The challenges and opportunities for the modern CFO

Today’s CFOs have to grapple with many different demands, so what are their priorities in the current climate? New research findings aim to analyse how CFOs can navigate industry challenges and seize opportunities to stay competitive.

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The role of the chief financial officer (CFO) is at a pivotal point. Technological advances, economic uncertainty and competitive pressures all pose significant opportunities and challenges for businesses, and the need to bridge the gap between the finance function and wider business goals has never been greater. 

Against this backdrop, the role of the CFO has evolved from financial gatekeeper to strategic player, with fellow C-suites and stakeholders increasingly relying on CFOs to leverage their insight, expertise and financial data to steer the organisation. This, however, requires CFOs to embrace new ways of thinking, develop a deeper understanding of the business and adopt new technology. 

To gain insights into how CFOs are adapting to the changing landscape, Raconteur and Payhawk surveyed over 200 decision-makers across a variety of industries. The research uncovered the importance of a holistic view for sustainable growth, the strategies CFOs are employing to navigate tough economic conditions, and the vital role finance technology and spend management data will play in helping businesses grow. 

Traditionally, CFOs have had a lot to juggle, with key focuses on accounting, tax, and safeguarding assets during volatility. These focuses continue to be a high priority for CFOs, but now, finance leaders are also adapting their financial strategies to respond to external economic pressures such as inflation and interest rates.

More than half (54%) of respondents said they are focusing on streamlining costs to cope with these challenges, while 48% said they were tackling a tough economic climate by improving cash flow forecasting - an essential activity when trying to better understand the potential financial runway a business might have in periods of uncertainty.

A stark finding to emerge from the research is that more than half of respondents (58%) say they have had to make or consider making customer experience compromises to survive in the current climate. This data surfaces a trend that could potentially see businesses take actions that negatively impact consumer satisfaction and loyalty, as well as damage their ability to stay competitive.

There was also a division in the most common cost-efficiency measures taken by respondents, with chief technology officers (CTOs), chief operation officers (COOs) and chief information officers (CIOs) most likely to cite outsourcing non-core functions to lower costs, while CFOs prefer to conduct cost-benefit analysis to accurately pinpoint cost-efficiency opportunities

But beyond their core financial responsibilities, the results of the survey also shone a spotlight on the transition of the CFO to a value-adding business partner. The events of the past few years have undoubtedly heightened the need for CFOs to reevaluate their priorities and expectations to encompass a wide range of trends and considerations. As such, more than half of respondents now cite scenario planning (and access to accurate data to support planning) as their highest priority strategic response to navigate economic difficulty.

The unprecedented rate of change and new and emerging risks also require businesses to move faster – and agility will be critical. Unsurprisingly, 62% of respondents said building a more agile or strategic team is a leading priority for CFOs over the next 18 months.

As a result, CFOs are increasingly coming to be viewed as highly strategic leaders, with this recognition most widely acknowledged amongst CFOs and COOs. However, one in five CIOs believe CFOs remain undervalued in their business, suggesting that despite their growing responsibility, the depth of their involvement continues to be overlooked in some quarters. 

A key trend that emerged was the pressing need for finance departments to gain a more holistic view of their organisation to support growth. However, the vast majority of respondents admitted that it is ‘extremely challenging’ to get complete, centralised control and visibility of the project/department spend and expenses across global or multi-entity businesses. This highlights the need for greater cross-team communication and collaboration. 

Similarly, managing risk effectively, ensuring alignment between finance and operational goals and balancing short-term and long-term goals are all additional challenges facing finance departments. 

The past few years have seen an explosion of new technologies to market. For the C-suite, it is becoming increasingly difficult to ignore the benefits offered by finance tech, from cost savings to enhanced operational efficiency and strategic insights. The research revealed a positive correlation between the use of IT and unlocking new opportunities, with 98% of respondents stating that finance tech helps them make decisions. 

Investing in digital transformation and harnessing real-time insights across the business to steer the company’s strategy has emerged as a key priority for CFOs over the longer term. 

Yet, the path to digital stewardship is not without its challenges. There exists a number of gaps between financial technology and decision-making. These include the ability to support long-term financial planning and strategy, managing financial risk and complying with regulation. In fact, 93% of respondents said harnessing centralised data analytics for informed financial planning and forecasting was a significant challenge. 

These challenges mean CFOs must approach technology with a strategic mindset, creating a cross-business culture of digital learning and development and prioritising tools that really enhance the business’s operations and offer the most value. 

Over the next 18 months, CFOs will walk a tightrope between seizing new opportunities and implementing robust strategies that ensure the business is well protected against economic volatility. Legacy systems, a lack of cross-team collaboration and visibility all pose obstacles for finance departments, highlighting the need for CFOs to remain adaptable, proactive and resilient. For those who not only recognise but fully embrace transformation, there is a brilliant opportunity to stand out and create value for their organisation.

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