If any one word could encapsulate 2023, it would be “uncertainty.” For most of the year, finance teams have been preparing for a recession that never quite reached the heights (or depths) heralded by the media. And while no one is disappointed, constantly waiting for the other shoe to drop has had a notable impact on finance leaders’ approach to, well, everything.
Over the last 12 months, as we emerged from the pandemic, CFOs approached the finance function with a sense of realism and pragmatism, prioritizing functional growth in their budgets and plans over resource growth. They have invested in training existing employees over hiring additional people and in marketing existing hero products over developing new products. The need for greater efficiency and more accurate forecasting led CFOs to re-evaluate the tools and processes on hand and their ability to overcome skills shortages and drive agility.
Now, as we head into 2024, CFOs continue to seek balance and efficiency through digital transformation. A recent Hanover survey found that 70% of respondents feel pressure from inflation, economic disruption, and recession. Meanwhile, Robert Half recruitment data shows that nearly 90% of hiring managers are having a hard time finding skilled talent to join their finance teams.
With interest rates still rising, skills shortages still posing a challenge, and the specter of recession still haunting board rooms, CFOs are looking to technology to connect data, build agility, and drive profitability.
Connected Data Will be Pivotal to Driving Profitability in 2024
In today’s dynamic business environment, data connectivity is key to increasing business agility and driving profitability. CFOs will need to pursue a two-prong strategy, sustaining healthy revenue and reducing costs, to achieve financial stability and enhance investor confidence. Next year, the top priority for CFOs is to foster a culture of financial discipline within their organizations, shifting their attention to enhancing the efficiency, agility, and resilience of their finance teams.
Sustaining Healthy Revenue
By consistently generating revenue, an organization shows its resilience, financial stability, and ability to weather market fluctuations. Cash metrics and liquidity show a company’s ability to weather financial challenges and satisfy its short-term obligations, both attractive qualities for investors during uncertain economic times. A focus on sustaining revenue not only enhances financial stability, but also safeguards investor confidence, reinforcing the organization’s position in the market and supporting long-term profitability goals.
Decreasing Operational Costs
Reducing operational costs without reducing operational efficiency is key to driving profit in an uncertain market. Efforts to decrease costs involve streamlining operations, negotiating favorable supply chain terms, exercising stringent cost control, optimizing employee productivity, and implementing energy-efficient practices. These activities collectively reduce operational expenses, ensuring that the organization runs efficiently and cost-effectively.
Balancing these revenue-sustaining and cost-cutting efforts will be critical in 2024, enabling finance teams to fortify bottom lines and contribute to organizational profitability and long-term financial health.
CFOs Look to Automation and AI to Bridge the Efficiency Gap in 2024
Impacted by external factors like market disruption and skills shortages, finance leaders are looking to squeeze more value from existing resources; this means working smarter by leveraging automation and AI to improve efficiency and productivity. Generative AI, or GenAI, is still a new enough technology that CFOs are curious but noncommittal.
Finance leaders are excited about the productivity gains GenAI can provide but also wary of potential security risks. Much like business leaders use BI tools to visually see and understand data, executives need to understand how the data AI delivers is generated; given GenAI is predominantly a data output, executives can have concerns over how the numbers were generated and worried they are missing crucial business context.
For the upcoming year, proven automation tools with built-in AI capabilities will be the happy medium that provides finance teams with increased efficiency and data confidence without posing the security risks of a generative AI engine. Hanover research shows that many (43%) leaders plan to adopt new technology to close efficiency gaps while others seek to increase investment and training in existing technology to meet this goal.
Finance leaders will look to automation tools to:
- Implement Data Integration
- Ensure Data Accuracy and Consistency
- Automate Manual Processes
- Enhance Data Security and Compliance
- Utilize Predictive Analytics
- Enable Real-Time Data Access
- Reduce Reliance on IT
- Facilitate Easy Collaboration
2024 Goals: Connect Data, Enable Agility, Drive Profitability
External factors from market uncertainty, skills shortages, and the rising cost of debt are making a heavy impact on finance strategies for 2024. Technology that increases efficiency by simplifying reporting processes is important for finance teams to connect data, enable agility, and drive profitability.
To see how insightsoftware solutions can help your organization achieve these goals, watch our video on driving business growth through automation.