andpricing strategies.
Improving the efficiency of accounts receivable and accounts payable processes willbe vital to ensuring steady cash flow. Keep an eye on metrics like expenses,past-due invoices and operating cash flow. Generating and tracking cash reportsdaily can help you plan for the future because you’ll see changes or fluctuationsyou can use to inform other decisions.
Financial Reporting
Managing financial disclosures continues to be a concern for public and large privatecompanies affected by SEC requirements. Finance leaders are concerned aboutcomplying with reporting requirements from COVID-19-related government stimulusprograms and ensuring proper documentation, recording and reporting for audits.Additionally, changes around disclosure requirements for Environmental, Social andGovernance (ESG) are likely ahead, and accounting teams need to be mindful of a shifting regulatorylandscape.
Hiring and Retaining Talent
Hiring is continuing for accounting and finance roles in technology, health care,property management, financial services, as well as for positions that keep cashaccounts strong. These roles include billing, accounts receivable and collections.
Retaining top employees as competition intensifies is a key challenge. Some 8 in10 finance and accounting managers are concerned about keeping valuedemployees. Two key areas of concern are low morale and high rates of burnout becauseof heavy workloads – the latter being a somewhat perennial issue for accountants.Taking steps to ensure that key employee retention strategiesapply to the accounting and finance department – such as continued education andtraining – is one place to start boosting morale. Helping accountants develop thetechnical and soft skills to better apply their domain knowledge to businessstrategy as more transactional tasks are automated will be crucial to retention in2024.
Automation and Artificial Intelligence
Although only some 2% of large firms have implementedmachine learning or AI, about one-in-five indicate they are planning to start. AIimplementations are done to address labour shortages, automate labour-intensivetasks and deliver more insightful data.
As more transactional work becomes automated, accountants will need to developdifferent skills to apply their expertise to information and data generated from newtechnology and play a role in more of the business strategy. Cloud-based accountingsoftware, budgeting, forecasting, data analytics and visualisation tools arebuilding some of the foundation for automation in accounting.
Upskilling
As automation increases, boosting existing skills and expertise to leverage theoutputs of technology will benefit employees and your business. Focus on upskillingand learning more about cloud-based payroll and human resource information systems,enterprise resource planning (ERP) systems, data analytics and financial modelingand forecasting. In addition to technical skills, other beneficial so-called softskills in demand will be the ability to work independently and in virtual teams,attention to detail, being comfortable with change, creativity, a desire forcontinual learning and written and verbal communication skills. Offering continuingeducation and training also has the added benefit of boosting employee morale andretention. Companies ranked highly on employee training see 53% lower attrition rates than thoseranked lower.
Tax Law Changes
Accountingteams have tax changes top of mind, especially understanding total tax liability andnavigating shifting trade and tariff policies.
Effectively navigating the tax law changes can help you have more funds available toweather other business challenges ahead. Digitised, accurate and easy-to-accessrecords with accounting software will make a complex tax year more manageable.
Regulatory Changes & New Accounting Standards
New revenue recognition standards, standards for lease accounting and CECL accountingstandards have been a challenge for accounting teams over the past few years. Whiledifferent phases of standards implementation have been delayed because of thepandemic, they remain on the horizon — so pay attention for announcements. Stay upto date with new regulations around PPP loans and changes related to current andfuture COVID stimulus packages.
Expense Management
Though it traditionally dominates expense reports, travel spend decreased by 77% year overyear. But spend risk was three times higher than in 2019 – with fraudactivity increasing by 57% from Q2 to Q3 in 2020 alone. Moving employees to workremotely brought entirely new expense management challenges. Office supplies,computer equipment and other items necessary to work from home were common expenses.But with that came risk for employees to take advantage and expense things like bigscreen televisions, sound systems and even TV subscriptions.
If you haven’t already, update your expense policy, focusing on allowable home officeexpenses and food, including delivery services and gift cards. Check internalcontrols and consider further automating the expense managementprocess with software to discourage fraudulent expenses and automaticallyflag questionable ones.
Payroll Management
New payroll challenges from changinglaws and regulations at federal and state levels are on the horizon. And managingwithholdings for employees in different locations has become a significant hurdlefor payroll managers. Remote work has made the management of state income taxeschallenging because of the complexity of determining primary work location.
If you don’t already, consider automating your payroll processes. Cloud-based payrollplatforms help with the calculation of earnings, deductions, company contributions,taxes and paid time off, while providing support for multiple jurisdictions when itcomes to taxes, forms, direct deposit and more.
Cybersecurity
It takes 280 on average days to identify and contain a data breach, and the averagecost is $3.86million. The lion’s share of those breaches is initiated by stolen orcompromised employee credentials. The accounting team regularly receives emails withattachments or links to invoices, and it’s not hard to see how easily a maliciouslink or attachment could make its way unnoticed into the workflow.
Accounting teams are well suited to be evangelists of cybersecurity company-wide —they’re already schooled in robust internal controls, access and permissionsrequired of their roles. Outdated software can increase the success rate for malwareand ransomware, so make sure all systems are up to date.
Remote Work
Like many other industries, one of the top accounting trends is a desire for moreflexible and remote work. Some 77% of accounting professionalswould like to continue to work remotely. But remote work brings challenges toaccounting and finance teams – who for decades have done tasks such as month-endclose by means of long nights in the office. Remote work also exacerbates the riskof cyberattacks – with IBM finding that 70% of companies that have adopted teleworkduring the pandemic saying they expect it will increase data breach costs.
Focus on making established financial controls work with a dispersed workforce. Use aclassic risk assessment framework to determine which controls may open the companyto risk.
For most businesses, cloud-based accounting software lends obvious advantages insupporting remote accounting teams. Companies that relied heavily on cloud-computingtechnology through 2020 were better able to meet challenges presented with remotework. And the technology frequently outperformed even VPNs with access topremises-based software.
Low Morale
It’s no wonder that burnout is a common problem for those working in finance andaccounting. Between juggling responsibilities, heavy workloads and a constantlyshifting regulatory landscape, accounting and finance departments can easily beplagued with low morale. Another common concern is being understaffed — on averagebusinesses with less than $25 million in revenue employed just three people infinance roles. And even for businesses with annual revenue between $100 million and$499 million, that number is only 13 people employed in finance roles.
How can you raise morale among your accounting team? Find ways to formally recogniseindividual contributions on a regular basis, especially at the manager level.Managers have an enormous impact on their employees’ morale. Keep lines ofcommunication between your accounting and leadership teams open. Listen to theirinput not just on financial matters, but strategic decisions as well. Give them thetools they need to collaborate. And automate tedious parts of their work to free uptime.
Accurate Financial Forecasts
The conditions created by the pandemic made accurate financial forecasting especiallychallenging. Business leaders should engage in scenario planning and re-examineforecasts for sales, expenses and cash. Test and re-test assumptions, model cashflow, burn rate and liquidity under multiple scenarios.
One of the top accounting tips forsmall businesses and startups is to use financial statements to evaluate andpredict business performance. Because so much is changing so quickly, access toreal-time analytics is key. That’s what will make the difference in buildingfinancial models that factor in historical trends, current conditions and best,worst and most likely scenarios.
Keeping Up with New Technology and Tools
Aside from a shifting regulatory environment and tax laws, keeping up with evolvingtechnology can be a burden. There’s a reason skills around cloud-based accounting software aresome of the most in-demand for accountants and finance professionals. Research firmGartner recently said that by 2024, more than 45% of IT spending will shift tocloud-based technologies, in many instances that will include financial andaccounting software.
The latest innovations around real-time analytics, robotic process automation (RPA)and AI will depend on having a sound, reliable, clean data infrastructure. But manycompanies are working with legacy, on-premises accounting systems that are outdated.Financial reporting, cash management, accounts payable and month-end close processesare all being impacted by technology, and will continue to be key components ofautomation and cloud-based accounting software in the near future.
#1 Cloud
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Innovation
Is accounting a challenging career? Absolutely. But there are also new excitingopportunities opening as more transactional tasks become automated, freeing up timefor accounting professionals to turn their attention to more analytical duties — andinnovation in the accounting software is abundant.
Globalisation
As businesses continue to increase in size and complexity across the world,accounting departments will need to accommodate more and more internationalstandards and regulations. As technology has made this easier, accountants findthemselves needing to contend with rules and norms prevalent in both their countryof origin and the markets they work in. Local economic instability, cybersecuritystandards, and tax law changes across these countries will require adaptableaccounting teams and technology that eases the challenges.
Economic Instability
Implementing and continuing to enhance cloud-based accounting systems is the firststep toward tackling many of the challenges 2024 will present. Top-of-the-line enterprise resource planningsoftware integrates finance and accounting with other business softwaremodules, such as supply chain, warehouse and order management. With a reliablesource of data and increased automation of time-consuming and error-prone tasks, theaccounting team has more time and better data to weigh in on the strategic decisionsand even become a key partner of guiding the business strategy.
