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BEING A PUBLIC FINANCE DEPARTMENT ISN’T EASY–ARE YOU READY?

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By David Brightman, Director of Product Marketing at BlackLine

 

Going public isn’t just a flip of the switch. It requires careful preparation. But by starting early, by implementing the best accounting practices, companies can improve their efficiencies for today and be ready for tomorrow, when they may decide to hold a public offering.

For now, the best thing companies can do is subject themselves to rigorous reporting deadlines and the expected UK-SOX style regulations. By doing this, they can then leverage these experiences to identify the gaps in people, processes, and systems and make the necessary investments, not just for today, but for two to three years down the road.

With that in mind, here’s my advice for companies looking to maximise IPO readiness.

 

Prepare Your People

Preparing to go public means evaluating not just your processes but your people. Your accounting staff is key to helping you get the most out of your accounting process and technology. They’re also your most valuable resource in analysing and creating strategies that support the company’s long-term financial health and sustainability. Yet too often, accounting teams within private companies lack the experience and capabilities that are critical to transitioning to—and functioning successfully as—a public company. The best advice is to start early, evaluating what you have and what you think you may need.

If you determine new people or new skills are necessary, the next step is to decide how you’re going to accommodate this need. While it may be tempting to “wait and see” which resources you need after you go public, don’t. You need a good team in place and it takes time to find the right people. In addition, you may need to line up external resources. Companies that have had a successful and timely IPO process both plan far in advance and know when to ask for help. Your team can’t do it all—and shouldn’t have to—and engaging experts in certain key areas can be a smart move. For example, you will need technical accounting capabilities even before being public. Know that the most profound gaps in skills are often seen in revenue recognition, and general technical accounting.

 

Strengthen your controls

As a public company, you will be responsible for reporting financial results and other information publicly in an accurate, reliable, and timely fashion. Your stakeholders, stockholders, customers, and more have many expectations about the company’s growth, smart use of resources, and ethical behaviours. Effective internal controls and systems can be a powerful solution for getting this right. Controls enable good business practices, provide better reporting to enable better decision-making, and help ensure timely compliance with regulations. Additionally, you will be subject to a variety of internal controls requirements. Thinking about controls while private and implementing strong controls early can increase board, investor, and auditor confidence in your accounting processes and readiness.

 

Identify and assess the controls you have in place

Take the time to understand the controls you have in place and if they are sufficient to mitigate risks posed to your organisation and the requirements of UK-SOX style regulation. Identify where the gaps are, prioritise those that are most significant, and determine how you will address them. Plan and prepare for this early; otherwise, the risks of IPO filing delays increase significantly. These new skills—and perhaps even new employees—are also a key component in avoiding indications of material weakness, or worse, the need for a financial restatement.

Furthermore, identify where you could invest in technology to strengthen controls and enhance F&A processes. If you’re going through an IPO, it’s likely your business is growing fast, meaning you’ll require smarter, more scalable processes and systems capable of adapting to growing transactional volumes or greater accounting complexities, which will naturally arise as the business evolves.

 

Think like an auditor

Lastly, anticipate what external auditors are likely to ask, to help you prepare for any difficult questions. What would an auditor identify as the biggest areas of weakness today? What risks might they see a year from now if you don’t enhance existing controls? What controls will help avoid any significant audit adjustments or misstatements?

 

Taking Centre Stage

Once your IPO is in play, what’s been going on behind the scenes and on your financial statements may suddenly be subject to rigorous scrutiny, so ensuring all the above steps have been taken will work in your favour.

As well as ensuring you’re IPO ready, this investment will also prepare your F&A teams to take on future work as your accounting complexity and volume grows and your business evolves.

 

Finance

WHY PEOPLE ANALYTICS WILL PLAY A PIVOTAL ROLE IN SOLVING THE FINANCIAL SERVICES INDUSTRY’S SKILLS CRISIS

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Daniel Mason, Vice President EMEA, Visier

 

Successfully guiding teams of employees through the post-pandemic landscape will not be easy for any business, but nowhere is this more apparent than in the financial services sector. Here, leaders face the formidable challenge of rebuilding working environments against the backdrop of huge industry uncertainty, caused by the most turbulent 18 months in living memory, as well as an increasingly concerning global skills gap.

In order to succeed, not only do they need to create highly compelling environments that entice new and existing employees alike, they must also work to proactively identify areas where additional improvements need to be made. Doing so will enable swift and decisive action to be taken before seemingly small issues start to have a major impact on overall business performance or staff retention.

 

Storm clouds are gathering on the horizon

It’s safe to say the financial services industry garners more media attention than most when it comes to working conditions. With well over a million people employed in the UK alone, scrutiny into key areas such as work-life balance, job pressures and pay is near constant.

In order to gain better insight into current job satisfaction within the sector, Visier recently conducted a new study focussing on how both UK employees and HR leaders feel their businesses are managing during this difficult time, and how it is affecting both current performance and future prospects. The research revealed some worrying statistics that point towards a potential avalanche of resignations in the near future, unless something is done to prevent it.

Why is this? Put simply, too many financial services organisations don’t appear to know their employees are unhappy and of those that do, most don’t fully understand the reasons behind it, meaning they can’t effectively tackle them. This article will discuss these findings and their implications in more detail, before exploring how people analytics can be used to spot key trends – both positive and negative – early, and boost employee experience/morale at this crucial time.

 

Learning new skills is increasingly important to both employees and businesses

According to Visier’s study, over half (52%) of employees in the financial services industry expect to actively look for a new job outside of their current company in the next 12 months, with almost a quarter (24%) already doing so. In light of these alarming figures, you’d be forgiven for assuming financial services organisations have failed to adapt to Covid-enforced ways of working. However, this isn’t the case at all, with the vast majority of those surveyed reporting that their companies have reacted impressively to the pandemic.

There are, of course, multiple reasons why workers may feel compelled to move on, even if they have a positive overall connection with their current employer. While each case is unique, the three most common reasons cited in the study were, perhaps unsurprisingly, ‘poor work-life balance’ (43%), ‘salary’ (33%) and ‘feeling undervalued’ (25%).

Following closely behind in fourth place was ‘not being encouraged to learn new skills’ (19%). However, there’s a growing school of thought that this has a much bigger influence on employee satisfaction than the raw data might suggest. Work-life balance and salary have always been major drivers of change, and learning new skills can go a long way towards helping workers address these by improving the value they bring, as well as boosting their overall day-to-day efficiency. The findings backed this up, with over half (55%) of employees admitting they are worried that failure to develop new skills will lead to their careers stalling.

The study also uncovered a strong feeling amongst both financial services employees and HR leaders that learning new skills is a crucial factor in the future competitiveness of their organisations.  Just 59% of employees felt confident their employer was bringing in the right people to keep pace with clients’ expectations for digital services. Meanwhile, over two-thirds of HR leaders believe that the sector’s lack of available candidates is holding back their company’s digital transformation strategy. As such, not only do employees see a lack of skills training and opportunities as a blocker to their own progression, it also presents an existential threat to the organisations they work for.

 

People analytics is playing an increasingly pivotal role

As financial services organisations continue to work through the disruption caused over the past 18 months, they need to be conscious of key factors impacting employee retention, as well as address any skills gaps acting as barriers to effective digital transformation. Investing in the right new learning opportunities and upskilling current employees will be crucial in reducing unwanted churn and ultimately boosting long-term competitiveness.

People analytics tools give businesses – in financial services and beyond – the real-time intelligence they need to achieve this, enabling them to grow and thrive regardless of what’s put in their path. Not only can people analytics help identify worrying employee trends such as disenchantment about skills training early, it also provides the insights needed to fix issues before they can significantly impact operational effectiveness.

As the data shows, employee satisfaction isn’t the only factor at play. Job happiness is also tied to whether employees believe the business is making the right decisions for their future. However, without the right tools in place leaders must operating on gut feel alone, which is rarely a good formula for success.

Every day, a growing number of decision-makers are using people analytics to uncover the key insights needed to make informed decisions regarding who to hire, who to reskill and who to promote. This is no coincidence. The move towards people analytics at scale is not a passing craze, but the acceleration of a powerful trend that’s been gathering momentum for almost twenty years. Maybe it’s time your business sees what all the fuss is about?

 

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Finance

AS SAAS GROWS, FINANCIAL SERVICES MUST RETHINK THEIR SECURITY APPROACH

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By

Ben Bulpett, Identity Platform Director, EMEA, SailPoint

 

The financial services industry is facing an increasing number of issues related to the adoption of cloud-based services. The growth of cloud and SaaS has accelerated with the consumerisation of information technology, along with the shift to working from home. Users have become comfortable downloading and using apps and services from the cloud to assist them in their work but often without explicit IT departmental approval. In fact, there are 3 to 4 times more SaaS apps in use at a company than the IT department is aware of, on average. This is known as ‘Shadow IT’ and while it can cause headaches for any industry, financial services are open to the biggest threat.

The data that banks hold on an individual is far more sensitive than other industries. By not getting approval on SaaS, the IT team have no visibility and no understanding of how to properly secure the software. One small security slip-up and consumers can be left with very little. But it’s not just about bad security and the reputational damage that comes with it. Shadow IT can also cause heavy financial loss.

 

The risks with Shadow IT

Shadow IT takes up a whopping 30 to 40% of overall IT spending for large enterprises, according to Gartner. This means that nearly half your IT budget is being spent on tools that teams and business units are purchasing (and using) without the IT department’s knowledge. A lot of unapproved software and services may duplicate the functionality of approved ones, meaning your company spends money inefficiently. How does this impact overall revenue? While it depends on the industry, on average companies spend 3.28% of their revenue on IT, according to a recent study by Deloitte Insights. Banking and securities firms spend the most (7.16%) and construction companies spend the least (1.51%).

Additionally, Shadow IT comes with a higher risk of security and compliance complications because the tools are not properly vetted. These risks include lack of security, which can lead to data breaches. Your IT team is unable to ensure the security of the software or services and can’t manage them effectively and run updates. Gartner predicts that by 2022, one-third of successful attacks experienced by enterprises will be on their shadow IT resources. If we use Ponemon’s average breach cost of $3.86M and average probability of a breach at 27.2% annually, Shadow IT may be costing you as much as $350,000 per year in breach-related risk costs.

 

Ben Bulpett

Keeping track of SaaS

Tracking your SaaS footprint goes beyond core enterprise apps and spreadsheets – the reality is that this isn’t complete visibility. It’s a fraction of what’s out there, and the moment that spreadsheet is updated it’s now out of date. This approach is both time-consuming and filled with inaccuracies.

For example, if a finance director, through a cloud file storage app, shared a root-level folder with outside parties, this inadvertently provides access to detailed financial statements that would never be released publicly or shared. Salaries, profit and loss, and more would be unintentionally exposed. In addition, the finance director’s team files, folders, and discussions would be made completely public rather than internal and read-only. This makes financial files and other sensitive information indexable by search engines and the fault lies with the CISO and CIO, rather than the finance director.

Similarly, when a company is unknowingly running multiple duplicate project management apps outside of IT’s purview, spread throughout the company, this creates massive cost overlap and security vulnerabilities. How much sensitive data may have been stored in the other apps? These examples are all too common, and probably true at your own company.

 

Shining a light using identity security

Organisations can shine a light on Shadow IT and SaaS access risk, and ultimately have greater visibility of the full scope of ungoverned SaaS applications, by using technology such as identity security. This allows them to drive a seamless process from discovery to governance across the entirety of their SaaS app landscape and wrap the right security controls around every newly-discovered SaaS app (and the data within).

Not only does this help companies shut down issues around Shadow IT across the business, by doing so it also enables companies to be able to save hundreds of thousands of pounds each year.

 

Greater visibility

It’s estimated that by 2022, nearly 90% of organisations will rely almost entirely on SaaS apps to run their business. In this new era of working, the only way to fully protect today’s cloud enterprise is by first discovering all of these hidden SaaS applications and then applying the very same identity governance controls that are already in place for the rest of the critical business applications.

There is no room for mistakes. By addressing Shadow IT and SaaS access risk and having deeper visibility of the full scope of ungoverned SaaS applications, the financial services industry can save hundreds of thousands of pounds each year. And most importantly, keep their customers protected.

 

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