Covid-19

Business recovery

Andromeda Woodasks how to ensure businesses meet their deadline requirements in the world of Covid-19.

Andromeda Wood Senior director of data modelling, Workiva

Businesses are beginning to wonder what their futures will look like after Covid-19. With the help of regulatory extensions on deadlines, companies have had more time to deal with issues that arose during the first half of the year; however, it’s time to start thinking about the second half, and the years to come.

Considering the regulatory changes and shifting deadlines that are set to take place over the next year, businesses need to start thinking about handling the medium to long-term impacts, as opposed to the triaging of immediate effects that they have had to prioritise in light of Covid-19. Namely, the European Single Electronic Format (ESEF) and proposals for updates to the Non-Financial Reporting Directive (NFRD) have both been priorities for businesses coming through the Covid-19 haze.

As many move out of survival mode, they’re asking: what’s next? Businesses need to think towards longer term operations and take this time as an opportunity to consider what bouncing back might look like, and how to best get back on track.

Let’s think about the long term

Most importantly, companies will need to ensure that improved resilience has been built-in across all departments, whether through process efficiencies, tech integration or improved workflow. Companies that implement sustainable, long-term solutions, instead of temporary “quick fixes”, will have longterm advantages when many of the adjustments caused by Covid-19 prove to be permanent.

When considering the challenges with remote working, businesses should prepare for permanent change to the workplace as we knew it, and companies will need to create solutions to keep employees connected and keep business moving. These solutions, which are often cloud-based, have the power to reduce the risk of human error,

which can lead to huge fines or potential reputational damage if unaddressed, and can also improve efficiencies, allowing employees to spend more time working on what really matters – such as strategy and digital transformation.

Connected technologies – like connected reporting – are a great way to ensure that businesses coming out of the Covid-19 crisis are able to operate nimbly, ensure that data is input and managed centrally, and minimise the risk of human error while maximising oversight and accountability across teams.

The regulation game

The EU recently highlighted ways that businesses can adjust in a tailored way to the effects of Covid-19 in the recent changes to the European Commission

Author bio Andromeda Wood is senior director of data modelling at Workiva. Her main area of interest is the role of technology and data in the future of corporate reporting 2020 Work Programme, released last month (see bit.ly/3h8HNvG). This programme’s original focus was on top-level, long-term goals around ecosustainability and a “Europe for the digital age” but has had to shift priorities in light of Covid-19.

The new focus includes adding top priority responses from both a health and economic perspective and, in addition, continuing to look at ways not to just “bounce back” to “normal”, but empowering businesses to move forward in line with the original long-term goals.

Furthermore, we’re also seeing reportingspecific regulations begin to reflect the need for more forward-looking flexibility that accounts for shifts in the economy. The UK’s Financial Conduct Authority (FCA) has announced that it is considering pushing back the ESEF deadline in order to allow businesses time to adequately prepare. For many other EU countries, however, there are no signs of an extension in sight. With this in mind, updates to reporting guidelines were put in place earlier this month, with many countries now rolling out what they expect ESEF to look like in their local markets ahead of deadlines.

In addition to ESEF’s on-time roll out, we are continuing to see movement around the NFRD, the consultation on which was also delayed when Covid-19 hit. However, we can expect to see more changes announced in the near future, including updated deadlines and changes to longer-term requirements. Many of the companies that have left addressing their reporting too long have ended up behind schedule. Relying on deadline extensions may pose a challenge to many to get on the front foot and operate within a shorter timeframe to meet these deadlines.

Following the lead from European Commission’s 2020 Work Programme, businesses must prioritise their financial and non-financial reporting, regardless of whether or not the deadline is pushed back. Businesses need to adopt the attitude that “Europe is doing this, so we must too”, as the world continues to move forward and find its footing.

Behaving flexibly

Neither ESEF nor the NFRD seem so far to have had a significant impact on business’s reporting procedures; however, it is crucial for companies to pay attention to both, particularly considering the current, shifting climate and wider trends. For example, sustainability and digital transformation are mentioned as priorities in the ESMA’s recent response to the NFRD consultation (see bit.ly/2GyGnhq), and in a publication from the Capital Markets Union high-level forum (see bit.ly/2R5VTU0), both including suggestions for more electronic reporting. It is likely that our current processes won’t remain sustainable and resilient as the world continues to change, and this is something that we need to be mindful of and adjust to as we move through Covid-19 recovery.

For many businesses, connected, cloud-based solutions hold the key to streamlining operations, workflow and taking the pain out of moving reporting deadlines.

Transforming to a digital-first system

Before Covid-19 hit the world and rocked the global economy across industries, global productivity was at a mere 0.8%; now, thanks to automation, it is predicted to increase annually at 1.4% according to a McKinsey Global Institute report. Companies that want to move forward will have to implement solutions where mundane or repetitive tasks, such as standardised data entry, will be automated.

This will allow companies to focus on valueadded business activities, such as strategic support and growth. Providing better data for statutory reporting and compliance is a shared commitment that calls for a collaborative data revolution.

Regulated entities across the globe have been subject to an increasing amount of fragmented regulatory regime changes, legislation, reviews and queries. There are so many variables and complexities that businesses need innovative solutions to support in streamlining their workflows. This shift demands a tech and data-driven approach for monitoring activities, including the heightened use of AI, machine learning and other cloud-based systems to create a more open, integrated and holistic compliance model. The goal is for the global use of power of automation and connection to streamline reporting processes, regardless of region or regulatory framework. Only then can businesses make better and more informed decisions.

Currently, executives want more meaningful information to be provided wherever, whenever and however they want it, with room for better analysis and leverage of this insight in meaningful ways. We need to be at a point – before the ESEF deadline – where we can drive technological adoption across compliance and business reporting into transparent, actionable and dynamic changes that will further prepare us for a future already in progress.

Many issues related to working remotely will continue presenting challenges, such as:

● processes becoming increasingly decentralised and difficult to manage;

● unclear ownership over activity; and

● the increased likelihood of mistakes.

These will continue to pose challenges unless businesses start to think ahead and use cloud solutions like connected reporting.

Taking the manual effort out of many reporting functions will allow teams to focus on what matters – meeting the ESEF, NFRD and other local regulatory deadlines – or, of course, the next crisis. ●