7 accounting and finance trends that have emerged in the past 18 months

Sage looked back on 2021 and found interesting, research-backed trends emerging in the finance industry. And there's a common thread in all of them.

Just like that, another year has passed. A year no less uncertain or unpredictable than the one before – or, no doubt, the one that lies ahead.

Although it may seem like it’s been “more of the same”, we’ve taken a retrospective look on 2021 and found interesting, research-backed trends emerging in the accounting and finance industries. And there’s a common thread in all of them: change is inevitable and resilience is key to staying relevant.

Trend 1: The financial leadership role is evolving, from number-cruncher into storyteller

The Sage CFO 3.0 research found that digital transformation has been placed firmly at the top of finance leaders’ agendas and that they are taking the reins by embracing new techniques and technologies to usher in the digital workplace.

In fact, the evolution of the finance role is intricately linked to digital empowerment. Finance leaders are now required to be more than mere number-crunchers – they must be strategic visionaries who can turn real-time data into compelling narratives that inform strategic business decisions.

As finance leaders grow and excel in this new role, so too does their esteem in the eyes of their board members. Research shows that 92% of finance leaders are now held in higher regard, and business stakeholders are looking to them to help navigate their companies through change with accurate, relevant, and reliable insights that promote opportunity and reduce risk.

In order to meet these expectations, finance leaders need to become digital transformation experts who can build agile, technologically powered teams geared for sustainable success.

Trend 2: There’s greater acceptance that AI and automation drive agility

The amalgamation of robotic process automation (RPA), artificial intelligence (AI), and machine learning (ML) has created a new class of financial decision-maker who uses data and emerging technology to paint a vision for the future.

Research found that 89% of CFOs welcome automation performing more of their routine accounting tasks in future, and 40% believe that AI and machine learning will help improve forecasting and financial planning even further.

However, only a little over half say that the bulk of their processes are automated. This suggests that a massive shift is still coming – especially since 86% of CFOs believe that financial management technologies can help their businesses to discover new opportunities, better manage risk, and improve agility.

Those that have already invested in automation solutions cite efficiency, streamlined processes, reduced human error, risk mitigation, and competitive advantage as the main business drivers.

The greatest benefits seen so far include:

  • Real-time audits
  • Efficient and accurate forecasting
  • Strategic financial planning
  • Faster closing
  • Enhanced governance

Trend 3: Cyber-crime has become a bigger focus than ever

CFOs are increasingly looking to new technologies to reduce the risk of cybercrime and non-compliance in their businesses. As guardians of some of the most sensitive information, 31% of HR and payroll professionals – especially those using cloud systems – are more focused on cyber-security than they were a year ago.

Although 91% of HR and payroll professionals say their businesses are fully compliant with the Protection of Personal Information Act (POPIA) and the General Data Protection Regulation (GDPR), 48% are still concerned about compliance and 63% worry about securely sharing personal employee information.

There is, however, a growing acceptance of how cloud-based systems can help to alleviate cybersecurity concerns. According to the Sage CFO 3.0 research report, 66% of respondents believed that cloud-based systems are secure. Fast forward 18+ months and 88% of respondents who already use the cloud say their systems are more secure than before, and 65% say they also benefit from safer data processes and storage.

Trend 4: Payroll and HR is being catapulted into the digital age

The Payroll and HR in SA: Rising to the challenges of change research conducted by Sage found that:

  • 77% of HR and payroll professionals struggle with the complexity of payroll taxes,
  • 49% feel that the continuous changes in legislation and regulations drive payroll complexity, and
  • 73% agree that COVID-19 has further exacerbated the situation.

What’s more, numerous HR and payroll professionals have had to embrace complex challenges such as managing remote or hybrid workforces and ensuring the security and integrity of employee data.

Cloud-based payroll software automates a lot of the repetitive work and reduces the risk of errors, making it easier to manage a remote workforce of permanent and contingent employees. And since the software is always compliant with the latest legislation and regulations, reporting is a cinch. It’s no wonder that 70% of SMEs intend to switch to cloud-based financial software in the 12 months.

Trend 5: Hybrid is becoming the de facto way of working

HR and payroll professionals have accepted that remote and hybrid working is here to stay. Finance leaders realise that if they are to thrive in this permanently changing landscape and successfully lead their remote working teams, they need to become experts in digital transformation. And to do that, they need better financial software.

According to the Digital CFO research, 82% of surveyed businesses switched to fully remote or hybrid working environments in the past year. What’s more, 50% started hiring, training, and managing employees in a remote or hybrid environment, and 86% of HR and payroll professionals link the increased use of cloud technology to their organisations’ ability to operate in a remote or hybrid environment. In fact, 64% of medium-sized businesses and 50% of small businesses have increased their use of HR and payroll technology to support remote working teams.

While many intend to shift to remote working, 41% of CFOs lack an integrated finance system and 39% lack an effective system to support this way of working. On-premise financial software systems are not fit for purpose, which means that in trying to meet their new mandates, finance leaders and their teams are overwhelmed by high volumes of data and swamped with manual tasks such as data inputting. These stresses are compounded for those who struggle to access their finance systems remotely: 35% of on-premise software users versus 24% of cloud users are overwhelmed by data overload.

Trend 6: Businesses are taking Gen Z seriously

Generation Z are redefining brand loyalty and employee expectations. With specialist technology taking care of the everyday tasks, HR and payroll professionals are now able to shift their focus to creating an organisation that appeals to the next generation.

This involves:

  • Managing employee engagement to increase productivity, motivation, and morale (48%),
  • Freeing up HR’s time to advise executives (44%),
  • Supporting increased needs around mental health (43%),
  • Increasing employee satisfaction (40%),
  • Strengthening organisational culture to create enduring bonds (38%), and
  • Managing and retaining top talent (37%).

This shift in focus for payroll professionals complements the work being done by their colleagues in HR to drive business growth through talent management, employee engagement and satisfaction, and showing sensitivity towards social issues that are important to Generation Z.

Trend 7: SMEs are focusing on building resilience against change

The key takeaway from a survey of SMEs conducted by Sage was that, to be able to operate through complexity and uncertainty, small and medium-sized businesses and accounting practices must accept that resilience is a never-ending, iterative learning process.

The survey also found that the importance of building a financial buffer has never been as crucial for small businesses as it is now and they’re having to invest time and money into resilience-building resources that weren’t considered a priority pre-pandemic.

However, while the majority of decision-makers see the value of investing in their businesses, only 13% are currently able to invest at the right level, while 41% do not currently have the finances to invest at all. In fact, most small businesses have had to secure additional financing just to get through the pandemic.

Investing in relationships is another way to build resilience against economic turmoil – 86% of businesses are already prioritising customer relationships post-COVID, and 47% are focusing on better managing and motivating their workforce.

Trend 8: Accountants have become strategic business partners

In the Sage Practice of Now 2020 research, 87% of respondents agreed that clients expect more flexibility and better service levels from accountants. One year on, 82% agree that expectations of accountants and bookkeepers have widened to include services such as advising on relevant finance and accounting technologies.

Accountants are responding by upskilling in-house, recruiting non-traditional specialists, and embedding technology at every level, in order for this expansive, alternative accounting framework to be delivered. At a base level, this ‘plus’ service is characterised as agile automation to keep pace with prolific and complex changes to government regulation. And at the boundary pushing level, it is the flexi-creativity to push past what is expected to find new ways of serving clients.

The forecast? It’s cloudy

The accounting and finance profession is rapidly changing. While some of these changes are in response to recent events, many of these are driven by ever-changing technology. As we head into 2022, we predict that finance leaders will accelerate their digital transformation initiatives and empower their teams with the very technology that’s driving the change.