It’s never a bad time to look forward to changes that might have an impact on the business… especially financially. Many CFOs find that they’re faced with four primary areas of focus in 2022: 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 quit low-paying and/or unfulfilling jobs, the war for talent is ongoing. But the finance department is discovering that it’s increasingly challenging to find people to build out their finance teams. In fact, a recent Ernst & Young report says 22% of CFOs are making it a priority to transform how finance talent is recruited, retained and developed.
CFOs need employees who are skillful with accounting, auditing and compliance, but also those who understand data visualization and are flexible thinkers. The lack of people 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 keeper of the checkbook and creating cost structures, but the task of controlling costs has become increasingly complicated yet still essential to long-term strategy. Growing 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 trying to protect shareholder returns when it comes to managing cost pressures, maintaining cashflow and uncertain times. Often, they’ll 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 impact on employee morale, brand value and eliminate the resources needed to achieve long-term goals. It’s a fine balancing act but can lead to extraordinary returns if you’re successful.
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 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 analytics have never been more important.
The EY report says 23% of CFOs plan to prioritize improving big data and analytics capabilities to transform forecasting, risk management and understand value drivers. Data is essential to optimize business growth, and that 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 ensures data integrity and makes pulling reports much faster and easier.
Technology and the Digital Transformation
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.
The growing acceptance of cloud-based apps in the finance arena enables companies to access faster, better computing power often at a lower cost. In fact, finance departments often find they can streamline transactional activities by using the cloud, finding additional precious time to focus on strategy.
Forward-thinking CFOs are looking to 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.
Unbelievably, only 34% of finance tasks are automated according to Accenture. But they estimate that 60-80% of historical accounting activity can be automated; it’s just not. One concern: the speed of evolving technology will render any investment obsolete before they get their money’s worth.
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 organization. When a CFO effectively leverages data and analytics, they’ll gain key insights that will help shape strategic business decisions.