With such a volatile economy over the past year, it’s never a bad time to prepare for more changes that might affect your business… especially financially. Many CFOs find they’re faced with four primary areas of focus in 2023: People, money, data, and technology, with some overlap among the four. Here we’ll briefly cover our predictions for the challenges heads of finance will likely face in the coming year.
Attracting and Retaining Talent
The world of finance isn’t immune from the effects of the Great Resignation. As workers continue to leave jobs in search of greener pastures, the war for talent marches on . But the finance department is discovering that it’s increasingly challenging to find people to build out their finance teams. In fact, in a recent Deloitte survey more than 82% of hiring managers specific to accounting and finance positions at public companies and nearly 70% at private companies said they are having a hard time finding talent. .
CFOs need employees who not only have accounting, auditing, and compliance skills, but also data visualization expertise and flexible thinking. The lack of candidates with the right skills is limiting transformation in finance, so employee retention is paramount. Once CFOs have acquired their desired talent, they need to invest in environments that will allow them to thrive, whether that’s in the office, at home, or a hybrid approach. One way to measure exactly what your workforce wants or how they’re feeling is to conduct quick Pulse surveys, which offer an immediate return on employee sentiment.
Controlling Job Costs and Financial Planning
CFOs have long been the keepers of the checkbook and creating cost structures, but the task of controlling costs has become increasingly complicated yet still essential to long-term strategy. Rising costs continue to outpace revenue, making it a challenge to transform sustained growth into prolonged profitability—especially while navigating the post-pandemic economic indicators confronting nearly every business.
Today’s CFOs face:
- Structuring costs to drive a specific competitive strategy
- Managing costs relative to external benchmarks and investor pressure
- Acting on cost-related risks and opportunities resulting from the business cycle
And they’re asked to do this all while under pressure from their investors to control costs and from business leaders to fund growth opportunities.
Unfortunately, this pressure can result in knee-jerk reactions in an attempt to protect shareholder returns when it comes to managing cost pressures and maintaining cashflow in uncertain times. Far too often, the imagined solutions are to reduce headcount, switch to lower-quality supplies, or delay capital and innovation investments. These types of initiatives may keep senior management happy, but they often have a negative effect on employee morale and brand value, and eliminate the very resources required to achieve long-term goals.
Disconnected, Disorderly Data
Few things are more of a timewaster than having the information you need housed in multiple, disparate databases and spreadsheets and not immediately available at hand. A setup like this results in low-value, often manual processes and creates a huge drag on the department’s agility. Real-time insights and workforce analytics have never been more important.
Gartner data shows that 54% of finance departments still struggle to provide reliable data and reports to their stakeholders to inform business decisions. Data is essential to optimize business growth and that optimization starts with having a single source of truth (SSoT) so that everyone’s on the same page when they need to be. Having one place for all your finance data helps ensure the entire department is getting the same information. It also helps ensure data integrity and makes pulling reports much faster and easier.
Technology and the Digital Transformation
Many finance functions are behind the curve when it comes to making the most of tech. CFOs and other senior financial executives (SFEs) report the lack of a sustainable plan for data and technology is the biggest barrier to delivering on their finance function’s purpose and vision. The challenge for many is that the organization at large—with a finite technology budget—may well choose to focus on client-facing technology, dashboards, and apps, leaving the finance function much further down the list. IDC’s “Road Map to Driving Finance Transformation in the Office of the CFO,” found that 77.8% of finance leaders believe the finance function within their company has to change, and more than 75% said they are investing in finance modernization. Nearly 85% of survey respondents agree that updating financial operations is essential for their businesses to compete in volatile markets.
Embracing digital transformation and the ability to scale quickly is essential for CFOs as they look toward the future. And the future of finance is all about evolving and innovating the business models: blockchain, AI, cloud-based technology. But some CFOs still have considerable hesitation about switching from the legacy manual systems they know and love out of concerns around reliability, security, and the potential steep learning curve needed to train end-users. That learning curve, however, comes with significant cost savings, so it’s worth the effort.
Forward-thinking CFOs are looking to automation and artificial intelligence to help the finance department provide more value with less effort. By providing rapid response to the needs of the business, the finance department can catapult from outmoded data processing to strategic partnering. Accenture estimates that 60-80% of historical accounting activity can be automated; it’s just not. An American Productivity & Quality Center survey supports that statistic, finding bottom performing organizations (25th percentile) only automate 15% of their primary finance functions. Top performers, on the other hand, automate 40%. There’s a lot of work ahead, and 2023 offers the opportunity for improvement across the board. One cause of hesitation among many CFOs, however, is that the speed of evolving technology will render any investment obsolete before they see the ROI.
To overcome these challenges, finance leaders need to invest in technology that offers the best solution for a seamless transfer of data, thus ensuring the long-term success of their organizations. When CFOs effectively leverage data and analytics, they’ll gain key insights that will help shape strategic business decisions for years to come.