A third (33%) of accountants do not have the tools they need to effectively forecast, research by cloud finance software provider Xledger found. This means that organisations are navigating the economic downturn without a clear insight into their financial resilience.
The study, involving over 514 accountancy professionals, found that 12% faced a lack of funding for the finance tools they needed, 11% reported that the tools they used were outdated and 10% simply didn’t trust their tools for forecasting. In a complex economic climate, the need for accurate forecasting escalates, meaning that a reliance on inaccurate tools could do more harm than good.
Over half (54%) of accountants can’t access data as quickly as they need it during critical periods, such as a recession. When asked about their adoption of cloud computing, the picture becomes nuanced when it comes to how quickly respondents had access to the data they needed. The majority (60%) of respondents that had adopted cloud computing either partially or fully were able to access data ‘very quickly’. In comparison, the majority (69%) of those that hadn’t adopted cloud computing, and didn’t plan to, said that they can only access data slowly.
Commenting on this, Xledger partner manager, Phil Chalmers, said: “The function of the accounting department, whether in-house or outsourced, has become increasingly critical for organisations in today’s business world. It must be able to identify and adopt new technologies that can benefit the organisation in the long term.
“Slow data analysis is a sign that the accounting team is relying on outdated technologies, and it can even quickly lead to inaccuracies. Our findings demonstrate how the speed of data access increases with the adoption of cloud computing and wider digital transformation principles. Clearly, there is a need to create efficiencies in this area for the majority of accounting firms.”
Unsurprisingly, rising costs are putting pressure on 56% of accountants and taking their attention away from the bigger picture and more strategic activities. A third (33%) also reported technology issues and 34% said that a high turnover of staff was a major distraction from their day-to-day function.
The research also looked at the biggest concerns of accountants over the next 1-2 years. 42% cited that revenue and growth was their biggest concern, followed by staff retention (26%) and cash flow was cited as the biggest concern by over a quarter (26%) of respondents. Interestingly, cash flow was a bigger worry for those that hadn’t yet adopted cloud or data analytics (rising to around a third of respondents).
Whilst the vast majority (72%) of accountants agree that digitisation would be helpful in a recession, as many as one-fifth (21%) believe it would be detrimental. This may be due to the perceived cost of starting a digital transformation project.
Chalmers added: “During times of economic instability, the need to perform financial forecasting is paramount. Within any business, the finance function must be able to think strategically and be able to cast an analytical eye over its key data. As the UK continues to navigate an uncertain economic period, it’s essential to equip accounting departments with the right data and analytics that enable them to plan and take the decisions needed to succeed.
“Much of the finance function appears to be in a state of flux, caught between the need to digitally transform and an unwillingness to do so. This unwillingness appears to be rooted in a fear of change, and that change having negative effects on productivity and processes. If companies fail to effectively leverage financial insight, it poses a very real risk to the success of the organisation, especially during periods of increased financial strain and market competition.”
This study was conducted among 514 accountants in the UK during April 2023 by CensusWide.