Digital (D)jerk
To understand how to use the current crisis as an opportunity, the example of the Enron scandal in the United States helps us. At the beginning of the millennium, the accounting fraud caused a furor and led to the revision of corporate reporting legislation in the USA with new guidelines.
The Sarbanes-Oxley Act (SOX), which has been in place since then, is very strict and the basis for those responsible for financial results to very quickly have one foot in jail if the numbers don't add up.
This fact alone has led to companies in the U.S. taking advantage of existing digital accounting capabilities to hedge their bets after the turn of the millennium.
Certainly, the Enron scandal cannot be compared one-to-one with the Corona pandemic, because Covid-19 is not an occasion for accounting fraud with subsequent court cases and draconian penalties. But both situations have one thing in common: they bring to light the weak points of organizational structures.
Whereas at the time it was the extremely "creative accounting" of Enron managers, the corona-induced situation brings to light serious deficiencies in the handling of manual accounting processes. The suddenly widespread home office, short-time work and the simultaneous need for valid figures in a situation in which companies have to act quickly and flexibly in order to survive the crisis as unscathed as possible are diametrically opposed.
Coordination is complicated, the availability of those involved in the process is more difficult, the effort is greater and the risk of error is higher. Ergo: Anyone who wants to ensure valid financial statements even in times of crisis should therefore try to digitize and automate the closing process today rather than tomorrow.
The current situation is perceived as pressure by most companies. But it is also possible to look at it positively and use the crisis as an opportunity for meaningful change - similar to what the U.S. was forced to do as a result of the Enron scandal.
If you change your perspective, you will quickly discover that digitization offers more opportunities than risks. Why? Because automation and the possibilities of the cloud solve many problems all by themselves. For example, accountants have the opportunity to do their part of the closing process from the home office.
In addition, individual and error-prone reconciliation processes are unnecessary because the data is passed on within the accounting system. Best of all, you have access to valid figures at any time - accounting in real time.
And especially important right now: In times of crisis, valid figures and information on cash flow are the be-all and end-all of corporate management. Only if those responsible have access to up-to-date key figures at all times will they be able to make the right decisions and maneuver the company through the storm.
Crisis as an opportunity
The pandemic acts like a burning glass: it amplifies the effects - both positive and negative. This makes it all the easier to identify which changes are particularly urgent and which are necessary but not essential for survival. Companies that want to continue to play a leading role in their market environment in the future should seize the opportunity and make an effort to implement overdue modernization and restructuring measures.
Even if additional change in difficult times seems like a difficult hurdle to overcome for many people in charge, one thing is certain: Those who don't take action now may be left behind sooner than they would like. The need for prioritization and, above all, digitization is beyond question.
