Connect with us

Finance

2022 FINANCE & ACCOUNTING PREDICTIONS

Published

on

by David Brightman, Director of Product Marketing at BlackLine

 

Finance & Accounting organizations will migrate to a hybrid work model in which CFOs provide the tools to finance staff to productively work from anywhere.

During a period of pronounced uncertainty in 2021, finance staff at many organizations pulled off the impossible, effectively closing the books on time and even taking a stab at earnings forecasts—from their homes. Having proven their mettle, finance staff (and other knowledge workers) in the future will continue to seek employment opportunities that adhere to the “work from anywhere” model.

Nearly two-thirds of U.S.-based employees in a 2021 survey by McKinsey & Co. said that COVID-19 had caused them to reexamine their “individual purpose”—what they’re doing in life and work and what they want to be doing in the future. The top three reasons employees are quitting are because they don’t feel valued by their organization, they don’t feel valued by their manager, and they don’t feel a sense of belonging at work, McKinsey discovered. Finance & Accounting organizations that fail to provide this value will fall victim to The Great Resignation as it persists through 2022.

In 2022, as the “work from anywhere” model takes firmer hold, Finance & Accounting organizations will invest in tools and technologies that help their employees execute work tasks and better manage their time, whether it be automation for repetitive, time-consuming tasks, or collaboration tools that help teams find more productive and enjoyable ways to connect.

At the same time, finance staff will have a greater voice in their company’s positions on issues like diversity, equity, inclusion and belonging (DEIB) and environmental, social and governance (ESG). In these regards, CFOs will seek people with traditional financial skills, in addition to interpersonal skills like leadership, empathy, and adaptability, and cognitive skills like critical thinking, project management and decision-making.

 

David Brightman

Demand for multiskilled F&A Teams will Intensify as corporate functions seek more insightful business intelligence for decision-making.

CFOs will look to recruit talent with a combination of both traditional finance & accounting (F&A) proficiencies and broad-based software and technology skills. One without the other is ineffective to reach or surpass their desired standard of performance.

The next stages of digital transformation will drive this growing demand for multiskilled talent. Finance teams will be tasked with advising colleagues across functions on the strategic meaning of real-time financial metrics like revenues, capital availability, liquidity and net profit, as well as more subjective metrics like pipeline aging, on time deliveries, days sales outstanding, customer satisfaction and employee engagement.

Since each function produces its own data, finance organizations will be tasked with using machine learning and other cognitive computing tools to assess this data in relationship to real-time financial information. To convert wide-ranging performance data into insights for each function’s decision-making needs, the finance organization increasingly will encompass individuals with broad business knowledge and technology skills.

 

The role of the CFO will expand to include ESG oversight

The demand among institutional investors like State Street, Vanguard and BlackRock for publicly available information on a company’s ESG risks will increase in 2022, leading to the likelihood of public company ESG reporting requirements. In anticipation of ESG data being audited and assured, each of the big four audit firms and major management consulting firms have already developed offerings providing professional-grade audits and/or assurance of climate change disclosures.

As the business and strategic partner to the CEO, CFOs will step up to become the executive sponsor of their organization’s ESG initiative, developing the governance structure and control environment for the company’s environmental, social and governance factors and risks, while providing ESG oversight, monitoring and accountability.

CFOs are the logical candidate to lead the ESG initiative. Their responsibilities already entail ensuring that the financial report is accurate, complete and verifiable, according to GAAP accounting standards and disclosures. Given their knowledge of GAAP and how to prepare a financial statement, CFOs will ensure that ESG data receives the same attention and care as other financial data reported in the financial statement.

Finance

Why indirect tax continues to cause headaches for the finance, IT, and tax teams

Published

on

By

By Roger Lindelauf, Director, SAP Centre of Excellence, Vertex Inc

 

Businesses across Europe continue to navigate a complex tax landscape as they attempt to automate their indirect tax determination and calculation requirements. However, many tax professionals use the limited functionality offered by their organisations’ ERP systems, or the in-house software developed by their IT departments to perform the task.

Unfortunately, these solutions are just not sophisticated enough to keep up with the frequent changes to the tax rules and regulations businesses are often subjected to across Europe.

Companies need to deliver accurate and timely finance reports to avoid being fined by tax authorities or being ear-marked for an audit. As a result, tax teams are under increasing pressure to make sure their calculations are right first time, every time. But with organisations typically reliant on the solutions available to them to automate the process, errors are all too frequent and leave businesses wide open to compliance failures.

To look in more depth at the raft of challenges experienced by tax, finance and IT professionals across Europe who use SAP to manage their indirect tax automation process, we recently surveyed their views. The research showed that one of the biggest challenges for 38% of our respondents, is managing tax requirements for multiple geographic jurisdictions, and for a 30%, it’s staying on top of legislative changes to tax and ensuring they’re applied effectively within the solution. And if the tax landscape wasn’t already complicated enough, 30% of respondents cited managing disruption caused by COVID-19 as an ongoing issue, closely followed by Brexit for 29%. Managing accounts payable (AP) determination was also highlighted as a painful task for 29%.

Another cause for concern flagged in the research is the lack of connection between the needs of the tax team and IT’s ability to understand and act upon these requirements using their tax automation solutions. Almost 30% of respondents admit that IT’s lack of knowledge in recognising how to keep up with the solution updates is a real issue. When asked about the limitations of their current indirect tax solutions, 41% agree that there are insufficient internal skills within the business to manage them effectively.

 

Joining forces for a future-proofed tax automation

The frustrations felt by tax and IT when it comes to tax automation are made abundantly clear in the research. Along with finance, tax and IT need to work together to find a better way to manage their indirect tax calculation and determination needs. They also need to agree on a future-proof solution capable of managing whatever changes are likely to be applied to tax rules and legislation further down the line.

When asked about their key requirements from a third-party indirect tax automation solution, tax and finance pointed to reliability, usability, and efficiency for integration as their key priorities. APIs are another future requirement to help build system implementation processes that are more streamlined and create scalability throughout all business and global operations.

Increasingly, we’re seeing more and more businesses across Europe turn to more sophisticated third-party tax automation solutions, accelerated by the adoption of SAP S/4HANA. There’s been a real shift towards organisations opting for a solution that integrates into SAP, improving accuracy for VAT applications on transactions, automatically.

Joining forces with key stakeholders is a crucial step to finding an approach that works successfully for all. However, with tax regulation complications showing no signs of diminishing any time soon, can businesses really afford to stay as they are and take a chance on tax compliance or is it time to invest in a new, more reliable, efficient, and future-proofed approach?

A study carried out by independent market research specialist Vanson Bourne. 420 finance, tax and IT decision makers were questioned across Europe.

Continue Reading

Banking

Cryptoassets and the European Central Bank’s new “PISA” Framework

Published

on

By

Alpay Soytürk, Chief Regulatory Officer Spectrum Markets

 

The European Central Bank has published a new oversight framework for electronic payment instruments, schemes and arrangements: “PISA”. In doing so it is further expanding its supervisory portfolio and entering into an area of significant public interest as the framework includes crypto-assets.

Crypto payments

The PISA framework will cover crypto-asset-related services but only to the extent they are relevant to the task of promoting the smooth operation of payment systems, which is as central an element of the ECB’s mandate as the definition and implementation of monetary policy, foreign exchange operations or the management of the euro area’s foreign currency reserves.

As an example of the scope of crypto-payments subject to the PISA framework, the ECB has highlighted the acceptance of crypto-assets by merchants within a card payment scheme and the option to send, receive or pay with crypto-assets via an electronic wallet. There seems to be a clear focus on payment tokens that does not include utility tokens, security tokens, Initial Coin Offerings or Security Token Offerings.

 

Out of scope

PISA excludes services where the transfer of value has only an investment focus. It also excludes services for which the transfer of value is executed solely in banknotes and coins, paper cheques, paper-based bills of exchange, promissory notes or similar. Paper-based vouchers or cash card issuance are also not in scope. The latter refers to cards that are issued for the purpose of depositing funds on it at the disposal of the receiver of a payment.

In other words, PISA focuses on all mechanisms that are based on electronic payment instruments with a general purpose, i.e., whose value transfer function is not limited to a single type of payment recipient or specific use, including instant payments and payment mechanisms in the B2B-sector, plus the usage of electronic payment instruments to place or withdraw cash.

 

Regulatory context

The ECB defines electronic payment instruments as (sets of) personalised devices, software or procedures agreed between the end user and the payment service provider to request the execution of an electronic transfer. In practice, this covers payment cards, credit transfers, direct debits, e-money transfers and digital payment tokens.

Consequently, there are overlaps with the PSD2[1] rather than with the MiCA[2] or the DLT Pilot Regime[3] proposals. As such, the ECB is expanding the scope of definitions to take into consideration the technological progress of recent years.

For the ECB, all representations of value backed by claims or assets denominated or redeemable in euros are in scope as well as other digital assets that are accepted under the rules of a scheme for payment purposes or to discharge payment obligations in euros.

 

Oversight and enforcement

The ECB maintains a Crypto-Assets Task Force, and it was this body’s analysis that led to the conviction that there are potentially material financial stability risks, and risks to the safety and efficiency of the payment system as a whole, should payments via stablecoins remain unregulated.

Following a 2020 public consultation, this finally led to the establishment of the PISA framework. However the ECB lacks the infrastructure to perform all the relevant surveillance and enforcement tasks to ensure the very highest levels of governance.

Consequently, for oversight purposes, i.e. the collection and assessment of information and implementation measures, the ECB assigns primary oversight responsibility to the national central banks within the Eurosystem.

The ECB has explained that, in this assignment, it emphasises proximity to the entity subject to oversight (e.g., the country of incorporation, national laws attributing specific oversight responsibilities to central banks concerned, subject to any Treaty-based requirements).

“Schemes” and “Arrangements”

PISA aims at the governance bodies of so-called “schemes” and “arrangements”, ensuring they behave in compliance with the ECB’s oversight expectations.

A scheme is defined as “a set of formal, standardised and common rules enabling the transfer of value between end users by means of electronic payment instruments”, managed by a governance body – while in practice, the governance body and the payment services provider are identical. Examples of schemes are card payment schemes, e-money schemes, digital payment token schemes, credit transfer schemes and direct debit schemes.

The ECB defines an “arrangement” as “a set of operational functionalities which support the end users of multiple payment service providers in the use of electronic payment instruments”. An example of an arrangement is an electronic wallet. The definitions, which are cryptic in the most literal sense, are designed to cover the entirety of the relevant area which would be difficult with classic categorisations where a service is provided organisationally and physically decentralised.

Looking to 2022

PISA was approved by the ECB’s Governing Council on 15 November 2021 and becomes applicable as of 15 November 2022 for schemes that are already subject to oversight by a national central bank within the Eurosystem. New schemes and arrangements have to abide by the PISA rules within one year after being informed that they fall within its scope.

 

[1] Directive (EU) 2015/2366, the “Payment Services Directive (PSD2)”
[2] Regulation on “Markets in Crypto-assets”
[3] Regulation on a “pilot regime for market infrastructures based on distributed ledger technology (DLT pilot regime”)

Continue Reading

Magazine

Trending

News5 hours ago

Russia and Turkey still keep door open to crypto adoption

Bitcoin dropped around 5% yesterday after the much-anticipated FOMC meeting, where Jerome Powell was more hawkish than expected. Although there...

Business5 hours ago

Using OKRs to transfrom business in a new working environment

Managing the challenges of rapid business growth while also adapting to a hybrid world of working forced by the global...

Business5 hours ago

The evolution of the CFO: 91% still carry out repetitive and manual tasks despite the new demands of their role

‘The future CFO’ research conducted by Xledger, the cloud finance software provider, finds that there is a lack of support...

Finance5 hours ago

Why indirect tax continues to cause headaches for the finance, IT, and tax teams

By Roger Lindelauf, Director, SAP Centre of Excellence, Vertex Inc   Businesses across Europe continue to navigate a complex tax...

Top 105 hours ago

Why the rise of millennials spells change for insurance companies

By Stephan Kaiser, CEO at KoverNow   Most of us, regardless of our age, use our phones to inform shopping...

Banking6 hours ago

Cryptoassets and the European Central Bank’s new “PISA” Framework

Alpay Soytürk, Chief Regulatory Officer Spectrum Markets   The European Central Bank has published a new oversight framework for electronic...

Business6 hours ago

Are we there yet? The journey of consumer spending habits is not over

Dr. Alexandra Dobra-Kiel, Head of Behavioural Research and Insight, Behave   One of the upheavals in our lives over the...

Business2 days ago

What Every Small Business Should Do

The majority of the difficulties associated with establishing a business stem from failing to accomplish the small things correctly. The...

Business2 days ago

5 Ways That Businesses Can Get the Most Out of Their Digital Marketing

Everyone knows that the world of marketing has been changing for the last two or three decades. The days of...

News2 days ago

Transact365 launches seamless cross border payments in India

Transact365 enables merchants to transact locally in India Merchants can partner directly with Transact365 without needing to source local partners...

Banking2 days ago

Cloud technology in banking: Why adoption is on the rise

Alpesh Tailor, Executive Director at digital transformation specialist GFT   The banking sector has never shied away from innovation, whether...

Technology2 days ago

A Smarter World: What role will electronics play in 2022

There has been a sharp increase in technology and devices designed to make our lives simpler, faster and more productive...

Business2 days ago

Top 4 Electronics Development from 2021

Phil Simmonds, Chief Executive Officer of EC Electronics.   As we embark on a new year of business, it is a good time to...

Top 102 days ago

Investing in workforce intelligence now, leads to an optimised tomorrow

Michael Cupps (Senior VP, Marketing, ActiveOps) discusses four critical ways in which a new world of workforce data improves organisational...

CRACKING THE CRYPTO CODE CRACKING THE CRYPTO CODE
Business2 days ago

The Evolution and Challenges of Crypto Regulation

Cryptocurrency regulations are evolving quickly around the globe with authorities responding to developing risks professed by criminals exploiting the latest payment...

News2 days ago

Europe’s first blockchain neobank, BENKER, opens for pre-registration

BENKER(http://www.benker.io/) is to become the first officially licensed blockchain neobank launched in Europe following approval by the Bank of Lithuania under the Electronic Money Institution...

Technology5 days ago

AI-Powered Fraud Prevention for Digital Transactions

By Martin Rehak, CEO of Resistant AI Fraud is on the rise, thanks to the rapid escalation of digital channels...

Top 105 days ago

The future of retail trading

Joe Jowett, CEO of StrikeX   The 2020s look set to be the decade of the retail trader. As the...

Business5 days ago

Dissecting the expansion of online checkouts

Daniel Kornitzer, Chief Business Development Officer   Card payments have long existed as the preferred payment method for online consumers....

Business5 days ago

How bug bounty programs can help financial institutions be more secure

Rodolphe Harand, Managing Director at YesWeHack   Financial services have been one of the most heavily targeted industries by cybercriminals...

Trending