Home Insights From operational department to strategic leader, accounting’s transformation in 2020

From operational department to strategic leader, accounting’s transformation in 2020

by Jackson B

By Frederic Portal, Product Marketing Director, EMEA Financials at Workday

According to research recently published by Deloitte, 89 percent of CFOs feel a high level of uncertainty facing their business. This comes as little surprise. The COVID-19 second wave has triggered another round of furloughs with organisations forced to halt product launches, cancel orders and readdress plans for 2021. During these uncertain times, businesses depend on their core stabilisers – Finance (in particular accounting), HR and Legal. Often underestimated as the ‘admin departments’, these functions form the backbone of business operations and are the first port of call for crisis response. In particular, accounting has become critical when it comes to decision making as more real-time financial data and modelling is needed for leaders to make quick, accurate decisions in this fast-changing climate. What this means for accounting teams is sudden but swift digital transformation. 

Desperate times call for desperate measures  

A lot of traditional accounting systems still use spreadsheets, manual tasks and paper trails.This does not allow teams to make the fast changes that leadership teams require as many accountants are bogged down with time-consuming, manual processes. The need for change and increased efficiencies in accounting practices became clear when accounting teams were forced to work from home. This resulted in teams turning to cloud-based solutions so accountants could collate data and better manage staff and payroll changes in one place, in real-time. 

One example of a business that has embraced digital transformation  during the pandemic is John Lewis and Partners (JLP). During the onset of the disruption, JLP digitised its payroll system. The project enabled the payroll and accounting team to deliver payslips to a workforce that was dispersed between furloughed workers, people working from home and frontline employees — and do so on time. Undergoing this digital transformation has reduced John Lewis’ operational workload on managers by over 20 percent, while also easing pressure across the organisation.

Planning in an age of uncertainty  

In addition to transforming IT infrastructure, accounting teams have also had to update their planning cycles. Weekly and monthly modeling are age-old practices that do not deliver under current conditions. As regulations change by the hour and new restrictions come into force, accounting leadership teams need access to the latest information at the click of a button. This is highlighted in Workday’s research into organisational agility which revealed that today’s top-performing companies were ten times more likely to react quickly to market shifts. 

The key to moving from weekly or monthly to real-time is adopting driver-based modelling. This approach makes sure that all business units are progressing towards the same goal as they build out forecasts. For accounting teams it involves linking operational activities to key variable revenues and expenses. Driver-based modelling can be adopted by any accounting team, simply through taking three easy steps:

  • Sync with the business plan. As the saying goes, communication is key. Using real-time data on financial performance, accounting can take the lead and ensure the organisation is working towards the same goal. It allows finance and accounting to align with other senior managers on priorities and goals for that planning period, informing any “what-if” scenarios.
  • Identify and understand the largest business drivers. Accounting leaders can make forecasts to leadership based on the biggest financial factors and how they align with overarching goals. Opening conversations across all levels of the business will help you to identify the biggest financial factors that need to be considered, whether that’s a disruption in the supply chain, a significant impact in sales demand or new customer acquisitions.
  • Focus on meaningful scenarios. No one can predict the next week, let alone the next month at the moment. But accounting is a department uniquely equipped to see the potential risk factors that businesses are facing. Using this insight, the accounting department can focus resources on the changes that will have the most impact. This allows businesses to refine scenarios that will have a bottom line impact.

Accounting takes the driving seat for business agility and recovery 

These three simple steps provide a strong foundation for a more agile planning environment. Driver-based modelling will help accounting teams plan for the unknown events that come their way whilst also keeping an eye on business efficiency. Arguably this year has changed accounting more than most other departments in the business. Through its transformation, accounting has a chance to redefine itself into a strategic head of business, and in turn, become the mastermind behind business recovery.