Chief Financial Officers, a.k.a CFOs, have broad, strategic duties and participate actively in their firms’ C-suites. A CFO needs to analyze where to begin when attempting to steer their companies through tough economic times, given the numerous financial challenges they must deal with. Undoubtedly, inflation, recession, and lay-offs are some of the biggest problems many businesses face. Although many analysts predict that price hikes will level off in 2023 to some extent as one-time cost increases filter through, CFOs must still make sure that businesses have a plan in place to control inflation and keep costs in check.
Since consumers and other businesses are unable or unwilling to pay more, many companies do not have the choice of raising prices. CFOs must cut expenses, increase efficiencies, and adopt new technology due to the recessionary environment that is widely anticipated for several nations in the current year.
Top 5 Challenges for CFOs in 2023
The challenging issues that will keep CFOs up at night in 2023 stem from all facets of their jobs. Five of the most challenging obstacles are listed below:
1. Enhancing Cash Flow
Improving cash flow is a top concern for most CFOs worldwide, according to a recent survey by Everest Group and WNS. Most of those surveyed supported their organizations’ efforts to find possibilities in this area. Real-time cash predictions, analytics, and dashboards for days sales outstanding (DSO) and days payable outstanding (DPO) have all become increasingly popular. Many businesses also employ predictive analytics to foresee late payments and behavioral analytics to determine the most effective way to deal with slow-paying clients.
According to the survey, more than 70% of firms acknowledged growing expenditures on cutting-edge technology and analytics. Many businesses have unlocked millions of dollars worth of additional cash flow by adopting advanced analytics. However, most companies have increased visibility and are still in the early implementation phases.
CFOs must transform their finance departments into insights-driven, digital businesses that add substantial value to the company. This depends on their ability to balance technology- and process-driven transformation. The full potential of their finance operation capabilities will be witnessed if they have a bias toward a process-led transformation strategy.
2. Accepting Innovation
How well CFOs can drive innovation within their firms will significantly impact how they fulfill their increased tasks. Therefore, maintaining the speed of innovation and change that helped businesses survive the current economic situation and seize possibilities in the future will be a significant issue for CFOs in 2023.
CFOs must apply their in-depth understanding of business performance, working with other C-suite leaders, to implement financial innovation to promote growth. Predictive analytics, dashboards, and key performance indicators are just a few of the tools that will be crucial in assisting CFOs in early opportunity identification so they can quickly change operation
Developing predictive models and capability for scenario analysis is the top priority for 47% of CFOs. -PwC Pulse Survey, Aug 2022
3. Improved Risk and Compliance Management
Another area that now drives significant ROI and investment is risk and compliance management. Therefore, CFOs should prioritize developing robust compliance and risk management practice during the upcoming year.
According to a poll, most firms’ second most important area of concentration (behind cash flow) was controllership and compliance activities to reduce risks (regulatory or otherwise). More than 50% of respondents viewed rising risk exposures (such as cybersecurity and data privacy) as a significant challenge. CFOs must ensure they have the workforce to implement the necessary adjustments after identifying this aim. For better control and compliance, employees who formerly performed manual, repetitive jobs but are now managed by new technologies must be retrained and redeployed.
CFOs who can enhance data management, including upkeep and organizational visibility, will be better equipped to face the complex and unpredictably changing economic environment (demand, inflation risks, etc)
53% of CFOs want to use data analytics, AI, automation, and cloud solutions to speed digital transformation. – PwC Pulse Survey, Aug 2022
4. Establishing a Hybrid Workplace
The pandemic’s aftermath has changed how people work ever since. As the effects of the labor shortage persist, CFOs may help their organizations adjust to the hybrid environment and enhance talent retention. With location-flexible agreements, they may help their teams and the company achieve more significant productivity increases and employee satisfaction levels. Many already use digital tools to support virtual meetings, distant teamwork, and robust network security measures.
5. Planning and Analysis for the Future of Finance
For the past few years, CFOs have monitored the change in Financial Planning & Analysis (FP&A). Nevertheless, it is one of the regions with the most active investments today.
CFOs must incorporate cutting-edge technology like artificial intelligence, machine learning, and data lakes into their current systems. In addition, as the business environment continues to experience shocks brought on by geopolitical unpredictability and industry disruption, CFOs need to make sure that change management transforms from an isolated activity into a culture.
The existing economic difficulties will persist over the coming years, and new ones may arise due to the unstable business environment. However, CFOs that act now and use quickly developing technology to ensure that their systems and processes are reliable, adaptable, and robust will help their companies succeed and gain a clear competitive advantage.
In 2023, CFOs will be well-positioned to steer organizations’ creative strategies. However, building the proper people, supported by the appropriate technology and data, to ensure they minimize risks, accomplish compliance, and guide their enterprises to innovative growth, is one of their biggest problems, even for those accustomed to demanding, far-reaching obligations.
