Six Emerging Trends In the Study Of Finance Management For an Efficient Workforce
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The Business world is undergoing a radical transformation. The automation and data quantity are the leading substantial changes in a fickle enterprise environment. The business process has undergone a decisive metamorphosis during this digital age (Met et al., 2020). As the influence of finance escalates, it pervades in all areas of the industry. Here are six emerging trends in the study of financial management for an efficient workforce.
Change in the workforce
- The new cohort of the workforce is advancing as we move ahead with time. The “GenNext” has a new and zestful approach towards working. These millennials are also pretty handy with the new upcoming innovative technologies which make working highly efficient. Therefore, financial leaders must sieve their staff accordingly to make the workforce more efficient. The constant meddling of financial knowledge helped to encourage link among financial awareness, satisfaction, socialization and financial risk attitude.(Eniola & Entebang, 2015; Nandan & Saurabh, 2019)
- In 2019, approximately over 1,300 startups were added to the startup world out of which 553 failed due to an inability to manage their financial requirements. India is now witnessing a huge growth in business as a significant number of startups are getting registered. If people are trained in the area of startups with financial and technological knowledge it will be easier to grow the business. These days venture capitalists look for successful startups to invest in and when that happens it becomes very important to understand finance. The new advancements in the digital world help employees work effectively towards growing their business.
Visibility is higher
- The advanced analytical technologies are making enormous amounts of data more accessible to employees. It is giving professionals better and higher visibility regarding their respective organizations. The new tools even help employees to classify information, understand and predict future probability, detection and optimization problems and solutions.
- Due to advancements in recent times, new product launches and changing tastes and preferences of customers - the industry is going through frequent changes that lead to a lot of mergers and acquisitions in the business. Financial management is the most significant aspect for successful and smooth mergers and acquisitions. Finance professionals must understand the enormous modalities of finance during the merger and acquisition process. Such understanding will not only allow financial professionals to manage the organization better but also make the process of merger and acquisition process much easier and user-friendly. Dealroom, Ansarada, Midaxo, etc are a few softwares that make the M&A process easier and efficient. Financial engineering enhances firm performance, costs effectiveness, and enables optimum utilization of resources based on reliable data (Hausman, 2019).
- As finance leaders grow their businesses they are bound to face new challenges be it from managing work in the complex economic environment or to managing the business on a global level.
- For instance, zero-based budgeting is a growing concern in most organizations and it is expected for a financial officer to handle the budgeting in the most effective manner. Therefore, to overcome such a challenge the recent trend of lean management comes to the rescue. If professionals, ensure the adoption and practice of lean management in the organization then concerns like zero-based budgeting can be overcome.
- The identified barriers in technology investments are lack of:
- Clarity on governing digital vision,
- Digital initiative connection with policies
- Mandate to digitize processes across the accounting and finance organization
- Understanding between digital finance teams and business units
- Connection between current capabilities and those required in a digital finance function(Bible, 2019).
The evolving role of the CFO
- In recent times CFOs (Chief Financial Officers) have become even more critical, as companies greatly depend on the financial and strategic expertise of their senior-most financial leaders. CFOs face a string of new challenges, from managing work at a global level, co-working, keeping up with new technological innovations, and much more.
- CFOs Role has changed a lot since the last decade. Initially, CFOs were only expected to manage the Accounts department, but today they are responsible for a lot of financial roles like forecasting inventory management, purchase, debt and asset management, and many more. So it's essential for them to get acquainted with the ever-changing complexity of the business environment.
- It ensures that the changeover role of CFO from decision support to decision making is more strategic in firm’s value creation. This task demands novel expertise like having a diplomatic approach, guiding manpower, moving from introspection to intrapreneurship and feed a better frame of mind (Butcher, 2019).
- Business without risks is like an ocean without fish. As finance professionals start dealing with these risks and use these risks as a weapon to turn the game around, efficiency shall surely be promised. To manage risk, employees need to be prepared, to analyse the upcoming challenges through various technological advancements.
- Profit and loss are an integral part of the risk. The analysis of profit and loss was a hectic procedure back in the day. But in recent times this analysis has become easier because of AI and other analytical advancements, therefore profit and loss can be virtually experienced with different business situations that help the financial professional more constructively.
- There are multiple risk management strategies in finance like managing investments and enterprise risk management pertaining to an emerging market, (Danisman & Demirel, 2019).
- Evolving regulations is a major challenge faced by finance employees in issues related to compliance, evaluating skill-gaps, and legal distress. But these rule-setting challenges can be overcome if rules are noted down in a simplified and clarified manner by breaking them down systematically. This will boost company revenue along with employee efficiency. These regulations, if created with a blend of technology, will certainly help to uplift the businesses.
- Recently, the Government has made stringent rules and regulations for the financial aspects of organizations. After the implementation of GST and other tax-related regulations, financial professionals are expected to abide by several regulatory requirements of the government. This needs a clear understanding of the policy and making the financial processes compliant with the same.