What is Keeping CFOs Up at Night?

Today’s CFOs face many concerns, which can be reduced to three issues:

• The uncertain state of the economy, which is affecting everything from managing cash flow to hiring and laying off staff to dealing with the board of directors.
• The increasing permanence of effects of the pandemic, changing customer expectations, problems with supply chains and distribution, hybrid workforce, and labor shortages.
• Changes driven by technology: cybersecurity, data, and artificial intelligence.

Each of these issues is critical, intertwined, and needs to be handled differently. By managing these six areas, CFOs can ease their concerns:

1. Economic challenges. According to the Labor Department, the consumer-price index rose by 6.5% in December 2022 compared with a year earlier. The Federal Reserve’s answer to this is to continue raising interest rates. Those factors alone create a difficult environment for CFOs to fulfill their mandate to increase revenue and lower costs even as customer demands continue to change. This means focusing on controlling fixed costs and discretionary expenses. It does not mean stopping investments in key areas like top talent and innovation.
2. Talent. Refocus the company’s hiring policies to target skill-based hiring instead of direct experience. For example, given the need for great communication skills, hiring a marketing director with expertise in internal communications but no experience in the company’s industry may be more beneficial than hiring someone with a lot of industry experience and little experience communicating internally. Similarly, give employees what they want. For instance, according to Zippia, 26% of U.S. employees worked remotely in 2022, and 55% of employees want to work remotely at least three days a week. The old five-day-a-week work model is no longer realistic, and companies that want to be successful and sustainable need to move with the times.

3. Data. Strong data is key. Companies are relying more on predictive data. Although this goes against most CFOs’ instincts to rely on historical data, the pandemic showed us how inaccurate that can be. Using big data, i.e., data that contains greater variety, arriving in increasing volume and with more velocity, instead allows CFOs to forecast more accurately, which makes the company more agile and responsive.
4. Financial process automation. More and more technology is available to help with the mundane tasks. In today’s business environment, CFOs need to strategically balance the amount allocated to core operations against the amount allocated to growth. Adopting the right technology can give the CFO more time to do creative scenario planning or return-on-investment calculations that can lead to higher revenue and a stronger company.
5. Cybersecurity. Risk management is a big part of a CFO’s role. The risks have gone up in the past few years, partly as a result of remote work policies and partly because of bad actors. The need to protect sensitive financial data has increased substantially, and CFOs need to continually revamp their cybersecurity policies and training to reflect new risks.
6. Compliance, taxes and regulation. These key parts of a CFO’s job are increasingly becoming more complicated. Ensuring regulatory compliance now includes changes to lease accounting and fair lending reporting along with new requirements for environmental, social and governance reporting. In addition, CFOs must stay abreast of federal, state and local tax law changes.

CFOs’ job descriptions have changed. The past still is important, but more as a point of reference than a predictor of the future. CFOs who understand and embrace the challenges of their new responsibilities are well positioned to lead their companies forward into an uncertain future.