How accounting teams can thrive through recession

A former Bank of England rate-setter stated that the UK is probably already in recession in a recent Bloomberg article. Businesses are re-forecasting and re-framing their growth strategies and strategic initiatives as a result of this economic uncertainty. 

Though this sounds dire, it’s also not terribly surprising. The 1-2-3 shocks of Brexit, pandemic, and war in Europe, complete with corresponding crises of confidence, energy supply, and staff availability have combined to shake the foundations of the UK economy.

For corporate accounting teams, this should be a wake-up call. Very soon, they may well need to work to overcome the challenges of a forthcoming recession. 

Dangers on the horizon

What are those challenges going to look like?

First up, recruiting and headcount freezes will lead to increased staffing issues in a sector that is already suffering – 87 per cent of UK finance directors claimed to have lost accounting staff to burnout in a 2021 UK Accounting State of Play Report. The tightening of headcount, budgets and organic staff turnover will leave accounting teams shorthanded, increasingly overworked, and at further risk of burnout – at a time when the reporting of financials is more important than ever.  

Second, but not playing second-fiddle to staffing, is the issue of limiting modernisation. Budget restrictions can limit modernisation efforts. But for many, modernisation is more important than ever as it will have the most impact in helping the finance team deliver what the business needs. For example, teams suffering from siloed, manual workflows or poor visibility across tricky close processes will feel the recessionary impact more strongly. Those teams will struggle with agility and speed, at a time when it is needed the most. 

With fewer staff, a freeze on innovation, and an increased operational risk facing the business, there will also be growing pressure to maintain the ability to close each month on time. This will be combined with increasing compliance measures, as an appetite for regulatory oversight will increase, impacting accounting teams’ overall bandwidth and ability to comply with new mandates. 

Making the best of it

Although recessions are naturally occurring economic events, reacting to them is different on a business-by-business basis. Accountants will feel it hard, and having the tools to prepare and react quickly will help mitigate the effects on the business.

It’s fair to assume during tough times a ‘make do’ culture will ensue. Financial speed, accuracy and agility are more important than ever, so it’s crucial to address core business processes to ensure those goals are attainable. 

In fact, it’s conceivable that with proper management and leadership, a company’s accounting and finance function could emerge on the other side of a recession with new efficiencies that work for everyone involved. While it may be challenging to try new things – particularly in periods of high economic pressure – businesses simply cannot afford to become complacent and unchanging.

With all that in mind, here are three key steps that accounting and finance teams can take to remain operationally excellent during challenging markets and times:

Ensure your data processes are up to scratch

To perform their best, accounting and finance teams will need the right data, from the right tools, with as little friction as possible. You can’t afford to be making decisions with bad data. One of the most common sources of frustration and delay during the close process is incomplete or unclean data, which in turn generates a significant amount of extra work searching for the right information.

So, it’s always beneficial to review your process with relevant stakeholders and make sure everything is working correctly. Can the entire accounting team access the data they need when they need it? Does the wider organisation understand how to supply the information in the right format? At the most basic level, is the software they’re relying on user-friendly, or does it take a degree in computer science to find the right receipts and invoices? 

If the answer to questions like this is ‘no’, put it on your roadmap to fix. The efficiency and time-saving in the long run will be worth the short-term effort – particularly amid the pressures of a recession.

Reduce and automate the manual

As budgets restrict modernisation efforts, it will be more important than ever to focus on the most effective initiatives. Choosing the most impactful technology will become the priority, as this will help staff manage the relentless and repetitive manual tasks better, with greater speed and accuracy. 

Automation will allow teams to free up bandwidth and focus on strategic value. When such tasks are sped up and streamlined – and particularly when you connect the close with upstream and downstream financial functions – you’ll likely benefit from more transparency across vital processes and a reduced audit burden within the close process itself. 

When considering automation, though, it’s key to remember that no software can replace the creativity and flexibility of human staff. The goal is not to slim down salary budgets, but to capitalise on the skills and expertise of your team by freeing them from grunt work.

Enable faster decisions without reducing information quality

The benefits of a strong data foundation aren’t limited to accounting tasks. With capacity freed up for more strategic tasks, accountants have the opportunity to provide valuable strategic insights to senior leadership at speed – which in turn can help inform smart decision-making during the rapid shifts of recession. 

At present, however, 46 per cent or more finance professionals say in the UK Accounting State of Play Report that they are not fully confident in the numbers they are reporting. Clearly, it’s not easy to make confident predictions about the health and future of the current business model if you’re not able to confidently state that your reports are accurate. A faulty decision based on poor data could be disastrous – so a focus on information quality is paramount.

Faster time-to-insight is imperative in a challenging economy 

In a challenging economy, the enterprise as a whole will also require a faster time-to-insight. The accounting team will need to drive greater operational efficiency with departments outside of finance, such as sales, IT, and marketing. In addition, there will also be a need for better connectivity and collaboration between finance and accounting teams across the close process itself. Accurate data is the cornerstone in meeting this need – so invest in processes that make data easier to access, and look for ways to clean up the data you’ve got.

If we are, in fact, slipping into a recession there will inevitably be a period of ship-steadying and analysis before any new projects can begin. But when the nature of the challenge has become clear and the business is in a position to begin moving forward, these points can help accounting teams make the best of a bad situation. Often the pressure of a recession is a justified opportunity to streamline poor processes and invest in greater automation, to allow finance teams the time to provide greater strategic value.

By Mike Whitmire, CEO, FloQast