In the year 2025
How will the finance function adapt to the fast-changing pace of technology in the future? Christian Doherty reports.
Like every other sector and related skillset, finance and accountancy are currently in the grip of disruption. For some, there is panic that the increasing pace of automation, the rise of artificial intelligence and developments in blockchain and analytics herald the death of the accountant as we know it.
Others have a more optimistic view: technology will set accountants free; liberated from the mundanities of transactional processes and scorekeeping, they will instead harness technology to deliver forward-looking predictive analysis of business performance and wider trends in the market.
While these may occupy extreme ends of the spectrum there’s no doubt that the next five years will only see the pace of change increase. So what will that mean for the finance function in 2025?
Democratisation of numbers
“Where I see things going is that the traditional ERP (enterprise resource planning) vendors are moving us away from finance as a department, interacting with so many of the external business processes,” says Andrew Hicks, CFO of software vendor Advanced.
“So increasingly, processes like order to cash, procure to pay and purchasing interaction by suppliers will increasingly be handled by operational people without any need for finance’s involvement.”
In Hicks’ view, technology will continue to spread out into every part of the business – from customer interactions via EPoS, through warehousing and logistics and even into a post-sales environment (think of how some technology firms now sell products like printers at a loss but instead make revenue through service and upgrades).
In short, he says, many businesses will become entirely ‘connected’, with a range of sensors (literal and metaphorical) capturing and reporting on everything from stock levels to click through rates and fuel usage.
Mobile devices, the growth of cloud computing and a generally more tech savvy and online workforce will serve to end finance’s position as gatekeeper. “Historically we needed finance people to process that, but things like blockchain of the supply chain and robotics to some extent, as well as advances in cloud ERP, will only see that increase,” Hicks explains.
“So that means the more traditional roles – like credit control – will disappear because that will be matched and paid through without the need for a person to look at it and match purchase orders etc. That will be automated.”
Importance of analysis
The volume of data generated by the business will increase exponentially: rather than monthly reports summarising and aggregating backward-looking information, data fl ows will be continuous.
As a result, the finance function will become a clearing house for all the business’s data. But make no mistake, more data doesn’t necessarily mean better data. And that’s where finance comes into its own.
“Ultimately people running businesses care about good clean data in order to tell a good story to investors and to make better more proactive business decisions,” says Alistair Barlow, founder and partner at accountancy firm flinder. Barlow’s firm is one of the new wave of practices that aim to blend accounting expertise, technology partnering and business consulting into one.
Recently named the most Innovative Firm of the Year at the Accounting Excellence Awards, in many ways, flinder’s approach will mirror the changes felt in finance functions in many businesses over the next five years.
“We talk about control, efficiency and insight – they expect us to do that, but they want insight that covers every span of the board’s work. So the business owners need that data to work out where they need to double-down on investment and focus, and so grow their business. It’s all about insight, and the finance function in 2025 will have to take that responsibility.” Andrew Hicks agrees.
“Once the finance function has become the business’s data hub, it will then be about continual tweaks and improvements; and things like AI will power that: it will show you who you’re purchasing from, or how the customers are behaving so they can spot it and course-correct. And that, he believes, should see the acceleration of a value creation mindset, where finance teams focus less on control and more on growth.
“And certainly we can see on the horizon learning that’s attributable to patterns will only get more consistent, efficient and in-depth.”
New tools to the fore
The emergence of new tools will only speed up that transition.
Take artificial intelligence – already many of the standard parts of the accounting toolkit run on AI powered platforms, whether that’s simple robotic process automation (RPA) or other analytics applications.
But it’s not just the underlying tools – finance professionals will increasingly be expected to translate data into useful operational understanding and judgment.
“We use a lot of data visualisation to do that,” explains flinder’s Barlow. “That involves those of us in finance bringing in financial and operational data and adding meaning to it. Sometimes you use applications off the shelf; we use Airtable and that’s a really powerful tool – like Excel on steroids.”
But while that can be great way of presenting often arcane data in a more attractive way, Barlow says more will be expected of accountants in 2025.
“This data is meaningless unless you understand the business and the strategic drivers of the business. So they will need to harness the right data to deliver something useful back. It will have to be relevant – how it’s structured and managed is important but it has to get to the heart of the matter.”
And he points out that this goes beyond what we currently expect the finance team to address.
“You will have to present and analyse the non-financial stuff . The most forward-thinking finance functions are talking cross-business: Why are sales down? What is driving churn in that particular region? Is it because we have more customers, or margins have changed, or whatever? So it’s not the ‘what’, but the ‘why’ – and that’s what the business will expect in 2025.”
A CHANGING SKILLS MIX
So what impact will ‘finance 2025’ have on the function’s skills mix? Will the finance function of 2025 be staff ed by an army of data scientists, absorbing data from across the business and synthesizing it into actionable insight?
Certainly the signs are that the next generation think so: A recent Pleo survey of accounting students put data analysis as the number one job skill.
“I see the argument that people doing certain finance roles will change,” says Hicks. “The technologies will create productivity so we’ll be able to process more per hour of worker effort. So the question is which companies will use that to grow? And the best companies will, make no mistake. So ‘net-net’, once that shakes out I anticipate headcount in the finance function to increase.”
But he sounds a note of caution:
“Frankly, the accounting bodies need to evolve to meet this emerging need, just as accountants need to. The professional training and qualifications will need to evolve.”
Advanced, in common with a growing number of businesses, doesn’t solely recruit qualified accountants for its finance function. “Increasingly we bring people in through apprenticeships or graduate recruitment,” Hicks says. “So they might have some finance background, but the route into the management accountant roles is now different and we cast our net wider.”
2025 – A FINANCE ODYSSEY
As technology continues to evolve, finance teams will have a wider array of toys to play with. We’ll see more use of disruptive technology, for instance – using drones to manage inventory; and AI engines to drive better data analysis to help finance begin to predict future performance and patterns.
Blockchain promises to empower finance teams: the need for intermediaries like banks and brokers will continue to ebb away. Will 2025 see supplier contracts and logistics tracking all held securely on the blockchain with no need for agents and brokers?
And that’s before we get to the Internet of Things (IoT), quantum computing and augmented reality…
Christian Doherty is a freelance journalist