Hugh Scantlebury, CEO and Founder of Aqilla
If the past few years have taught us anything, it is that the future is hard to predict! But now a few weeks into 2024, we can identify some of the key trends which finance teams should be keeping an eye on. From the continued dominance of AI and the latest technological developments in the world of Open Banking, to ongoing difficulties caused by inflation and geopolitical tensions, the next twelve months look set to be another rollercoaster with plenty of opportunities to ride the highs and stay aboard through the lows.
Artificial intelligence has the potential to transform the way finance teams work by automating repetitive tasks and freeing up time that’s in short supply — particularly when monthly end reports are due. By getting AI to do the heavy lifting on basic and repetitive work, finance teams can focus on more strategic tasks and deliver greater value to the businesses they support. This, in turn, has the potential to help them gain importance and influence, allowing them to play an increasing role in guiding high-level decisions.
This is all well and good for the long term, but more immediately — and for the remainder of this year, at least — finance team leaders must prioritise AI education. This includes dispelling misconceptions about the technology, such as AI implementation will lead to job losses. Leaders should be on the lookout for external training. They should also push their companies to run workshops, integrate AI literacy into performance metrics and make sure they’re up to speed on AI offerings that could benefit their department.
Those working in finance and accounting teams should be reassured that far from causing a scaling back in numbers and influence, AI is more likely to have the reverse effect. As such, I’d strongly advise finance teams not to shy away from AI this year, but to take every opportunity on offer to learn more about it.
As we approach the second quarter of 2024 (where is this year going?), the cost of doing business remains challenging. Energy costs are still high, and inflation rates continue to exceed both government and Bank of England targets.
Moreover, there’s uncertainty in the air surrounding potential business tax incentives from the Chancellor before the upcoming election. There’s also the possibility of business tax, minimum wage, national insurance and windfall tax adjustments if, as is widely anticipated, Sir Kir Starmer’s Labour forms the next government. Due to these factors, meticulous financial planning and record-keeping, which have always been essential, now assume even greater importance.
To date, UK banks have focused on consumer-driven Open Banking offerings. But Open Banking can also help the business community— particularly SMEs and sole traders — by speeding up lending decisions and reducing the cost of borrowing.
It would be great to see these offerings progress further during this year, particularly if they could help businesses accelerate payment processes and cross-border transactions — creating more efficient, robust supply chains. This would have the knock-on effect of assisting companies to improve cash flow and develop greater economic resiliency.
I’m confident that longer-term, more B2B-focused open banking offerings will be launched in the UK. We don’t need to look further than the increased use of Making Tax Digital (MTD) as proof. Although the project ran over budget, it successfully ensured all the UK’s VAT- registered companies are now filing digital VAT returns.
As 2024 unfolds, cloud computing, Software as a Service (SaaS), and Platform as a Service (PaaS) models will continue to minimise infrastructure costs and enable the accounting and finance team to focus resources on core functions.
This year, finance and accounting teams will adopt more Data as a Service (DaaS) solutions in a bid to speed up and simplify big data analysis. For many in the industry, DaaS solutions represent the future of financial data analysis — and they will be vital in helping finance teams expand their reach and influence.
Like other IT as a Service offerings, DaaS solutions store company data in the cloud and offer simple-to-use tools that, in this case, can analyse revenue, expenses and profitability to forecast future performance. Correctly configured, DaaS solutions can also draw on non-financial data, such as market intelligence or customer information — helping to provide a sound financial take on wider decision making and company growth strategy.
Last year showed us once again that geopolitical tensions are volatile. They impact financial markets, investment decisions, supply chains and cash flow. The ramifications of war in Ukraine and continued conflict escalation in the Middle East, in particular, continue to impact global supply chains — most obviously in the Suez Canal due to the escalating Houti situation. All eyes are on the US, too, as Americans go to the polls to choose between a second term for Biden or Trump.
For all these reasons, finance teams would be wise to pay even closer attention to order books, delivery schedules, balance sheets, and invoices this year to avoid unplanned and unmanageable shortfalls — and keep their operations running smoothly in the face of ongoing instability.
