You may have seen on Social Media a similar image with the comment “Not to alarm you, but Mad Max was set in 2021”. Let’s hope that is not the case!
Clearly 2020 was a challenging year for everyone in one form or another and saw many businesses irreparably damaged. A few thrived but these were the exceptions! I wish I had bought some shares in Zoom!
In looking at financial challenges, my views are based on working with a range of clients in 2020 and I am going to break it down into 3 separate stakeholder groups:
- Business and Operations
I use the term loosely since this applies to all organisations, including the NFP sector! Financial management, especially cash flow management, became even more critical in 2020 and many CFOs and Finance teams found themselves increasing the frequency of scenario planning – the focus being on cash. Whilst hopefully confidence, both consumer and business, will continue to strengthen and thereby fortify the economy in 2021, I do not see this scenario planning decreasing anytime soon.
What is needed to make this effective and is not always present, is an understanding by all employees of how each decision they make, impacts the finances of the organisation – and here I am also mindful of the lack of understanding by many of the difference between profit and cash.
During lockdown last year we saw an increased interest by companies to run Personal Finance – Financial Wellbeing programs for their employees. Even before COVID, Australians had one of the highest rates of debt worldwide when compared to income – not surprisingly leading to financial stress. The participants attending these virtual sessions were indeed fortunate, not only having a job but working for an organisation that demonstrated its concern for their wellbeing. Whilst there is a wealth of helpful material available, it was my observation that many needed to be stepped through the process of taking control of their finances. It was so rewarding to hear of the immediate results that our program was able to achieve. So 2021? Well, JobKeeper is about to end, credit card use maybe down but Buy Now Pay Later use is skyrocketing, so I do not see our household debt issue improving anytime soon.
- Finance Teams
It is clear that COVID has accelerated the digitisation of the Finance function. Whilst historical reporting is needed for compliance purposes, companies of all sizes are looking for finance professionals to be their trusted advisers, their indispensable business partners – not just “bean counters”. In my opinion, 2021 will just continue this trend and having highly developed communication and social skills will be critical. My fellow accountants who think analytical ability is the key skill for their role, without being able to communicate effectively and clearly to the business, will be left behind. Leadership, challenge and insight is what the business wants and needs in 2021.
I realise that my focus is on developing people to meet these challenges. I am sure there will be numerous other challenges in 2021 and hopefully some good news mixed in with the terrible ongoing death toll from COVID. I wish you all well.