Finance leaders preparing for tax changes

A group of finance leaders are coping with a steady stream of economic disruptions this year and they’re planning ahead for tax hikes and more.

Potential U.S. and international tax legislation is having an impact on nearly every organization surveyed, with 87% of the 257 finance decision-makers polled in the U.S., Canada and Mexico saying that tax changes would alter their 2022 forecast and strategies. The survey was released Wednesday by financial software developer OneStream and conducted by Hanover Research,

To prepare for possible changes, finance leaders are updating their tax planning and provisioning processes (64%), reducing corporate spending (52%), raising the price of their products and services (52%), and educating employees (48%). That could be part of the reason why 50% of finance executives are investing more in cloud-based planning and reporting solutions. Tax reform and planning are on the radar of nearly all the finance decision-makers as potential new U.S. and global tax policies are on the horizon that may impose a minimum corporate tax rate. 

The word “Taxes” is seen on the facade of the Internal Revenue Service (IRS) headquarters in Washington, D.C., U.S., on Friday, Oct. 20, 2017. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

The current financial climate has CFOs and finance leaders anticipating more inflation and supply chain challenges will extend through the middle of next year, forcing organizations to implement new practices to manage the impact on their business. Approximately half the respondents indicated they are increasing prices (51%), leveraging new sales initiatives and campaigns (48 percent, a 13% increase from a survey last fall, and expanding their supplier network (47%, a 12% increase from the Fall 2021 survey) as a result.

“We are in an economic landscape where the ability to be agile and pivot quickly is still as much a necessity as it was at the start of the pandemic,” said OneStream CFO Bill Koefoed in a statement. “These findings reflect what is top of mind for CFOs and finance leaders across industries as they work to make informed business decisions in a time of disruption.”

The Great Resignation and the talent shortage are continuing to change organizations’ approach to talent acquisition and retention and expand their recruitment efforts to stay competitive. In the search for talent, finance leaders are investing in training and employee development (56%), improving internal and external workspaces (52%) and building company culture (47%), among other efforts. When asked if they plan to make a career change of their own this year, nearly half the finance leaders said yes, albeit within their existing organization.

Investments in environmental, social and governance areas and diversity, equity and inclusion efforts remain a priority for finance leaders, with the findings aligning closely with an earlier survey in the spring, as 60% of the respondents are committing to investing more in ESG and DEI initiatives this year. While two-thirds of respondents report uncertainty around planning for ESG rulings, nearly all (95%) are preparing for this change either by putting in place new ESG and sustainability policies, engaging consultants or investing in software to capture and report ESG data.

Technology is also playing a role. Nearly half (47%) of the organizations polled plan to increase their investments in machine learning this year, and 63% reported indicated they are already seeing a return on their investment, it’s clear this technology is serving finance leaders and their teams well. The survey found 87% of respondents have either adopted, or are in the process of adopting, an AutoML solution to support intelligent process automation, data center optimization, customer service and sales/marketing optimizations, among other benefits.

Cloud-based solutions and predictive analytics are also popular, with one-third of the finance leaders saying they use the technology regularly. Such technology will see increased investment in 2022 than in previous years, with 22% of respondents planning to invest more in cloud-based software and 21% investing more in predictive analytics. When they were asked about roadblocks to technology investment this year, 42% of the finance leaders responded that cost was a factor, along with cybersecurity concerns (38%) and the technical skill gap of employees (38%).

 

https://www.accountingtoday.com/news/finance-leaders-preparing-for-tax-changes