New Year's resolutions for finance leaders: mistakes to avoid in 2020
The year 2020 has landed. It’s the beginning of a new year, a new decade and a natural time to make resolutions for the upcoming months. You may be joining others in making personal resolutions to eat healthier, join the gym or cut back on alcohol, but it’s worth considering making some professional resolutions as well.
In a complex, fast-paced and ever-changing environment, having clarity about what to pursue and what to avoid can make all the difference to ensure a lucrative 12 months for your business. The year ahead holds some unique challenges, and it is crucial to be prepared for them. With JPMorgan predicting another financial crisis this year, it would be wise for finance leaders to take a step back, map out the next four quarters and ensure 2020 doesn’t present a pitfall for your company.
A significant ongoing challenge for finance leaders is keeping up with an increasingly digital and data-driven business landscape. According to Gartner, the speed of adoption presents a significant challenge, while only 24% of CFOs are confident about solving the problem of slow uptake.
As a top priority for increased ROI, analytics should be one key area of focus for 2020. While finance spend on analytics is increasing, the majority of organisations are not set up to deliver advanced analytics. If you are one of these, consider 2020 as a year to accelerate your capabilities on this front. But don’t rush. Start by choosing a couple of business problems with existing data. Once these have succeeded, you can set your sights on more advanced projects.
Technological investment is another crucial consideration in order to avoid being left behind. Without internal expertise, finance departments find themselves reliant on IT departments and external providers, resulting in slow implementation. Investing in technological proficiency within finance teams will ensure efficient rollout and maintenance. The potential for new technologies — including artificial intelligence (AI), robotic processing automation (RPA) and blockchain — must also be a focus for finance leaders, along with the ability to make a business case for their adoption.
Another, more specific, technological hurdle is the upcoming changes for Making Tax Digital (MTD). If you are one of the many who signed up for the new HMRC MTD platform in 2019, then it is vital to make sure you are sufficiently prepared for its implementation in April 2020.
There are three main changes to be aware of. For larger businesses, the new regulation that dictates data must be transferred digitally, is likely to have the biggest impact. This means no more manual inputting, consolidating or correcting. Investment, integration or complex programming may be needed to ensure an uninterrupted digital journey. Make sure you’re ahead of the game on this one. Finally, April 2020 will see the end of penalty suspensions, so any offences will carry fiscal consequences.
Ready yourself for new regulations
One of the biggest risks of any new financial year revolves around not being prepared for changes in financial regulation. Nobody wants penalties on their 2020 agenda. We have already covered MTD, but there are two other regulation changes you might need to be aware of for the year ahead.
The first is the upcoming end of the first Streamlined Energy and Carbon Reporting (SECR) period. The Carbon Trust reports that the new SECR policy requires around 11,900 listed organisations — as well as other limited companies that meet certain criteria — to report on energy and carbon emissions. This came into effect in April 2019, and businesses need to comply for subsequent financial years. If you are one of the businesses affected, then make sure you are ready to comply at the end of the financial year.
Another drastic change on the horizon is, of course, the dreaded IR35. Put simply, this will mean that the end-client is responsible for confirming whether IR35 rules apply to a contract. If the client determines that IR35 does apply, then they must deduct tax and national insurance on behalf of the contractor. Again, this will come into effect in April 2020 — if necessary, make sure you are ready to avoid any confusion or possible penalties.
Make no mistake
The year ahead carries risk. Change, both in terms of technological advancement and government regulation, poses the possibility for mistakes to be made. A refusal to look forward, prepare and make the case for investment puts you in danger of financial repercussions. However, with the right resolutions, this year can unleash exciting opportunities.