Businesses are closed, many are unemployed and the future of the economy is uncertain, but what does this mean for the United States, your finance department, and the future?
Much discussion is hovering around how the coronavirus pandemic will affect our economic climate. What does the future hold? Will this prompt a recession similar to the 2008 housing crisis? Chair of the Federal Reserve, Jerome Powel says it is the ‘biggest economic shock’ in living memory, and this is why.
The Employment Forecast
The unemployment rate peaked in April 2020 at 14.7% where 20,500.000 jobs were lost, the worst devastation since the great depression. Luckily, this number is predicted to average around 9.3% for the year, drop to a steady 6.5% for 2021, and even further to 5.5% for 2022 - so the worst is behind us.
But as Keren Dynan, a former treasury department official, explained, ‘by the end of next year I think we are still going to be looking at something like a 6% unemployment rate, a lot of people are not going to get their jobs back.’
The Changing Economy
With the closing of non-essential businesses, the rest of the economy went into a tailspin. Retail sales dropped 16.4% in April alone, the stock market took a hit with the Dow Jones losing over 1800 points in June, but with the copious federal loan and grant programs available, there is a light at the end of the tunnel - although it may be hard to see.
The population, as well as the economy, is growing accustomed to this new social distancing culture and the issues COVID-19 brought us. However, COVID-19 cases are still rising with the United States surpassing over 5.79 Million as of August 26th. With numbers rising and the federal government doing little to help, businesses and individuals need to take it upon themselves to embrace this new social distancing lifestyle and find their way to profit accordingly.
The most common and successful way to go about this is for businesses to adopt new trends and technologies. Digital is becoming mainstream whether we like it or not and with an uncertain future, they are the only way to overcome this remote work conundrum. With that said, these changes will not only affect the job market but the relevant job positions as well, with some becoming obsolete and others exponentially increasing in demand.
What Does This Mean for Finance Departments?
The pandemic is accelerating change and with that, the acceptance of those technologies that assist in work from home. The once hesitant to change their current processes have now been forced to adopt new methods in order to keep the virtual office running.
Collaboration software is one of the most popular with Monday.com, a team management software, having added over 7,000 new customers in only 7 weeks since the shift to remote work. Slack.com is another software that supports work-from-home by offering a communication platform for teamwork with channels for questions, updates, and more so everyone, regardless of their location, can stay in the loop.
These technologies are making waves in industries suitable for remote work, which as the chart below reveals, is strongest for accounting and finance, business development, IT and security, and management roles.
Remote work obviously requires collaboration software but when it comes to Finance departments other changes take precedence. Management cannot just walk into the finance department and ask for an update; they now need an interface to access data for themselves. This begins with augmented intelligence platforms that can consolidate financial data from across an organization into one unified interface for accessibility from all departments.
One software making waves in the finance industry is DataRails. DataRails is a platform made by FP&A specialists that converts Excel spreadsheets into real-time, actionable insights for organizations. This provides businesses the ability to rid themselves of the need for manual inputs and version comparison.
ThinkAutomation is another company to look into for your finance department as it uses robotic process automation for finance workflows like sending payments and billing alerts while updating customer records, journal, and ledger entries.
The evidence is there and these time-consuming, robotic positions are being replaced by intelligence software. Finance individuals waste time fact-checking numbers when their real value is in their ability to offer strategic advice through the analysis of this data.
Management is realizing the value of the teams they currently employ and this explains why the finance positions expected to decline in 2021 include bookkeeping, accounting, auditing clerks, and the like. The pandemic is exacerbating the changing environment, bringing to light the value of existing employees. With remote work, management is being forced to accept and adopt these new technologies - and this revelation is molding where the future is headed.
The Future of the Job Market
According to Business Insider, the roles that will be in high demand in the coming years include Financial Managers, Management Analysts, Software Developers, and Data Analysts. These up and coming positions are not only in high demand but high paid as well, with Financial managers having median annual earnings of $129,890 in 2019. All this data truly shows the significance of adopting technologies and the roles that will change accordingly.
In a report by PWC called Financial Services Technology 2020 and Beyond, they described how in 2020, ‘digital will become mainstream.’
Understanding what the future holds for your department, position, and where the industry is heading is the best way to prepare. There are ways to mitigate the effects of the pandemic for you and your family, now and in the years to come. After months of solitude, businesses are slowly opening but the number of cases is still increasing and the remote work culture is not going anywhere. Start adopting these new technologies, see how you fit into this new environment, and make 2021 your year to shine!