Last year, the pandemic swept businesses into a brave new world. But heading into the summer months of 2021, there’s a palpable sense of optimism in the air. And while we’re not out of the woods yet when it comes to the pandemic, there’s a sense that the economy and the country are on a better path.
For businesses, though, that doesn’t mean that everything is hunky-dory. In fact, challenges will persist into 2021 and beyond. Businesses across sectors will need to grapple with a host of challenges, including a new competitive landscape, evolving technologies and workforce skill requirements, the need for quicker decision-making and a post-pandemic hybrid work environment.
There’s no beating around the bush: Finance teams across the business spectrum will have their work cut out for them in 2021. Recognizing the challenges and adequately preparing for them may help finance teams clear the hurdles.
With that said, here are four challenges facing finance teams in 2021.
Many firms realize that recruiting and retaining employees is going to be a challenge this year — in fact, almost 30% of respondents noted that it would be the most significant challenge they’ll face during 2021 in UHY’s 2020 Middle Market Survey, making it the biggest concern among the survey’s respondents.
And it’s not necessarily just a shortage of workers, but for many firms, it’s a shortage of the right workers. With technology and workflows evolving as rapidly as ever, there’s a need for strategic, growth-oriented workers who are efficient communicators, who can free up time and resources for company leaders and solve complex problems on the fly, and who have the ability to be an asset to finance teams and ultimately help those teams reach the next level.
But the challenge lies in the inherently complex nature of the industry. There are cash flow management problems to solve, crisis loan programs and tax credits to navigate, not to mention rules, regulations and strategies that are constantly changing. It requires specialized knowledge and skill sets, and potential employees are in high demand.
Because of this, some firms may need to look at outsourcing options or use their own digital transformations as a recruiting tool — a point of interest that can be used to draw in a new generation of industry leaders.
Second, firms will need to account for the pandemic-induced shift to remote work. While many workplaces had previously adopted remote work options, hybrid work environments have become commonplace in the post-pandemic economy, and the number of people working permanently from home is expected to double in 2021.
This is a shift that some firms will need to embrace. While working remotely may present a big change for older workers, younger employees are all but demanding it. For example, almost half of all millennial employees work from home, according to recent data from Gallup. And a recent survey of more than 31,000 workers from Microsoft found that 73% of them hope to continue having flexible remote work options even after the pandemic ends.
Of course, for firms, there are things to take into account: Remote workers may lack access to necessary tools or lose focus due to distractions at home. Firms need reliable and adaptable workers, and for many, there may be a need to institute governance, policies and internal controls to contend with an increasingly remote workforce.
Depending on the specific firm’s approach, this can mean some big culture changes and operational shifts to manage staffers, review their work and keep employees engaged — a big task that will require significant thought and planning.
UHY’s Middle Market Survey found that respondents, when asked to rank their top three priorities in preparing for the post-pandemic playing field, ranked “pursuing operational efficiencies in the core business” as their top concern. In other words, finance teams need to have performance improvement in their crosshairs.
Adopting and implementing new technologies can help many teams get there, but selecting platforms and point solutions to increase your team’s firepower needs to be executed efficiently and decisively. The upfront costs may be hard to swallow, but the payoffs can be big: Transitioning manual processes and away from outdated tech into data-driven, dynamic and cloud-based systems can generate massive cost savings with time.
It’s also important to keep your team up to date for security’s sake, particularly in a remote environment. Every other day, a new large-scale cybersecurity breach seems to appear in the headlines.
Teams and companies will also need to keep innovation at the front of mind in order to stay competitive. That will help ensure your firm is on the cutting edge and help maximize business valuations.
Speaking of valuations, we’ve also found ourselves in a unique economic environment — the post-pandemic economy is racing, and investors are hungry. Just look at the recent boom in SPAC transactions over the past year, or consider that private equity firms are sitting on record levels of dry powder.
For firms (and finance teams), that means some serious muscle needs to be dedicated to cash forecasting, developing and tracking relevant KPIs, and having the data on hand that will be necessary to make key decisions for company leaders. Whether companies are looking to be acquired or attract outside investment, making sure that a firm’s financials are in tip-top shape will be critical with investors looking to throw their weight around this year.
In all, finance teams have their work cut out for them in 2021. While their jobs were never easy, per se, the post-pandemic landscape is throwing businesses across the spectrum a series of curveballs. By sizing up some of the challenges ahead, firms should be able to have a much smoother ride in 2021.