2024 is shaping up to be a year full of challenges for the CFO that isn't prepared for them.
First, the good news. The likelihood of a recession in 2024 is dropping slightly. While that may spark optimism, the general consensus by financial analysts is that 2024 will continue to be a challenging year for CFOs. Below we break down the expected pain points and how CFOs can mitigate them.
1. Economic Uncertainty
Fluctuations in the global economy, including inflation, interest rate changes, and potential recession risks, could impact financial planning and decision-making.
Solution: Improve data gathering practices to improve forecasting and decisioning. Tools are evolving rapidly in data collection, but it is still a giant to tackle for most CFOs that are more focused on high-level strategy development. If you do not have competent in-house staff to properly prepare and report on financial metrics that influence finance measuring and decisioning, then it is best to look to outsourcing this task to ensure optimal results for your business.
2. Technology Adaptation
CFOs will attempt to keep up with rapidly evolving financial technologies, such as BI, blockchain, AI, and data analytics, while ensuring cybersecurity and data privacy.
Solution: As CFOs look to lowering costs and remain competitive, the emerging technology solutions they turn to are increasingly third party software and services that can be configured to the exact needs of the business. Expensive in-house development, once in vogue, is quickly shrinking in the rear view mirror. An example of emerging technology is the SMART cloud-based AR solution that helps hundreds of mid-size and larger companies manage AR through a third party servicer.
3. Regulatory Compliance
Navigating an increasingly complex regulatory environment, both domestically and internationally, especially in areas like tax laws and environmental regulations.
Solution: It is impossible for any one CFO to stay informed on all changes, across all areas of responsibility. Seeking advice from legal experts and using third party servicers that specialize in AR or finance can help ensure compliance. Implementing robust compliance management systems is also beneficial.
4. Talent Management
It will continue to be challenging for companies to attract and retain skilled financial professionals in a competitive job market. Additionally, the cost for developing employees skills in-house continues to rise.
Solution: Offering competitive salaries, flexible work options, and opportunities for professional development can attract and retain talent, but that comes at a high cost. This has led to a burgeoning market for fractional and comprehensive services offered by third parties. CFOs seeking to reduce costs and keep their company competitive will look to these third party servicers.
5. Risk Management
CFOs will be dealing with various risks, including market volatility, credit risks, and operational risks, requiring more robust risk management strategies.
Solution: Developing comprehensive risk management strategies and regularly reviewing and updating them is key to managing various types of risks. CFOs will continue the trend of seeking third party Advisors and Servicers that specialize in risk management for their industry.