Thriving during hard times

Accounting and finance professionals can now employ new analytical skills and techniques to flex and adapt their organisations and make them succeed, even in a downturn environment

All around the world we can see the economic outlook being dismal and darkening. Inflation is soaring while supply chain disruption and contraction continues in many countries. Here in Sri Lanka the Government has had to increase taxes and keep a tight rein on public expenditure to deal with the depleted foreign exchange reserves, and this will indeed have knock-on economic effects, which will remain for quite a while. 

We have to accept that businesses are going to be operating in very different and difficult environments and this will remain the case in the foreseeable future. However, businesses are better prepared to meet the challenge than in previous downturns, because modern finance teams are much more able to drive effective businesses management and ensure value creation than in the past. The role of accounting and finance professionals has significantly changed over the years; they are now true value partners who focus on creating and preserving long-term value for their organisations. More recently, they have started to take on a more holistic role, working strategically with business partners to actively guide business decisions and support its overall purpose – they are now transforming into value drivers. 

Accounting and finance professionals can now employ new analytical skills and techniques to flex and adapt their organisations and make them succeed, even in a downturn environment. Speaking from experience, I know there are several proven methods that accounting and finance professionals employ to navigate uncertainty and sharpen up operations. They include:

Horizon scanning

Today this involves so much more than just looking at economic forecasts. Accounting and finance professionals will be examining supply chains, the regulatory environment and changing customer behaviours to identify risks and opportunities which need to be built into the business model. These issues will be analysed from multiple perspectives, so as to understand the views of all the company’s stakeholders when considering possible changes. They will be asking questions about what impact the digital revolution will have on how their organisation operates and devises business proposals to meet that challenge. Through this type of analysis, they add value and can help future proof their businesses.

Strategic focus

One of the strengths of the finance team is that they have a rare ‘full system’ view of their organisation. They are therefore in a good position to examine, and help find solutions to, the strategic issues that will ultimately determine operational success. Above all they can help assess and evaluate the varied organisational projects that are working and the ones that are not bringing any value. Using this unique perspective, the finance team can produce the strategic options that keep the company focused on future development and value creation. 

Maximising the value of data

Accountants have always been the holders of financial data, but in recent years their role has expanded to include non-financial data as well. This growth in integrated reporting, which combines both types of data, is game changing for making critical business decisions. Data-driven decision making is informed decision making, and modern finance teams must utilise the full spectrum of data available to them to drive their organisations forward and ensure long-term success.

Inflation mitigation strategies

Here in Sri Lanka we have sadly experienced exceptionally high inflation over the past few months. Accounting and finance professionals will be weighing up what this means for their consumers, operations, and their business model. They will use this analysis to put in place mitigation measures to secure the future of their organisations. These will include building and maintaining healthy cash reserves, including foreign exchange reserves, to deal with unexpected changes in cash flow, and reshaping the organisation’s cost base and allocation as needed. A good way to do this is to analyse the company’s processes to see where they can be streamlined, made agile or automated. 

It is therefore very evident, the way that finance teams have evolved and developed in recent years means it can contribute in ways that have simply not been possible in the past. I would urge all businesses to take full advantage of this enhanced capacity to help them, not only survive these turbulent times, but most importantly to position themselves to adapt, thrive and grow in the future.

(The writer holds an FCMA and CGMA, and is CIMA President and Co-Chair of the Association of International Certified Professional Accountants, representing AICPA and CIMA.)