Finance leaders are moving into 2024 with cautious and measured optimism, well aware of the challenges that lie ahead. But with these challenges come opportunities and solutions, so as finance and accounting teams jump into 2024, here’s what to prepare for and how to excel in 2024.
17 Accounting Challenges and Their Solutions
Accounting teams that leverage technology are better able to adapt to changes and challenges like some of the unexpected supply chain and revenue interruptions seen in the past few years. So, what are the biggest challenges facing accountants today? Cash flow, hiring new talent, adapting to new tax and regulatory changes and continuing to adjust to remote work remain some of the largest hurdles for accounting teams.
-
Cash Flow
Often when there is economic hardship, or signs that it’s pending, companies move quickly to ramp up liquidity by implementing cost containment, while implementing cost containment measures and deferring planned investments. Some of that focus on improving cash flow will persist into 2024 – especially when it comes to capital expenditures.
Management and consulting firm McKinsey & Company says that boardrooms have shifted their focus from earnings before interest and taxes (EBIT) to cash – and that has translated into responsibility for cash management at all levels of the business. But some of those cost-cutting measures have slowed, particularly those related to workforce and operations. Businesses are more confident in generating revenue from the changes they made in 2020 to products or services offerings and pricing strategies.
Improving the efficiency of accounts receivable and accounts payable processes will be vital to ensuring steady cash flow. Keep an eye on metrics like expenses, past-due invoices and operating cash flow. Generating and tracking cash reports daily can help you plan for the future because you’ll see changes or fluctuations you can use to inform other decisions.
-
Financial Reporting
Managing financial disclosures continues to be a concern for public and large private companies affected by SEC requirements. Finance leaders are concerned about complying with reporting requirements from COVID-19-related government stimulus programs and ensuring proper documentation, recording and reporting for audits. Additionally, changes around disclosure requirements for Environmental, Social and Governance (ESG) are likely ahead, and accounting teams need to be mindful of a shifting regulatory landscape.
-
Hiring and Retaining Talent
Hiring is continuing for accounting and finance roles in technology, health care, property management, financial services, as well as for positions that keep cash accounts strong. These roles include billing, accounts receivable and collections.
Retaining top employees as competition intensifies is a key challenge. Some 8 in 10 finance and accounting managers are concerned about keeping valued employees. Two key areas of concern are low morale and high rates of burnout because of heavy workloads – the latter being a somewhat perennial issue for accountants. Taking steps to ensure that key employee retention strategies apply to the accounting and finance department – such as continued education and training – is one place to start boosting morale. Helping accountants develop the technical and soft skills to better apply their domain knowledge to business strategy as more transactional tasks are automated will be crucial to retention in 2024.
-
Automation and Artificial Intelligence
Although only some 2% of large firms have implemented machine learning or AI, about one-in-five indicate they are planning to start. AI implementations are done to address labour shortages, automate labour-intensive tasks and deliver more insightful data.
As more transactional work becomes automated, accountants will need to develop different skills to apply their expertise to information and data generated from new technology and play a role in more of the business strategy. Cloud-based accounting software, budgeting, forecasting, data analytics and visualisation tools are building some of the foundation for automation in accounting.
-
Upskilling
As automation increases, boosting existing skills and expertise to leverage the outputs of technology will benefit employees and your business. Focus on upskilling and learning more about cloud-based payroll and human resource information systems, enterprise resource planning (ERP) systems, data analytics and financial modeling and forecasting. In addition to technical skills, other beneficial so-called soft skills in demand will be the ability to work independently and in virtual teams, attention to detail, being comfortable with change, creativity, a desire for continual learning and written and verbal communication skills. Offering continuing education and training also has the added benefit of boosting employee morale and retention. Companies ranked highly on employee training see 53% lower attrition rates than those ranked lower.
-
Tax Law Changes
Accounting teams have tax changes top of mind, especially understanding total tax liability and navigating shifting trade and tariff policies.
Effectively navigating the tax law changes can help you have more funds available to weather other business challenges ahead. Digitised, accurate and easy-to-access records with accounting software will make a complex tax year more manageable.
-
Regulatory Changes & New Accounting Standards
New revenue recognition standards, standards for lease accounting and CECL accounting standards have been a challenge for accounting teams over the past few years. While different phases of standards implementation have been delayed because of the pandemic, they remain on the horizon — so pay attention for announcements. Stay up to date with new regulations around PPP loans and changes related to current and future COVID stimulus packages.
-
Expense Management
Though it traditionally dominates expense reports, travel spend decreased by 77% year over year. But spend risk was three times higher than in 2019 – with fraud activity increasing by 57% from Q2 to Q3 in 2020 alone. Moving employees to work remotely brought entirely new expense management challenges. Office supplies, computer equipment and other items necessary to work from home were common expenses. But with that came risk for employees to take advantage and expense things like big screen televisions, sound systems and even TV subscriptions.
If you haven’t already, update your expense policy, focusing on allowable home office expenses and food, including delivery services and gift cards. Check internal controls and consider further automating the expense management process with software to discourage fraudulent expenses and automatically flag questionable ones.
-
Payroll Management
New payroll challenges from changing laws and regulations at federal and state levels are on the horizon. And managing withholdings for employees in different locations has become a significant hurdle for payroll managers. Remote work has made the management of state income taxes challenging because of the complexity of determining primary work location.
If you don’t already, consider automating your payroll processes. Cloud-based payroll platforms help with the calculation of earnings, deductions, company contributions, taxes and paid time off, while providing support for multiple jurisdictions when it comes to taxes, forms, direct deposit and more.
-
Cybersecurity
It takes 280 on average days to identify and contain a data breach, and the average cost is $3.86 million. The lion’s share of those breaches is initiated by stolen or compromised employee credentials. The accounting team regularly receives emails with attachments or links to invoices, and it’s not hard to see how easily a malicious link or attachment could make its way unnoticed into the workflow.
Accounting teams are well suited to be evangelists of cybersecurity company-wide — they’re already schooled in robust internal controls, access and permissions required of their roles. Outdated software can increase the success rate for malware and ransomware, so make sure all systems are up to date.
-
Remote Work
Like many other industries, one of the top accounting trends is a desire for more flexible and remote work. Some 77% of accounting professionals would like to continue to work remotely. But remote work brings challenges to accounting and finance teams – who for decades have done tasks such as month-end close by means of long nights in the office. Remote work also exacerbates the risk of cyberattacks – with IBM finding that 70% of companies that have adopted telework during the pandemic saying they expect it will increase data breach costs.
Focus on making established financial controls work with a dispersed workforce. Use a classic risk assessment framework to determine which controls may open the company to risk.
For most businesses, cloud-based accounting software lends obvious advantages in supporting remote accounting teams. Companies that relied heavily on cloud-computing technology through 2020 were better able to meet challenges presented with remote work. And the technology frequently outperformed even VPNs with access to premises-based software.
-
Low Morale
It’s no wonder that burnout is a common problem for those working in finance and accounting. Between juggling responsibilities, heavy workloads and a constantly shifting regulatory landscape, accounting and finance departments can easily be plagued with low morale. Another common concern is being understaffed — on average businesses with less than $25 million in revenue employed just three people in finance roles. And even for businesses with annual revenue between $100 million and $499 million, that number is only 13 people employed in finance roles.
How can you raise morale among your accounting team? Find ways to formally recognise individual contributions on a regular basis, especially at the manager level. Managers have an enormous impact on their employees’ morale. Keep lines of communication between your accounting and leadership teams open. Listen to their input not just on financial matters, but strategic decisions as well. Give them the tools they need to collaborate. And automate tedious parts of their work to free up time.
-
Accurate Financial Forecasts
The conditions created by the pandemic made accurate financial forecasting especially challenging. Business leaders should engage in scenario planning and re-examine forecasts for sales, expenses and cash. Test and re-test assumptions, model cash flow, burn rate and liquidity under multiple scenarios.
One of the top accounting tips for small businesses and startups is to use financial statements to evaluate and predict business performance. Because so much is changing so quickly, access to real-time analytics is key. That’s what will make the difference in building financial models that factor in historical trends, current conditions and best, worst and most likely scenarios.
-
Keeping Up with New Technology and Tools
Aside from a shifting regulatory environment and tax laws, keeping up with evolving technology can be a burden. There’s a reason skills around cloud-based accounting software are some of the most in-demand for accountants and finance professionals. Research firm Gartner recently said that by 2024, more than 45% of IT spending will shift to cloud-based technologies, in many instances that will include financial and accounting software.
The latest innovations around real-time analytics, robotic process automation (RPA) and AI will depend on having a sound, reliable, clean data infrastructure. But many companies are working with legacy, on-premises accounting systems that are outdated. Financial reporting, cash management, accounts payable and month-end close processes are all being impacted by technology, and will continue to be key components of automation and cloud-based accounting software in the near future.
-
Innovation
Is accounting a challenging career? Absolutely. But there are also new exciting opportunities opening as more transactional tasks become automated, freeing up time for accounting professionals to turn their attention to more analytical duties — and innovation in the accounting software is abundant.
-
Globalisation
As businesses continue to increase in size and complexity across the world, accounting departments will need to accommodate more and more international standards and regulations. As technology has made this easier, accountants find themselves needing to contend with rules and norms prevalent in both their country of origin and the markets they work in. Local economic instability, cybersecurity standards, and tax law changes across these countries will require adaptable accounting teams and technology that eases the challenges.
-
Economic Instability
Implementing and continuing to enhance cloud-based accounting systems is the first step toward tackling many of the challenges 2024 will present. Top-of-the-line enterprise resource planning software integrates finance and accounting with other business software modules, such as supply chain, warehouse and order management. With a reliable source of data and increased automation of time-consuming and error-prone tasks, the accounting team has more time and better data to weigh in on the strategic decisions and even become a key partner of guiding the business strategy.
#1 Cloud
Accounting
Software
