Firms struggling to identify future challenges

A third of finance professionals do not have the tools they need to effectively forecast economic conditions.

Research by cloud finance software Xledger has found that most organisations are navigating the economic downturn without a clear insight into their financial resilience.

The study, involving over 1000 in-house and in-practice accounting professionals, found that 13 per cent reported that the tools they used were outdated, one in 10 faced a lack of funding for the finance tools they needed, and nine per cent simply didn’t trust their current tools for forecasting.

Over half of accountancy and 55 per cent of in-house finance professionals can’t access data as quickly as they need it during critical periods, such as a recession.

The majority  of respondents that had adopted cloud computing either partially or fully were able to access data ‘very quickly’. In comparison 69 per cent of those that hadn’t adopted cloud computing, and didn’t plan to, said that they can only access data slowly.

Ian Halliwell, marketing and sales director of the Bristol based XLedger, said: “Slow data analysis is a sign that the finance team is relying on outdated technologies, and it can even quickly lead to inaccuracies. Clearly, there is a need to create efficiencies in this area for many organisations.

“Financial analysis needs to be done at speed and information needs to be readily available.  But how can they be expected to do so, when they do not have the right tools for the job, or the tools they do have, they have no faith in?”

Unsurprisingly, 53 per cent of finance professionals are feeling increased pressure due to rising costs, and it is taking their attention away from the bigger picture and more strategic activities.

Over a third also reported technology issues and the same amount 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 finance professionals over the next 1-2 years.

Just under half cited that revenue and growth was their biggest concern, followed by staff retention (26 per cent) and cash flow was cited as the biggest concern by a quarter 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).

Ian added: “Chief financial officers and their teams are now called upon to provide meaningful context around business performance to senior leaders and stakeholders.

“Our research demonstrates that very few organisations are yet to fully digitise their finance functions and integrate technologies and strategies that enable them and their colleagues to deliver value in a digital age.

“In fact, the vast majority of respondents are still ill or un-equipped to accurately forecast to the level they need to in the modern working environment.

“As the UK heads further into a period of economic uncertainty, without clear insight into financial resilience and financial variables, many organisations could struggle to weather the storm.”

This study was conducted among 514 accountants and 500 in-house finance professionals in the UK during April 2023 by CensusWide.