Investing is no game for the faint-hearted. In today’s coronavirus-ravaged economic landscape, that’s truer than it’s ever been. Since March 2020, the declaration of a global pandemic and the shutdown measures it has necessitated have up-ended plans and predictions and pushed formerly thriving companies to the brink of bankruptcy and beyond.
For investors, it’s been a roller-coaster ride. Savage slumps have seen the value of their holdings plummet overnight; unpredictable upswings have sparked cautious optimism that the outlook may not be as dire as initially predicted. Rinse and repeat several times – and we’re still only a few months in! As economies around the world progressively reopen, there’ll be an ongoing appetite for information on how industries and businesses have weathered the crisis and how long their journey back to profitability and growth is likely to take.
While conditions are volatile, investors look for surety wherever they can find it – including in the financial data of the companies where their funds are invested.
Reliable, real-time reporting
BlackLine surveyed institutional investors here in Australia and around the world, and the feedback we receive is consistently the same. What they want to see from the companies they invest in are effective financial management and true and transparent reporting – and they’re prepared to hold leaders at the very highest level responsible if things go wrong.
More than three-quarters of Australian investors say it’s the CEO who’ll be in their sights, should financial data prove to be misreported or inaccurate. Just 29 per cent of investors believe the buck should stop with the CFO, despite their obvious responsibility for the financial functioning of the enterprise.
Increasingly, investors are also looking for financial information that’s far more granular, and far more current, than that which has been provided to them historically. While the accounts capture a company’s status at a point in the past, investors today are much more interested in knowing how the companies in their portfolios are performing in the here and now.
An overwhelming 97 per cent of local respondents to BlackLine’s most recent survey stated real-time visibility over finances would also be a crucial determinant of business competitiveness over the next 18 months.
Continuous accounting comes into its own during challenging times
Modernising the accounting and finance life cycle can provide companies that are prepared to retire legacy methodologies with the accurate, up-to-the-minute data they – and their investors – need to inform their decision-making in uncertain times.
An approach to managing the accounting cycle which sees workloads distributed evenly across the accounting period, rather than concentrated at period end, the continuous accounting concept centres around three principles: automating repetitive processes; eliminating end-of-month bottlenecks; and establishing a continuous improvement culture.
It’s a proposition which resonates with investors, the majority of whom are hopeful technology will be the catalyst for positive change. Seventy-seven per cent of Australian investors believe artificial intelligence and machine learning will result in improvements to the way financial data is handled and managed, and greater accuracy and transparency in reporting.
Embracing technology that meets investor expectations in the post-coronavirus era
Senior executives from the CEO down will find their mettle tested in the upcoming months and years, as they’re forced to enact tough choices to enable the enterprises they lead to survive the unprecedented economic crisis the COVID-19 pandemic has ushered in.
Maintaining investor confidence and trust will be part of the challenge. One of the ways that will be able to be achieved will be by keeping investors in the loop, with salient financial data that accurately reflects the company’s position. Against this backdrop, the adoption of continuous accounting methodologies and technologies is likely to become a priority for companies looking to thrive in the post-coronavirus era.
Claudia Pirko, regional vice-president Australia and New Zealand, BlackLine