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If 2016 has taught us anything, it’s that making predictions is an inexact science. There is much that has happened over the past 12 months we would have been hard pressed to predict this time last year.
But as one year draws to a close we must plan for what may come in 2017, and based on this year, the first thing we should predict is unpredictability.
Digital transformation will continue at a pace that makes 12 months a very long time in business. Predicting the extent to which traditional industries will be disrupted in that time isn’t easy. Similarly, the uncertainty surrounding the global economy is not going to go away any time soon, as we wait to understand the impact of a new President in the US and Brexit hanging over the EU.
Stepping into the Unknown
As a result, businesses need to plan for multiple scenarios throughout 2017. They should plan for extremes of currency fluctuations, rising and falling commodity prices and the repercussions of any variable factors within their supply chain.
It is not a failure of planning to admit we don’t always know what we are planning for. It is essential to understand many factors are beyond our control and planning to make the best of any situation is good business.
There is much that has happened over the past 12 months we would have been hard pressed to predict this time last year.
Another area of certain uncertainty is around the extent to which technology will shape businesses. We are on the cusp of potentially highly disruptive technologies, such as artificial intelligence and robotics, becoming mainstream, bringing investment cost into businesses but taking operating cost out through increased automation. Businesses must balance those scales through 2017, while accepting they cannot ignore the need to modernise.
Will IFRS 15 have significant financial statement impacts for your company?
Not everything will come from leftfield in 2017. There is much businesses can plan for with surety. Business planning for new regulations such as IFRS 15, which will be fully in force by 2018, and increased scrutiny on multinational companies’ tax arrangements, accounting and transparency, will all increase in 2017. Finance teams need to know how new or tightened regulations affect them and should be planning well in advance for their impact.
For all the challenges, it is also crucial organisations focus on growth and ensure their own business model moves with the times. But growth plans need to be built on solid foundations, especially at a time when risk and reward are often separated by the narrowest margins.
It is essential to understand many factors are beyond our control and planning to make the best of any situation is good business.
CEOs and lines of business are already increasingly leaning on the CFO for insights, guidance and reassurance. CFOs therefore are less focused on reporting and more focused on forward planning, risk analysis and making investment decisions. This will become more so throughout 2017, which will be a year when the CFO is truly at the heart of the decisions shaping businesses.
Growth plans need to be built on solid foundations, especially at a time when risk and reward are often separated by the narrowest margins.
To better enable these decisions, CFOs will need to gain even clearer sight of the whole business and this will mean ensuring transparency across lines of business and the systems they use. This must be a focus for 2017. Data silos will increasingly become the enemies of accurate and successful decision making.
2017 looks likely to be a busy year for the finance department and one that will shape the future of their business. They just need to be prepared for the fact they may not yet know in what ways.