Two things can be true and still be in conflict with each other. That statement applies to the top two challenges that many accounting and finance organizations face today: meeting regulatory compliance demands and staying up to date with technology.
Chief financial officers interviewed for a recent Robert Half Management Resources survey cited regulatory compliance challenges and keeping pace with technology as the greatest pressure points impacting their finance teams. These issues, if not managed appropriately, can also disrupt operational functions and resources beyond the finance department, affecting an organization’s ability to adapt quickly to shifting business demands.
However, interestingly, these converging challenges for finance teams can also support potential solutions for each other. Technology can help to ease the burden of compliance work by automating controls and certain activities. And regulatory compliance challenges can drive much-needed new tech adoption and innovation in an organization’s front and back offices.
No pressure, no change
Compliance mandates, from Sarbanes-Oxley (SOX) to the General Data Protection Regulation (GDPR), are a familiar challenge for companies and have only become more stringent and complex over time. According to Robert Half’s latest Benchmarking Accounting and Finance Functions report, just 2 percent of finance leaders expect their firm’s compliance burden to decrease in the next few years. More than one-third (38 percent) said they believe it will rise.
The resource-intensive nature of maintaining compliance and internal controls was a theme in the latest Benchmarking report. Compliance demands can divert finance teams’ attention from other activities that add value to the business and help it to grow. But on the positive side, while regulatory compliance challenges can strain a company’s operations and resources, they also force organizations to evaluate their processes and seek new solutions to improve performance and productivity.
New technology is one of the solutions for alleviating many of the stressors confronting accounting and finance functions. That includes the compliance burden, which regulatory compliance automation (also known as “RegTech”) can help to ease. Tools that use artificial intelligence (AI) and robotic process automation (RPA) can help companies keep pace with the increasing demands and complexity of compliance requirements. These real-life use case studies illustrate some of the solutions that technology can deliver:
- A financial services organization needed to review its transactions to obtain audit evidence. AI tools helped the company rapidly recalculate an entire year’s worth of revenue — millions of transactions — which would have been an impossible task using traditional, manual processes.
- In another instance, a manufacturer needed assistance in adopting the new lease accounting standard. It introduced machine learning technology to augment and streamline its data-abstraction effort.
Looking beyond their ability to help solve regulatory compliance challenges, data analytics tools, cloud computing solutions, enterprise resource planning (ERP) systems and other technologies can all help to transform accounting and finance functions by improving business agility and efficiency. As the Benchmarking report explains, digital transformation efforts are completely changing how many functions, and the businesses they support, operate.
The people factor in digital transformation
Technology’s value in supporting accounting and finance teams is becoming increasingly clear. But digital transformation in any respect is almost always easier said than done. The array of implementation options, the deployment scale, the required investment and the simple fact that technology is advancing so rapidly can all have a paralyzing effect on decision makers.
There is also the people factor to consider. Digital transformation initiatives require tech-proficient professionals with specialized knowledge and skills. As the Benchmarking report notes, digital transformation is driving the need for professionals who have experience with data analytics, knowledge of cloud-based systems, experience with ERP systems and more. In today’s highly competitive job market, that talent is hard to find, hire and retain.
Companies, to ensure they have the skilled resources in place to execute their digital initiatives, may want to consider taking the following three-pronged approach:
1. Developing internal staff
Businesses can upskill their existing personnel by offering relevant technology training and professional development opportunities, increasing exposure to digital projects, and providing continuing education reimbursement.
2. Bringing in external consultants
The new labor model for finance can provide the staffing agility and flexibility many companies require to succeed in the digital age. Working with professional staffing and managed services firms provides access to the specialized tech skills needed to support digital transformation projects. These resources can also help firms manage the change and disruption that these initiatives bring.
3. Cultivating knowledge transfer
Finance leaders can drive cross-pollination of technology expertise in their organization by fostering greater collaboration with their IT colleagues and interaction between internal staff and external consultants. For example, holding a post-mortem meeting following the implementation of a new business system is a great way to ensure knowledge transfer and share new learnings.
Again, while regulatory compliance challenges and keeping pace with technology can create headaches for accounting and finance teams, they also can help to alleviate those pressures. Technology can help ease the compliance burden, and compliance demands can help spur necessary digital change in an organization. It is important for finance leaders to recognize, and take advantage of, the positive link between these two key challenges. They can help their teams and the business to succeed in both a rapidly evolving technology environment and an increasingly complex regulatory compliance landscape.