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The value of financial insights in post-COVID world

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The value of financial insights in post-COVID world 1

By David Brightman, Director of Product Marketing, BlackLine

This time last year, we were adjusting to unprecedented restrictions to our daily lives that were unthinkable only a few weeks before. Now, as the days grow longer, and with the UK poised to emerge from its third national lockdown, the outlook for the next few months feels very different to where we are a year ago. 

To a large extent, however, the pressures and uncertainty facing businesses have not changed. Yes, the prospect of society slowly reopening brings with it the possibility of a return to 'business as usual'. But companies may still need to quickly adapt their operations and decisions based on emerging scientific information and changing government policies.  

This means business leaders must continue to scrutinise indicators of their companies' financial health and resiliency in order to make informed decisions. At BlackLine we recently conducted a survey of 1,300 C-level executives and finance professional across the globe and uncovered a worrying lack of confidence in the data used for financial reporting, analysis and forecasting. 

With so much riding on the financial insights Finance and Accountancy (F&A) can provide, we wanted to get a better understanding of where this distrust stems from, and crucially what can be done to address this in the months ahead. 

How COVID-19 changed the role of F&A 

Businesses all around the world were faced with similar problems when the first stay at home orders were put in place. For most business leaders, protecting the health and safety of employees, while simultaneously protecting the financial continuity of their business, became their most pressing priority.   

In this kind of situation, management is likely to look to finance to help guide their decision making. So it doesn't come as a surprise that a third of our survey respondents said the pandemic had increased the pressure on F&A to provide an accurate picture of company performance, while a quarter (26%) admitted that their CFO faced more pressure from the board because of COVID-19. Unexpectedly and almost overnight, finance teams were simply expected to do more with less. 

For instance, on top of regular reporting, F&A were expected to support crisis planning. According to our research, 43% said their organisation had become more focused on financial analysis, stress testing and scenario planning as a result of the pandemic and 40% said the finance department was increasingly being called upon by the board to help with these activities. Yet despite the increased workload, close to a third of respondents said their organisation did not have the necessary technology to properly analyse financial data in real-time.

Trust and transparency 

The problems caused by a lack of appropriate technology can be amplified in a world where our daily interactions are predominantly virtual. For businesses, it can impact everything from communication and collaboration, to trust, transparency and compliance. 

Our survey suggests that a lack of real-time access to data and a reliance on manual processes undermines the trust the C-suite and F&A professionals have in their data's currency and accuracy. More than a third (37%) of respondents said they did not fully trust their own organisation's financial data because of a continued reliance on clunky spreadsheets and outdated processes, which leave finance teams in the dark until month end. This lack of trust in the data in turn undermines the value of the analysis and planning F&A are increasingly being asked to provide. 

Additionally, the fact that the majority of F&A teams have been working from home makes it difficult to know if the right processes are being followed, according to 36% of those surveyed. More than a quarter (28%) were also worried that a mixture of remote and office working will make it more difficult for teams to collaborate effectively over the next 12 months, suggesting this particular issue isn't going away any time soon. Going forward, ensuring the virtual environment has the right checks and balances will be just as important as ensuring real-time visibility over the numbers. 

Business leaders clearly understand the value of data-driven financial forecasting and analysis, but there is a clear need for better access and transparency around this data. As vaccination programmes continue and countries start to open up, many will be feeling more positive about what lies ahead. But the economic landscape remains precarious; business leaders still cannot afford to make decisions based on wrong or outdated information, hoping to get lucky. 

Tackling the challenges that lie ahead 

To improve trust in data, and by extension, the insights derived from it, businesses must review how data is stored and gathered. Managing data manually increases the risk of human error, which sooner or later will lead to mistakes. And with employees now operating under more pressure, the risk for errors will only increase. 

Thankfully, many finance leaders and professionals seem to understand and be taking action to address these risks. A third (34%) of those surveyed said they now plan to implement or scale automation solutions to help increase the accuracy and reliability of their organisation's financial data. A similar number (31%) want to implement technology that will help to increase control and reduce risk. 

Some of the specific processes respondents are looking to improve through automation include financial reporting and filing (36%), intercompany governance (35%), accounts receivable (29%) and the financial close (28%). Automating these processes would take a heavy load off F&A. With freed-up time, they can refocus efforts on data analysis and provide vital insights to aid faster, smarter decision making. Automated, cloud based solutions can also help companies manage their entire financial lifecycle in one centralised, secure and reliable system to reduce risk and increase control.

The pandemic encouraged and in some instances, forced, businesses to seek out more effective digital solutions. While it's great that oraganisations have recognised the benefits of automation, they cannot afford to wait for the next crisis before they take action to improve basic, day-to-day processes. Change, especially during a pandemic, can be challenging, but with the right investment, F&A can deliver the accurate, timely insights companies need to remain competitive and resilient in the year ahead. 

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