We’ve always known digitalisation would transform finance, but it took a pandemic for the proof.
Australia’s accounts and finance departments embraced digitalisation and virtual ways of working when it mattered most, helping shepherd businesses through the worst of the past year.
As CBA notes in its most recent accounting market pulse, “Accounting firms continue to play a vital role in helping businesses navigate operating conditions as we emerge from the pandemic. That’s fuelling strong demand which in turn has underpinned a dramatic rebound in confidence.“
If a well-run finance operation was crucial to business before the pandemic, it is even more important now.
The real-time data that modern, virtual accounting enables better prepares management to manage growth and tackle future challenges, providing critical lead time in which to adapt and change direction and refocus resources. In a recovery-fuelled market, predicting opportunities better than others will likely lead to a competitive advantage.
By contrast, when companies take weeks to close the books, so much time passes that information may no longer be accurate or relevant, curbing the accuracy of decisions it shapes.
A new virtual footing
CBA estimates that about half of all accounting firms successfully weathered the disruptive challenges of the past year, and therefore were best-placed to help their own clients through a challenging time.
One of the major challenges faced by finance and accounting staff was closing their financial year books entirely virtually.
A virtual close is the successful monitoring and execution of period-end financial close processes in a distributed environment. It is achieved when your accounting and finance teams have the technology they need to perform all their activities and tasks virtually, without needing to be physically present in the office. Accounting and finance teams had to be able to collaborate from anywhere, unify data and processes across disparate systems, whilst not sacrificing visibility and reporting on their activities.
According to CBA’s numbers, 57% of firms “experienced a relatively smooth transition to remote working and digital delivery of services to clients”.
This is encouraging, for two reasons.
First, it shows that virtual accounting practices and tools are finally achieving critical mass in terms of adoption, after a substantial period of under-utilisation.
Research even last year declared this kind of digitalisation in accounting to be a slow process; “If this were a train, it would be hardly moving,” one report hypothesized.
That is likely to be an over-exaggeration; a CPA Australia report found that “while the pace and scale of change has increased, thus far the accounting profession has largely kept pace with technological progress.” In fact, our own research validates this, with CFOs and controllers telling us the pandemic has created a renewed urgency around digital transformation and investment in technology. Close to a third (32%) of those surveyed said developments over the last year have made people at their company value real-time access to financial data more and a similar number (31%) said there is now more urgency to redesign core business processes.
At the same time, just over a third (34%) are considering implementing or scaling automation solutions to help increase the accuracy and reliability of their organisation’s financial data. It’s clear that there’s still considerable opportunity to improve, and that applies to all parties, no matter how advanced they are in their journeys. Businesses now recognise the critical role financial data has to play in informing business strategy and continuity, poor visibility and a lack of access to real-time data is hindering companies’ ability to respond to volatile market changes.
For the 43% of firms in the CBA report whose digital transition during COVID-19 was bumpy, the ability now to benchmark against leaders in the space provides opportunity and impetus to catch up. And for the remaining 57%, there’s a chance to bed down gains and solidify virtual processes and practices, improving outstanding challenges like “communication and collaboration” and “technology and infrastructure”.
A permanent step forward
It’s also worth noting that virtual accounting has made leaps and bounds on the back of long-sought simplification to and easing of regulations and rules.
For listed companies, this included the ability to have financial statements audited and to run shareholder meetings virtually. There were also federal and state-based changes that allowed documents to be signed, co-signed or witnessed virtually, using e-signature technology.
It took a pandemic to push virtual technology to the forefront of the regulatory and policy agenda, but ongoing acceptance is important to lifting adoption across finance and accounting operations.
Some adjustment still required
With enterprises still faced with considerable uncertainty, forecasts and assumptions for the coming year and beyond are still likely to require some on-the-fly adjustments.
Those that can close virtually with confidence have the advantage in this regard. A true virtual close is when someone can produce a financial statement at any time, so they have the ability to do real-time analysis.
Real-time access to accurate and detailed operating data equips decision makers to achieve sales targets and better manage expenses.