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TOP CHALLENGES FOR CFOS IN 2024

Lynne Sampson | ERP Content Stragetist | February 9, 2024



In This Article

 * The Evolving Role of the CFO
 * 10 Top Challenges for CFOs in 2024
 * Close the Technology Gap with ERP
 * CFO Challenges FAQs

The macroeconomic headwinds are picking up speed. Most economists predict a
recession in the next 12 months. The United States inflation rate has more than
doubled since 2020, driving central banks around the world to raise interest
rates. Add to that, geopolitical uncertainties: the war in Ukraine, political
unrest in countries from China to Iran, and lingering health threats posed by a
pandemic that refuses to end. All of these trends continue to disrupt supply
chains as fluctuations in demand and supply impact inventory levels, port
access, and warehouse costs.

With all of this in mind, it’s not surprising that CFOs are battening down the
hatches for the years to come. It will be up to finance leaders and their teams
to help companies ride out the storm.


THE EVOLVING ROLE OF THE CFO

The role of the chief financial officer (CFO) continues to evolve, with less
emphasis on scorekeeping and more on business strategy. Historically, the CFO
has been responsible for the balance sheet, profit and loss (P&L) statements,
accounting, the financial close, and regulatory compliance. But in recent years,
many of these responsibilities have moved to a controller or chief accounting
officer (CAO)—especially at large enterprises. CFOs are now more involved in
planning and predictions, helping other C-suite executives make the best
decisions for the company’s workforce, sales plans, inventory, supply chains,
and other lines of business.

Increasingly, C-suite leaders are looking to connect their business plans across
their finance, workforce, sales, and supply chain teams. This approach, known as
“connected planning,” provides deeper insight into data across the company so
that business leaders can get a good view of the whole business plan and not
just one piece of it. Connected planning helps to improve decision-making and
identify the right strategy for the business. More CFOs are now partnering with
their C-suite counterparts (chief operating officers, sales leaders, etc.) to
connect plans across lines of business and give executives better information
company-wide.


10 TOP CHALLENGES FOR CFOS IN 2024

In light of economic challenges—including inflation, geopolitical unrest, and a
likely recession—CFOs have identified the following as their top 10 challenges
for the year:


1. CUTTING THE RIGHT COSTS

According to a Grant Thornton CFO survey, 58 percent of respondents ranked cost
optimization as their top concern for the next six months. Areas that CFOs are
eyeing for cost savings include headcount, travel, consulting fees, product line
rationalization, and technology investments. Potential solutions that CFOs are
looking at to help them reduce costs include profitability and cost management
software; AI and machine learning to automate tasks, such as data matching and
account reconciliations; and predictive analytics to identify potential biases
in forecasts.


2. ATTRACTING AND KEEPING THE RIGHT TALENT

Labor remains one of the scarcest resources in the business world, with millions
of job openings going unfilled. A lack of finance and IT talent has troubled
CFOs for nearly a decade, according to research from AICPA-CIMA, but today’s
labor shortages extend to operations, manufacturing, logistics, sales, and
entry-level jobs across industries. Finance and HR leaders are examining their
workforce plans to help ensure their companies can continue to operate at scale.


3. IDENTIFYING THE RIGHT INVESTMENTS TO DRIVE GROWTH

CFOs in 2024 face the unenviable task of cutting costs while continuing to
invest in the projects, products, and innovation that drive profits and revenue
growth. While M&A activity is likely to slow due to the high cost of borrowing,
other investments—such as expanding into a new region or product line—will need
thorough evaluation to balance the risk with the potential reward. Careful
scenario modeling using enterprise performance management (EPM) software can
help with these evaluations.


4. CASH AND LIQUIDITY PLANNING

When a recession hits, cash is king. It’s critical to have enough cash on hand
to make up for possible revenue losses; and with high interest rates, borrowing
to invest in growth can get prohibitively expensive. Historically, cash flow is
calculated monthly; however, new technologies that use artificial intelligence
can help CFOs get a snapshot of their cash position at any point in time. This
vision of continuous cash forecasting has the potential to be a game changer
when it comes to balancing debt with equity.


5. MORE FREQUENT, MORE ACCURATE FORECASTING

Financial planning and analysis (FP&A) is one of the basic functions of a
finance team, but since the shock of the pandemic in 2020, many companies have
increased the frequency of their financial planning cycles. Scenario modeling,
in particular, has taken on a new urgency as CFOs seek to develop contingency
plans for the next outlier event. Manual processes and spreadsheets slow down
planning cycles, so finance leaders are looking at financial planning
applications with AI, machine learning, and predictive analytics to improve both
the speed and accuracy of their forecasts.


6. PROFITABILITY

Attendees at the 2023 Davos conference in Switzerland emphasized the importance
of profitable operations in the current economic climate. Profitability and cost
management software can help finance teams work with sales and marketing to
analyze each individual product and service—right down to the individual SKU—to
help product owners offer the right products and services and set the right
prices.


7. MAKING THE MOST OF TECHNOLOGY INVESTMENTS

The past two years have seen many companies doubling down on technology
investments as they realized that their legacy, on-premises systems couldn’t
handle the workforce and supply chain disruptions of the pandemic. Now that
they’ve spent all this money, CFOs are looking to wring as many benefits as they
can out of their digital transformation efforts. With technology budgets likely
to be cut in 2024, many companies will look to these recent investments to drive
returns, reduce total cost of ownership, and help the company introduce new
products and services with a minimal amount of new spend.


8. SUPPLY CHAIN DISRUPTIONS

The lockdowns might have ended, but the supply chain disruptions continue amid
geopolitical uncertainties and labor shortages. CFOs will continue to work
closely with their chief operating officers (COOs) to plan for, and mitigate,
supply chain disruptions with the help of integrated business planning software
and systems.


9. ESG PLANNING, REPORTING, AND COMPLIANCE

Regulatory bodies in the EU have introduced new compliance requirements around
environment, social, and governance (ESG) issues. The SEC is eyeing similar
rules for public companies in the US—and while these rules might yet be
challenged in court, companies are already preparing for compliance. ESG
planning and reporting solutions must be able to pull together accurate data
from across the company—including finance, sales, operations, HR, and supply
chain systems—to create narrative reports that will satisfy regulators’ demands.


10. CAPITAL COSTS

As interest rates rise, CFOs are keeping a watchful eye on company debt.
Existing loan payments are likely to balloon, and new borrowing will be tightly
curtailed. Any new investments to drive growth will rely more heavily on
existing cash reserves. This will require careful financial planning to ensure
that the company doesn’t overleverage itself (the most frequent cause of
corporate bankruptcies).

The top challenges for CFOs in 2024 include attracting the right talent, cutting
the right costs, monitoring profitability, and improving forecasting.


CLOSE THE TECHNOLOGY GAP WITH ERP

Modern software solutions are designed for most of the toughest challenges CFOs
can expect in 2024, covering the entire back office. A modern ERP system with
financial management capabilities can go a long way toward helping CFOs close
the technology gap, while consistent, robust data combined with real-time speed
and powerful analytic tools help CFOs and their teams deliver the right
information at the right time for strategic decision-making.

From accounting and financial and operational planning to supply chain and
procurement, this holistic view helps CFOs work closely with other C-suite
leaders to identify the best places to cut costs, while still keeping enough
capital on hand to drive investment and growth. Cloud ERP software from Oracle
also supports more frequent planning and forecasting cycles, so that as macro
conditions change, the company can adapt its strategy and quickly execute
changes.


CFO CHALLENGES FAQS


WHAT ARE CFOS WORRIED ABOUT?

CFOs in 2024 are worried about the impact that macroeconomic trends will have on
their business. These trends include inflation, higher interest rates,
geopolitical unrest, supply chain shortages, and a possible recession.


WHAT ARE THE CHALLENGES FOR FINANCE OFFICERS?

CFOs are heavily involved in planning and strategy, helping other C-suite
executives make the best decisions for the company’s workforce, sales plans,
inventory, supply chains, and other lines of business.


WHAT CHALLENGES DO FINANCE PROFESSIONALS FACE TODAY?

Among the top challenges facing today’s finance professionals: cutting costs,
attracting and keeping talent, and balancing these two imperatives to ensure
future growth.


WHAT DO CFOS CARE ABOUT?

CFOs care about the financial performance of their business and must take steps
to mitigate the risk of macroeconomic trends, such as inflation and worker
shortages. These steps might include cost-cutting, layoffs, frequent
forecasting, investment, or expansion.


SEE HOW ORACLE CLOUD ERP GIVES YOU THE AGILITY TO ADOPT NEW BUSINESS MODELS AND
PROCESSES QUICKLY, HELPING YOU REDUCE COSTS, SHARPEN FORECASTS, AND INNOVATE
FASTER.



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