Beyond the political and economic shocks, the accounting profession was already apprehensive of the transition to digital transition accelerated by the pandemic and against a backdrop of calls for skills upgrading. Today, as it faces multiple challenges, the demand for a competent financial leader has never been greater. In addition to flexibility and adaptability, a broader view of the business is needed to understand how finance can enhance or help broader business operations.
According to insolvency figures, the number of bankrupt businesses has increased rapidly, and as conditions only worsen, many more businesses are expected to file for insolvency. A recent investigation of more than 500 senior managers, executives and business owners in the UK and Ireland found that although business leaders said resilience and agility were a priority more than five years ago , many admitted they could only “roughly hedge it” when responding to market shocks.
As more and more companies understand the potential to transform finance function team members into value-added professionals, it begs the question: does the solution lie in leadership?
The bigger picture
In a profession that relies on training and is highly regulated, it is common for management accountants to struggle with the corporate culture divide.
A management accountant typically works with data and makes day-to-day financial decisions. However, looking beyond the numbers to see the big picture is crucial to recognizing and managing risks and opportunities.
It’s about making big financial decisions about an organization’s history and future plans, ongoing performance and industry trends outside of the company, as well as empowering and connecting employees on the workplace at large.
Communication is key
There is a clear need for well-rounded skill sets that combine technical and professional skills rooted in relationship building and communication. What is important is that finance managers connect with staff and are open to feedback.
Strong communication skills will help professional accountants manage risk and effectively transmit risk within the wider business function. In addition, frequent communication with critical stakeholders and providing logical conclusions rather than adopting a traditional accounting position is necessary; to do this, finance professionals will need to improve their ability to put a narrative around numbers and assumptions.
The ability to delegate will also be vital in these tough economic times. A critical skill that might be overlooked in a finance manager is the ability to challenge the boss and clearly communicate why, providing current data and insights.
A green outlook
Accountants have a significant opportunity to manage environmental, social and governance (ESG) issues because sustainability is a key concern – and a major attraction – for global investors.
Accountants are well placed to provide high-quality, integrated reporting assurance, given their assurance skills, financial auditing experience, and professional skepticism and judgment. Their professional training and experience allow them to both understand organizations of all types and sizes and to exercise good judgment and solve problems in complex situations.
Built-in reporting assurance is an essential part of the future role of accountants, enabling a career path to apply their professional expertise beyond financial information in corporate reporting, to other information related to creating of business value, thereby improving confidence in the resilience and sustainability of the business.
With appropriate knowledge of sustainability, the ethics, skills and judgment of qualified accountants position them perfectly to incorporate ESG advisory services into their offerings. Indeed, as sustainability efforts evolve, the accounting industry is poised to innovate by offering multiple eco-conscious services to help their clients measure how well they are operating sustainably.
Although there are no defined standards for ESG, although there are global standards being developed, a widespread growth opportunity for auditing is here for the accountancy industry.
What the pandemic has shown us is that the term “risk” has evolved significantly, and now a continued volatile climate has set the tone, at least in the medium term. Whether it’s strengthening or redefining credit checks for customers and suppliers or reassessing the global supply chain, risks need to be viewed from a different perspective.
The importance of having a resilient and sustainable operating model has never been more evident thanks to the impact of the pandemic. At the top of the agenda must be resiliency and operational improvements, ensuring seamless integration of upstream and downstream activities for business continuity. All aspects – from business continuity planning and procurement to inventory management and forecasting – require seamless integration into a sustainable business model.
In summary, while the path forward is unclear, an accountant’s role as a critical business leader has never been clearer.