Your Neck On The Line

How well do you sleep at night? Do you lie awake worrying about your financial practices? It might seem an odd question to ask but a recent survey of 977 finance professionals around the world found only 3% of respondents slept soundly.

Only 3%!

… And there’s good reason. As global regulators seek to minimise corporate tax avoidance and increase transparency among multinational enterprises, the role of tax, accounting, and finance departments has been elevated to new heights.  With that comes the pressure of ensuring you’re getting it right.

The complexities of meeting different countries’ regulations and reporting requirements mean that any large enterprise is in danger of more than a slap on the wrist if it wrongly files its tax. What’s more, in some countries, like the Netherlands, directors of a legal entity are held personally liable for unpaid tax debt.

Those survey respondents who reported their worries were mostly concerned about how systems and processes can keep pace with the rate of change in the business. There is a great deal of cynicism and mistrust of technologies that could ultimately untether finance from IT and free finance leadership to pay closer attention to the increasingly strategic demands being placed on their roles. Yet, there is a real risk for those that ultimately bear the responsibility for meeting these ever-increasing regulations. It is time for leaders in finance to carefully consider the stepping stones to transformation, starting with automation and standardisation.

Digital transformation may be a key strategy for improving customer-facing areas of the business, but as we’ve recently discussed, the finance function doesn’t always line up to join this shift in both mindset and practice. Finance operates in an environment that is more highly regulated than most of its peer divisions. Of course, innovation and change must be assessed extremely closely and tested for reliability before the risks associated with implementation can be deemed acceptable but there has never been a better time to make that transformation.

The pressures around reporting are well-documented and we’ve talked about the over-reliance on spreadsheets, as well as the lack of controls over critical data, so what is at the root of resistance? It would seem that some people are cynical about past and present technology offerings, but you only need to look at other parts of your organisation to see where automation and standardisation have been successfully implemented.

Other parts of the enterprise — IT, contact centres, sales, and marketing have all experienced disruption and are going through transformative efforts to harmonise people, process, technology, and data in new ways. All have experienced the notable change management issues that occur amongst teams in response to automation.  But what people in tax and finance teams need to acknowledge is that it’s time to evolve and if you don’t, you put both yourself and your company at risk.

By ignoring the developments in technology, you risk being left behind and creating too big a gap to catch up with the rest of the business, tax and finance compliance. You risk becoming an expensive overhead rather than a part of your organisation that can add real value to the business and the bottom line. So how do you take the leap from lagging behind to helping lead the way in the transformation of tax and finance?

You need to work closely with the rest of the business and not in a silo. Aside from concerns around adopting new technology itself, you need to be prepared to compete for investment in the new technology and to also overcome cultural barriers. Building finance’s business case for technology investment and operational readiness for technology adoption relies on finance working with peers in HR to address individuals’ concerns. To do so, you need to appreciate some people’s aversion to relinquishing control to automated processes. However, the examples of costly Excel mistakes in our previous blog should be enough to focus anyone’s mind! It’s not always a case of better the devil you know. The processes themselves are designed and driven by experts within finance and ultimately, accountability for errors large and small can typically be traced back to a human source.

Processes can be offered, managed, and monitored in a uniform way that’s ripe for standardisation and automation. This is where errors can be reduced and productivity improved. Another important observation is that the reduction of complexity is also important when competing for future talent. Millennials now make up 35% of the workforce [1] – they don’t use PCs; everything is on their phone. Their use and appreciation for the right technology to support their work is greater.

To successfully release the burden on tax and finance teams HR should play a supportive role and help align the finance function with the business as well as planning for the skills of the future. Your colleagues in HR can help you to create harmony across your team, processes, technology and data.

As you start to shift towards automation, you’ll be able to extract more capacity from finance and bring not only transactional processes but also value-added tasks into a centralised environment. This is where shared services can help further. It is not just about a focus on efficiency and the role that technology plays but also assessing the quality of the process that has been created and the accuracy of the outcome.

As we said, directors need assurance there is appropriate governance in the process, and this requires a focus on producing accurate accounts, rather than just outsourcing current workflows. Whether it is people or robots doing the work, finance needs the credibility of consistent, quality output and contribution to the business to help everyone sleep well at night.

Download the SSON Report: Statutory Reporting in Shared Services today.

[1] https://magazine.startus.cc/millennials-rule-workforce-2020-infographic/