CFOs’ Biggest Challenges in 2020
CFOs’ Biggest Challenges in 2020

CFOs’ Biggest Challenges in 2020

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 2020: 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.

executives in meeting at conference table

Challenge 1: Attracting and Retaining Talent

Finding new ways to thrive despite a very tight labor market continues to plague businesses overall in 2020. But the finance department is discovering that it’s increasingly challenging to find people to build out their teams. Ten years ago, the three areas finance hires were judged on were accounting, auditing, and compliance. Today, they still need to have those three skill sets, but they also need deep expertise in data and analytics.

CFOs need employees who understand data visualization and are flexible thinkers. Typically, the CFO and senior finance executives have acquired these newly required skills at a greater rate than the department at large has, creating a gap in knowledge between the top and bottom of the organization. In fact, it is not technology or data that is limiting the pace of transformation within finance—it is the lack of people with all the right skills.

man's hand typing on laptop

Challenge 2: Cost Issues

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 mixed economic indicators nearly every business is confronted with.

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 and uncertain times. Often, they’ll reduce head count, 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 some companies have seen extraordinary returns for their organizations by being successful at it.

man at desk

Challenge 3: Disconnected Data

Few things are more of a time-waster 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. Heading into the Roaring 20s, it’s important to have a single source of truth (SSOT) so that everyone’s on the same page when they need to be. Having one place for all of your finance data helps ensure that the entire department is getting the same information. It also makes pulling reports much faster and easier.

cfo with tablet in hand

Challenge 4: Working with Emerging Technology

New accounting standards such as lease accounting for government entities (GASB 87) will make it a business imperative to ensure accounting software is integrated with ERP software. And the future of finance is all about evolving and innovating: Blockchain, AI, new tech…. Cloud-based technology is where it’s at. But some CFOs still have considerable hesitation about switching from the legacy back-office systems they know and love out of concerns around reliability, security, and the potentially steep learning curves 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 than before. 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. The CFOs surveyed expect less than 50% of all finance tasks to be automated by 2021, largely in part to employee resistance to working with non-human colleagues. Plus, their Catch-22 is that with the speed technology is evolving, the fear of technology becoming outdated before the return on investment is realized is maximized.

The bottom line is that the overarching challenge for CFOs in 2020 is sort of a reverse Venn Diagram showing lack of inter-connectedness among the four challenges – between datasets, between people, between new and old tech, and between management and stakeholders. When everything is connected, people, processes and technology work together to form a streamlined and successful finance team and overall business.

More to Discover

Webinar: Paycor Virtual HR Platform Overview - 10/21 @3pm ET

Webinar: Paycor Virtual HR Platform Overview - 10/21 @3pm ET

Focus on what you do best. We’ll take care of the rest, behind the scenes.Over the years, Paycor has conducted hundreds of user groups, one-on-one interviews, and group discussions with HR leaders. One thing we discovered is that HR teams spend nearly 70% of their time on inefficient administrative tasks, some of which are still paper-based. To make a difference in your organization, your team needs to simplify and streamline HR, benefits administration and compliance so you can focus on what you do best.Join us as one of our solution experts walks through how Paycor’s HR solution can help you solve some of your biggest HR challenges.Speaker: John Redding John is the Senior Director of Deal Success and Pre-Sale Support for Paycor. He is...

[Infographic] Here’s How Businesses are Managing the New Reality of Work

[Infographic] Here’s How Businesses are Managing the New Reality of Work

Paycor surveyed nearly 600 leaders of small and medium-sized businesses about their plans for 2020. In this infographic, the HR and CFO leaders we surveyed describe the impact COVID-19 had on their business, including whether or not they received government funding.Share this Infographic On Your SitePlease include attribution to Paycor with this graphic.

[Infographic] How Manufacturers are Managing the New Reality of Work

[Infographic] How Manufacturers are Managing the New Reality of Work

Paycor asked manufacturing leaders about their plans for 2020. In this infographic, you’ll see how they had to adjust their workforce in response to COVID-19 and how many plan on hiring new employees in 2020.Share this Infographic On Your SitePlease include attribution to Paycor with this graphic.

[Infographic] How Long-term care Providers are Managing the New Reality of Work

[Infographic] How Long-term care Providers are Managing the New Reality of Work

Paycor asked long-term care leaders about their plans for 2020. In this infographic, you’ll see how they had to adjust their workforce in response to COVID-19 and how many plan on hiring new employees in 2020.Share this Infographic On Your SitePlease include attribution to Paycor with this graphic.