Finance Trends to Watch Out for in 2021 and Beyond
Published: June 15, 2021
During the first few weeks of 2020, few, if any, could have predicted exactly what was ahead of us. Now, even though life is far from normal, we’ve adapted to the impact the global pandemic has had on our lives, economy, and the way we do business. It’s through this lens that we can examine the likely finance trends for both the immediate and long-term future as the world negotiates the road to recovery.
Taxes and transfer pricing
At the same time as the roll-out of the vaccination programme in the UK, people and businesses across the country will soon start to feel the economic fallout of government borrowing. There’s already been a great deal of chatter around the possibility of tax hikes to help pay back increased government debt and, at some point, the cost of the various state-funded Covid-19 support schemes will have to be met. The burden will ultimately fall on individuals and/or companies.
With this reality in mind, corporations should consider where future tax rises may be concentrated. Furthermore, the continued focus in the media on transfer pricing and complex tax structures means there is higher risk of scrutiny by authorities, particularly for larger organisations. Companies should review their current transfer pricing policies so, should they be audited, they are prepared for dialogue with the relevant authorities.
Brexit, Covid, and continuous planning
Until recently, continuous planning in real time was always considered a luxury, but when you combine the economic uncertainty arising from the crisis along with post-Brexit issues, it’s now a must-have for finance teams.
While companies may have re-forecasted monthly or quarterly in the past, 2020 showed us that this way of working is becoming obsolete. From discussions around tariff arrangements to changes in business competition rules and disruption to supply chains, the political environment is ever-changing. Planning models need to update in real time to show the impact of such macro assumptions on an organisation’s sales and profitability. These forecasts will provide immediate value to boards, enabling companies to make strategic decisions quickly and demonstrate agility as to how they respond to current events.
With the current climate of uncertainty set to continue for the foreseeable future, we’ll see finance teams shifting gears in the next few years, as they move toward working in this new ‘real-time’ mindset.
Uptake of AI in finance teams
Artificial intelligence (AI) will start to gain traction among finance teams in 2021 and beyond, with many organisations investing in process-driven automation, such as robotic process automation (RPA), which is seen as a pivotal stepping stone towards AI.
RPA helps businesses prepare for a higher level of intelligent automation. It guides companies towards thinking about AI-driven processes without actually being AI.
As far as AI is concerned, businesses are using it by improving the accuracy of their forecasting – comparing forecasts generated by algorithms with more traditional forecasts generated internally, for example. Variances between the two will enable finance teams to focus on those areas to refine their business predictions.
As more organisations adopt these technologies, more examples like this occur, and the results are shared within the wider professional community, finance teams will gain a greater understanding of how AI-powered automation can benefit their organisation’s processes. Adoption will continue to gain momentum, to the point at which machines may do much of a finance team’s ‘thinking’.
Tomorrow’s financial workforce
The role of financial controller isn’t as much about collecting the right data as it once was. Today, it’s increasingly being replaced by reporting automation – although having the correct underlying data is still as important, of course. Automation enables businesses to release their best people from working on manual processes leaving more time for value-added analytics. This means that data analysis is taking centre stage, and finance teams require the skills to adjust to this shift.
In fact, some of the world’s biggest companies are transitioning traditional roles in their finance team to analysts – or citizen data scientists as they’re sometimes referred to. As this transition continues, financial controllers will upskill their employees, adjusting the make-up of their teams to meet changing skill requirements, and increasingly hiring candidates for their knowledge of data analysis.
Without doubt, 2020 was a year like no other, challenging established processes and procedures. The ongoing effects of Covid-19 into 2021 and beyond means the next few years will be filled with some uncertainty and unpredictability. On the upside, however, finance teams have done their best to future-proof themselves and their organisations against the challenges that lie ahead, bringing new opportunities and digital transformation.