In 2022, the Finance function was impacted by a number of significant developments. Some of the most notable included:
The COVID-19 pandemic: The COVID-19 pandemic had a significant impact on finance in 2022, as businesses around the world faced unprecedented challenges. This included disruptions to supply chains, changes in consumer behaviour, and economic uncertainty. Finance teams had to work closely with other departments to adapt to these challenges and make informed decisions about how to allocate resources. This often required finance teams to prioritise certain areas and redirect funding to ensure the short-term and long-term viability of the organisation.
Remote work: The shift to remote work brought about by the pandemic highlighted the importance of technology in enabling finance teams to continue operating effectively, and has driven the adoption of new tools and technologies to facilitate remote work and collaboration. Cloud-based software and services such as Google Workspace and Microsoft 365 allowed finance teams to access and share documents, collaborate on projects, and communicate with colleagues from anywhere with an internet connection. Video conferencing platforms like Zoom and Teams helped stay connected and productive while working remotely. Project management tools like Asana and Trello enabled tracking and managing tasks and projects, even when team members were not physically present in the same location.
The rise of fintech: The fintech industry continued to drive innovation and disruption in the finance sector in 2022, with new technologies, financial products and emerging services that transformed the way finance is conducted. Artificial intelligence and machine learning started becoming a key component of technology platforms, as companies look to leverage predictive capabilities to further analyse their data and performance trends. Blockchain and Cryptocurrency pushed further to decentralise finance and further opened access to and participation in a new digital economy.
Increased focus on sustainability: There has been a growing recognition of the importance of sustainability and the role that finance can play in supporting it. This has been driven by a number of factors, including increased public awareness of environmental and social issues, the adoption of sustainable development goals by the United Nations, and the introduction of regulatory requirements related to sustainability. Finance teams have played a key role in helping businesses transition to more sustainable practices. This has involved working with organisations to identify areas where they can reduce their environmental impact, such as by reducing energy consumption or transitioning to renewable energy sources. It has also involved helping businesses meet regulatory requirements related to sustainability, such as reporting on their ESG performance and disclosing their carbon emissions.
Changes in the global economic landscape: 2022 saw a number of changes in the global economic landscape, including shifts in trade patterns, changes in monetary policy, and fluctuations in currency values and inflation. Finance teams had to stay up to date on these developments and make informed decisions about how to navigate them.
Overall, 2022 was a year of significant change and uncertainty for finance teams, as they had to adapt to a range of challenges and changes in the business environment.
As we move into 2023, the following trends will likely continue to shape the finance landscape.
Digital transformation: The finance function is expected to continue undergoing digital transformation in the coming years. As advanced technologies such as artificial intelligence, machine learning, and automation become more widespread, finance teams may adopt these technologies to streamline processes, reduce errors, and make more informed decisions. In addition, the use of cloud-based solutions and mobile apps is also likely to increase, as these provide finance teams with greater flexibility and access to real-time data. The adoption of these technologies has the potential to significantly improve the efficiency and effectiveness of the finance function. For example, machine learning algorithms can analyse large amounts of data and identify patterns that may not be immediately apparent to humans, helping finance teams make more informed decisions. Automation can also help reduce errors and improve efficiency by automating routine tasks and freeing up finance professionals to focus on more value-added activities.
Regulation and compliance: As regulatory requirements and standards continue to evolve, finance teams must remain vigilant and ensure compliance to avoid potential risks and liabilities. This involves staying up to date on new reporting requirements, changes to tax laws, and the adoption of new accounting standards. In addition to traditional regulatory changes, finance teams are also facing new challenges related to sustainability and environmental, social, and governance (ESG) issues. Increasingly, investors and stakeholders are demanding greater transparency and accountability from companies on these issues, and finance teams must be prepared to report on and track progress in these areas. To respond to these changes, finance teams are required to develop new systems and processes for tracking and reporting on ESG metrics, as well as incorporate sustainability considerations into financial planning and decision-making. As regulatory and sustainability pressures continue to mount, it is crucial for finance teams to stay informed and adapt to the changing landscape.
Cybersecurity and Data Privacy: In 2023, we will continue to have an increased reliance on digital systems and data. As more businesses adopt digital technologies and move their operations online, the risk of cyber threats and data privacy breaches will continue to rise. Potential threats can be malicious in the form of ransomware, supply chain vulnerabilities, internet of things (IoT), data poisoning and many others. However, threats can also come from a gap in corporate governance and non-compliance with the evolving legal landscape. Serious consequences for organisations can include financial losses, damage to reputation, regulatory and operational implications, and legal liabilities. This will require a need for ongoing reviews and addressing of vulnerabilities. Including further investment into cybersecurity, privacy, compliance and other risk functions. Most importantly enhancing board visibility and allocating funding to mitigate potential risk.
Talent and skills: The finance function is likely to continue seeing a shift in the skills and expertise required to succeed. As technology continues to evolve, finance professionals must ensure they become proficient in new tools and technologies, such as data analysis, visualisation software and automation tools, to effectively analyse financial data and streamline processes. In addition to technical skills, strong analytical and problem-solving abilities are essential to interpret complex financial information and make informed decisions. In today's business environment, finance teams are required to work closely with other departments and stakeholders, such as marketing and sales. As a result, it is increasingly important to possess strong soft skills, such as communication and collaboration is needed, to effectively collaborate and communicate financial information to a diverse audience.
The role of the CFO: The role of the Chief Financial Officer (CFO) is also evolving as the finance function continues to change. In addition to managing traditional financial responsibilities, such as financial planning, budgeting, and forecasting, CFOs are increasingly expected to play a strategic role within the organisation. This may involve working closely with the Chief Executive Officer (CEO) and other senior executives to help shape the direction and vision of the company. CFOs may also be involved in decision-making processes related to business expansion, mergers and acquisitions, and risk management. As the finance function becomes more integrated with other areas of the business, the role of the CFO continues to become more collaborative and cross-functional. CFOs must therefore possess a combination of technical expertise and strategic thinking skills to effectively contribute to the overall success of the organisation.
In conclusion, the finance function is likely to face a number of challenges and changes in 2023 and beyond. From digital transformation and regulatory compliance to cybersecurity and the changing role of the CFO, finance teams will need to adapt and stay ahead of the curve to succeed in the future.