Political and economic shocks aside, the accounting industry was already getting to grips with the shift to digital transition accelerated by the pandemic and against the backdrop of a call for upskilling. Now, as it faces multiple challenges, never has the demand for a capable finance leader in business been more important. As well as flexibility and adaptability, a broader overview of the business is required to grasp how finance can improve or help the wider business operations.
According to insolvency figures, the number of companies going bust has risen quickly, and as conditions are set to only worsen, the forecast is for many more businesses to file for insolvency. A recent survey of over 500 senior managers, executives and business owners from companies in the UK and Ireland found that despite business leaders saying resilience and agility are a priority now more than five years ago, many admitted they can only “just about cover it” when having to respond to market shocks.
As more firms are understanding the potential of turning finance function team members into value-adding professionals, this begs the question: Does the solution lie in leadership?
The bigger picture
In a profession that relies on training and is very rules-based, it is common for management accountants to struggle with the business culture gap.
A management accountant typically works with data, as well as making the day-to-day financial decisions. However, looking beyond the numbers to see the big picture is crucial to recognise and manage risk and opportunity.
It’s about making the big financial decisions regarding an organisation’s history and future plans, ongoing performance, and industry trends outside of the business, empowering and connecting employees in the wider workplace too.
Communication is key
There is a clear need for well-rounded skillsets that combine technical and professional skills that are rooted in relationship-building and communication. What is important is for finance leaders to build connections with staff and be open to feedback.
Stronger communication skills will help professional accountants in managing risks and effectively convey the risks within the greater business function. Also, frequent communication with critical stakeholders and the provision of logical conclusions rather than adopting a traditional accounting stance is required; for this finance professionals will need to improve their ability to put a narrative around the numbers and assumptions.
The ability to delegate will also be vital in these challenging economic times. One vital skill that might be overlooked in a finance lead is the ability to challenge the boss, and communicate clearly why, by providing current data and insights.
A green perspective
Accountants have a significant opportunity to manage environmental, social and governance (ESG) issues as sustainability is a key concern – and a major attraction – for global investors.
Accountants are well-placed to deliver high-quality integrated reporting assurance, given their assurance skillset, experience in financial audit and professional scepticism and judgement. Their professional training and experience provide both an understanding of organisations of all types and sizes, and an ability to apply judgement and problem solving in complex situations.
Integrated reporting assurance is a critical element of the future role of accountants, enabling a career pathway to apply their professional expertise beyond financial information in corporate reports, to other information that is related to enterprise value creation, ultimately improving confidence in business resilience and sustainability.
With appropriate knowledge of sustainability, the ethics, skills, and judgement of qualified accountants perfectly position them to integrate ESG advisory services within their offerings. Indeed, as sustainability efforts evolve, so the accountancy sector is primed to innovate through offering multiple eco-conscious services to help their clients measure the degree to which they are operating sustainably.
Although there are no defined standards for ESG, albeit there are global standards under development, a widespread growth opportunity for auditing is there for the taking by the accounting sector.
Reframing risk
What the pandemic has shown us is that the term ‘risk’ has evolved significantly, and now, a continuing volatile climate has set the tone for the medium term at least. From strengthening or redefining credit checks for clients and suppliers to re-evaluating the global supply chain, risks need to be viewed from a different perspective.
The importance of having a resilient and sustainable operational model has never been more evident thanks to the impact of the pandemic. At the top of the agenda must be operational resilience and improvements, by ensuring seamless integration of upstream and downstream activities for the sake of business continuity. All aspects – from the business continuity plan and procurement, to inventory management and forecasting – call for seamless integration to a sustainable business model.
In summary, while the road ahead is unclear, the role of an accountant as a critical business leader has never been clearer.