Across Europe, the Middle East, and Africa (EMEA), organizations have transitioned from optimism to pragmatism post-COVID-19, preparing for potential recession while emphasizing digitization and resilience to navigate global market trends. The focus on innovative technologies and digital transformation is helping businesses gain a competitive edge, while the lessons learned from the pandemic underscore the importance of adaptability and preparedness for future disruptions. Understanding evolving market conditions and consumer behaviors in EMEA remains crucial for capitalizing on emerging opportunities and mitigating risks in this dynamic and competitive landscape.
To find out more about the state of Finance in 2023, insightsoftware partnered with Hanover Research to survey accounting and finance decision-makers on the most pressing trends of the year. Here, we discuss how factors like market uncertainty and IT dependence impact finance teams throughout EMEA.
The State of Finance in EMEA
Finance teams worldwide have been deeply impacted by market uncertainty. Gartner describes recent global economic pressures as a “triple squeeze,” which includes:
- Inflation and high interest rates. Companies looking to refinance a loan or coming out of a five-year fixed rate are suddenly looking at interest rates that are significantly higher than they were previously paying.
- A tight labor market. There’s a notable skills gap in EMEA due to loss of existing talent, driving the need to do more with less. Many organizations have set digitization goals but lack the tech talent to push through their transformation.
- Supply chain constraints. Unpredictable supply chains due to the pandemic and recent conflict across EMEA have necessitated keeping a closer eye on business fundamentals while highlighting the importance of staying ahead of inventory management.
This year’s survey results echo this. The top external factors impacting finance team efficiency in EMEA are economic disruption (52%), interest rates (47%), and skills shortages. The top responsibilities for finance teams throughout EMEA are:
- 65% Financial Planning and Analysis
- 54% Budget and Forecasting
- 48% Financial Modeling
- 48% Tax Management
Nearly three-quarters (69%) of this year’s EMEA-based survey respondents feel pressure from inflation, economic disruption, and recession. These factors create a demand for finance professionals to be more efficient.
As a result of these external pressures, EMEA-based finance professionals wrestle with significant internal challenges. Chief among them are:
- 35% Budgetary restraints
- 27% Raised prices
- 26% Lack of skills in team
- 25% Manual and time-consuming processes
- 23% Adoption of New Technology
This year’s survey also highlighted a significant drop in teams around the world expecting to grow in 2023 down to 64%, compared to 73% in 2022. EMEA mirrors the global results at 66%.
In EMEA, skills shortages and IT dependence prove to be significant challenges this year.
Globally, organizations in 2023 are less likely than 2022 to be completely satisfied with the relationship between Finance and IT, decreasing from 54% to 28%. While 66% of global participants find their teams to be over-reliant on IT, EMEA-based finance professionals find themselves to be even more reliant at 70% on average.
Financial skills shortages across EMEA is a key contributor to Finance team over-reliance on IT. According to Robert Half, 91% of CFOs in the EMEA region reported facing challenges in finding skilled finance professionals. Similarly, in a survey conducted by PwC, 75% of CFOs in the EMEA region stated that they were concerned about the lack of specialized skills in their finance teams, particularly in areas like data analytics and financial modeling. The European Banking Authority (EBA) found that banks in the EMEA region were struggling to recruit finance experts with expertise in risk management, compliance, and financial reporting. This is particularly worrying given the increasing layers of global finance regulation.
Struggling with Shifting Regulations
The challenges finance teams have faced have had a strong negative impact on overall efficiency. On a global scale, 100% of finance teams are less efficient at all responsibilities. Compared to last year’s results, the biggest efficiency drops worldwide are:
- Capital management / treasury: -22%
- Short term business strategy: -22%
- Mergers and acquisitions: -21%
- Strategic decision making: -18%
- Tax management: -16%
Tax management is a significant responsibility for finance teams in EMEA. In recent years, a constantly shifting regulatory environment has made the already complicated task even more complex. One reason is that filing deadlines for Base Erosion and Profit Shifting (BEPS) Pillar Two are quickly approaching. The regulation requires any organization that operates in more than one country to pay a minimum effective tax rate of 15% in any nation where they do business.
Pillar Two imposes an array of new data gathering, calculation, and reporting requirements on global businesses. Under this framework, Pillar Two seeks to put a floor on competition over corporate income
tax through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases.
If your finance team struggles with tax management, now is an important time to evaluate your organization’s current systems to determine whether they’re prepared to comply with new and upcoming requirements. Naturally, this creates a significant learning curve.
Simply Financial Reporting and Tax Management
How can finance teams overcome challenges from external factors, IT dependence, and ensure they comply with new tax laws?
Investing in automation tools can help ease the pain of skills shortages and repetitive tasks. With the help of intuitive technology, you can more easily keep up with changes to regulations while simplifying financial reporting.
When searching for a solution, find one that puts reporting processes in the hands of the finance department. That way, finance is equipped to develop crucial custom business reports, without technical knowledge or help from IT.
When searching for tax-management software, find one that automates data collection and processing. Without being weighed down by manual processes, your team can free up time for critical analysis. With a smart investment in robust tax software, you can put your corporation in position to optimize its tax policies across all jurisdictions—thereby enabling your corporation to increase profitability, reduce risk, and keep pace with ever-evolving tax requirements.
In a market defined by uncertainty, automation helps to bridge efficiency gaps. Enable your existing staff to be trained quickly, do more with less, and free up time for critical budgeting and forecasting tasks that have become more important this year than ever before. An investment in technology ensures organizations can take control of budgeting, planning, and reporting while still having time for value-added analysis as finance teams focus on helping drive business strategy.
insightsoftware’s connected solutions can help finance teams with:
- Budgeting and Planning
- Financial Reporting
- Close & Consolidation
- Operational Reporting
- Disclosure Management
- Tax and Transfer Pricing
Ready to take the pressure off your finance team? Request a demo today.