Trending in corporate finance: The challenge of unpredictable demands and the rise of accounting salaries
Welcome to the first trending in corporate finance, a monthly roundup of the most important things happening this month in the world of finance. Our goal is to aggregate the latest enterprise finance news and trends into a quick-to-read and easy to skim format. Here are our top picks of recent articles and news that caught our eye during September.
- Global profits set to tumble
- Unpredictable demand is the biggest business challenge
- The real cost of planning and budgeting lies outside finance
- The U.S. Department of Labor is changing the rules on overtime pay
- Accounting salaries continue to rise
There is a big wake-up call for everyone in an important article from McKinsey called “The new global competition for corporate profits.” They predict that corporate profits peaked in 2013, and we can expect increasing competition from companies in the Far East and digital disruption to erode margins over the next couple of decades.
Why does it matter? Carrying on as normal is not an option. McKinsey suggests that companies must adapt to these new realities quickly if they want to capture a share of the new markets, which are created by rising consumption in the emerging world. Improving productivity is key to survival— leaving no time for laborious financial processes and systems.
A new research report from Aberdeen Group found that the top challenge facing growing organizations is “unpredictable demand.” (Login to view article).
Why does it matter? Well, oversupply ties up working capital while shortfalls result in lost revenues and possible customer defection. Real-time visibility into all processes and the ability to share planning information across the extended enterprise are seen as key to success.
Forget corporate functions. According to CEB’s recent survey, local finance teams, management, and operating staff within the business units bear 90 percent of the cost when it comes to budgeting and forecasting.
Why does it matter? These findings demonstrate that the only way to drive down the total cost of enterprise planning and budgeting is to incorporate disparate sales and operational planning into a holistic process. It is the first step to achieving a fully integrated business planning (IBP) strategy—all while improving agility.
During September, the U.S. Department of Labor’s Wage and Hour Division announced the planned legislation to double the current minimum salary at which employees are exempt from overtime pay.
Why does it matter? Moving the threshold from $23,660 to $50,440 would affect the pay of approximately five million US employees. For some companies, these changes could mean a considerable increase in costs. This needs detailed modeling and analysis in a workforce planning tool—employee by employee—during the current budgeting cycle in order to assess the financial impact this change will have in 2016.
Accounting professionals in the U.S. continue to be in high demand. Staffing firm Robert Half found that accounting salaries are rising at an accelerating rate as businesses continue to bounce back from the recession.
Why does it matter? This continued rise in accounting salaries shows just how valued finance and accounting professionals are and increases the demand for finding and retaining top talent.
This is our first in a monthly blog series that will recap what’s going on in Finance. Each month we will keep an eye out for topics to include in the next edition. Feel free to tweet your recommendations to @Anaplan and share your thoughts on September’s hot topics in the comments below.
Don’t forget to check back for October’s edition of trending in corporate finance for next month’s must-reads.