A new opportunity arises: embracing the accounting trends shaping the year ahead.
Every year — once we've had a chance to settle back into our post-holiday routines and the ink is starting to dry on last year's ledger — it's time to take a deep breath, roll up our sleeves, and start getting down to the business of starting the new year strong.
At Personiv, we like to use this time to reflect on the current state of the finance function and scan the accounting landscape for trends that are just emerging. We take our best guess at what the year has in store for the accounting professions and how to best apply past lessons to the future we're anticipating. Let's dive in:
Top 6 accounting trends to watch:
CFOs Must Manage Uncertain Economic & Political Factors
On paper, economic conditions are improving. Inflation and interest rates are starting to ease, and December job numbers hint at a durable labor market (though if you've had to hire an accountant lately, it may not really feel like it). But the lingering effects of past turbulence on everything from inventory to consumer confidence will follow CFOs and other finance leaders into the new year.
Stubbornly unmet capital needs, turbulence abroad, an election year at home, the pressure to adopt AI technologies that are still quite nascent, and the growing consumer backlash to that very technology make for potentially choppy waters in 2024.
It's not new territory for CFOs, who are often called upon to steer through them, but it does mean that finance leaders are heading into the next year with more caution than cautious optimism. It's more important than ever to manage cash wisely, scenario-plan early, and go on the offense with a proactive approach to risk management while you scan the horizon for opportunities to seize.
More Demand Than Ever for Data-Driven Decision Making Capabilities
When the future is unclear, leaders and stakeholders want a live pulse on the financial health of their companies. Given the number of known and unknown unknowns in the economic landscape right now, finance leaders will need timely, up-to-the-minute, accurate information wherever possible to inform strategy for the year.
Technology and expertise that can improve data analyses — paired with tools that enable real-time reporting — will be in very high demand going forward. That means more open roles for FP&A experts and a greater emphasis on the value of the work they do. Research from Gartner in 2023 found that FP&A roles were in high demand for 51% of the CFOs it polled, while the Association for Finance Professionals (AFP) clocked a 5.5% salary increase for FP&A professionals on average.
CFOs must act now if they haven't started to move on covering resource and skills gaps in their data strategy. We predicted last year that leveraging Big Data would be table stakes, and numbers like these bring that to bear, making an already competitive labor market that much more cutthroat.
An Uptick in Mergers & Acquisitions
We're likely to see an increase in M&A activity as economic challenges accelerate the consolidation of smaller companies into larger ones better equipped to weather any coming storms. 83% of finance leaders told Deloitte they expected dealmaking volume to grow.
In some sense, there's nowhere to go but up, after M&A slowdowns caused deals to fall 32% in 2022 and resist turnaround until later in 2023. The combination of cooling inflation and regulatory uncertainty will mean more CFOs will make the deals while they can in 2024.
Automation & Outsourcing Will Drive Dual Strategies
With resource management front-of-mind, CFOs will continue to turn to a combination of outsourcing and automation to contain costs and cover talent gaps — and interrupt the self-sustaining feedback loop between these two challenges.
Revolving and locked-door hiring cycles have gone from being irritatingly sticky to extremely worrying over the past decade and a half; as pipeline supply trickles down to new all-time lows and hiring costs hit unprecedented highs, vacancies persist with knock-on effects to established teams. Teams understandably struggle to stay productive, to say nothing of motivated when staff shortages fuel burnout, disengagement, and separations — all carrying costs of their own.
Leaders have two tools at their disposal, and they'd be wise to make use of both in 2024 and beyond: automation and outsourcing.
Accounting Automation Trends in 2024
Recent research from ShareFile found that the biggest problem 72% of the accountants they surveyed faced regularly was having to do more with fewer resources. The conversation around accounting automation once flagged anxieties around job displacement as a central impediment to its adoption. That feels awfully dated now, with 70% of accountants saying a lack of automation to assist with routine processes represented a stubborn hurdle to efficiency and 96% calling it "important to the profession" last year.
Outsourced Accounting Trends in 2024
In 2023, we predicted an outsourcing super bloom — and that proved to be true across the board. All kinds of industries turned to globally distributed teams to augment in-house staff manage work from every function. That doesn't appear to be slowing, at least not where the finance and accounting outsourcing market is concerned. Technavio, a market research firm, estimates that the global finance and accounting business process outsourcing market will experience a compounding annual growth rate (CAPR) of 7.8% by 2028, representing a total of 27.3 billion additional dollars to the market, 31% of which will originate in the U.S.
Leaders may have once been reluctant to send accounting tasks overseas, but a shift in cross-cultural understanding, new technology, and our collective experiment with remote and hybrid work is changing that. Soon, offshore teams will function as extensions of in-house professionals with the assistance of improved automation tools. Their onshore counterparts, in turn, will shift focus to the high-value, in-demand strategic accounting work they were hired to do.
More Sophisticated Cybersecurity Threats — And More of Them
2023 was a banner year for ransomware, according to security firm Cyberint's CEO: The 55% increase in ransomware attacks was a record-breaking one. Going into 2024, finance leaders will have to brace themselves for the inevitable increase in fraud and scams made possible by AI's democratization of everything from voice-cloning software and convincing deepfakes to scripts that automate the entire process of phishing attacks.
And as leaders stay vigilant to combat breaches and data leaks, they’ll have to contend with rising cybersecurity insurance costs and track upskilling needs to close the "skills chasm" that's contributed to the exponential growth of the threat landscape over multiple time horizons.
AI Will Inform Finance and Accounting, But Not Define It
You didn't think we forgot about artificial intelligence, did you? We called it "nascent" before because it is — despite the tenor of conversation around it touting it as the Next Big Thing. There's some truth within the hype — businesses of all kinds have used AI in some form or another even before 2023's chatbots kicked off the scramble to invest or adopt or be left behind.
AI has the potential to pick up where automation leaves off, freeing up highly skilled human labor for work on strategic tasks that require critical thinking skills. A Vision Fund survey of CFOs sums it up: 95% of CFOs said they thought generative AI had the potential to make workers more productive, but only 5% said it would have an impact on finance in the immediate future.
How Accounting Can Prepare for the New Trends 2024 Has in Store
2024 is just beginning to unfold, and if past years have taught us anything, it's the importance of adaptability. We won't know for certain the full impact of what it has in store — from the outcome of the election to advancements in technology — until we're standing here again this time next year. One thing is for certain: accounting professionals and finance leaders are a resilient bunch, and we'll just keep on keeping our eyes on that bottom line.
As you head into Q1, bring your lessons with you. Or bring your peers'. Head over to CFO Weekly to see which challenges CFOs are already tackling this year, or join us in Dallas for our upcoming CFO Leadership LIVE event: Tales from the Trenches: CFO War Stories and Lessons Learned.
About the AuthorFollow on Linkedin More Content by Megan Weis, CPA, MBA