by Vikram Bhandari

With ever-evolving and competitive times, the role of a CFO has gone through a radical change. Traditionally CFOs were known for their ability to track numbers and support decision-making. Today, CFOs are no longer hitting the mark by solely navigating with financial acumen – they need strategic foresight. They are the drivers of consistent growth and they lead substantive changes. This shift in the scope of their responsibilities has put CFO on the edge. But the problems for CFOs do not end here, there are more challenges facing ahead of CFOs’ journey as the recession is coming in the near term, forcing them to limit their budget.

Massive layoffs and what else is waiting ahead?

Crunchbase reports almost 70,000 workers were laid off in recent job cuts by U.S-based tech companies which is not the only growing concern. With the uncertainty trailing from the recent global pandemic, political unrest, increasing cyberattacks, and rising inflation, CFOs come head-to-head with changing and challenging times. Gartner survey shows that when asked what CFO’s most difficult task to manage over the next 12 months will be, 54% answered “Hiring and retaining enough staff” along with “Forecasting” and “Cutting the right costs”. However, they shouldn’t let the difficulties come their way to reach prosperity within their limited expense this year.

Responding to such turmoils with growth strategies backed by digital transformation, requires sharp regulatory scrutiny, an understanding of the industry and digital adoption with the right priorities and a well-chosen road map. This underlying demand asks that CFOs understand how aiming for efficiency with digital transformation will impact their organization and how they can identify areas where they get the greatest return for their resources, now and in the long run.

Cost Management, Not Cost Cutting

Cost management is a high priority for CFOs this year. The Consumer Price Index hit a 6.5 percent increase by the end of 2022 (Canada, U.S.). According to Goldman Sachs, the probability of a downturn during the next 12 months is 65 percent, pushing policymakers to begin aggressive pullback in the stimulus as one of the efforts to curb the risks. Apart from this, more challenges need CFO’s attention to combat this year like the labor market and interest rates.

While most CFOs already have their financial plan in place to respond to macroeconomic difficulties, these responses are more towards a defensive position. There is a shift in the expense plan, from building scalability to gaining operational efficiency – therefore, many CFOs still want to invest in technology that helps them optimize their operation.

Although CFOs cannot control the global economy’s possible slide into a recession, they can focus on how to utilize limited resources to gain better efficiency and look for more opportunities.

Pave the Ways to Prosperity and Opportunities

Many CFOs are overwhelmed by inflationary pressures and uncertain market conditions, hence, hesitate to take intense action to gain more advantages for their business. However, I often encourage my clients to take tactical moves to enhance top-line performance without fear of disruption. There are four areas below (but not limited to!) that CFOs can consider while spending their budget in 2023:

Improving commercial effectiveness: Even during a cost-optimization effort, a budget should be allocated to encourage sales leadership by optimizing market intelligence, segmentation, and sales coverage models. This includes modernizing systems and implementing A.I. and big data solutions into account management to better adapt to changing market conditions.

Nurturing relationships with the existing customer base and improving loyalty: Optimizing revenue from your existing customers is an excellent way to improve topline performance while cementing loyalty with your customers quickly. Focus on retention and reduce churn while including a coordinated effort with the customer-related teams, instead of pushing the engineering teams to retain customers themselves.

Acquiring and retaining talent: While 83 percent of CFOs are about to conduct a hiring freeze, finding talent is the top challenge facing CFOs this year. There is a mix of responses to this from CFOs globally – some tech giants are laying off talent to cut costs while others are making an effort to attract them. I suggest reassessing recruitment efforts to ensure that critical roles are prioritized, detect the talent already available in-house and focus on not overhiring but instead hiring the right talent.

Adding automation with technology: 84 percent of CFOs are prioritizing automation as part of their digital transformation efforts. To make the right choice at the right time, CFOs should keep themselves updated with the most suited technology applications and trends taking expert advice where needed for a well-evaluated decision. More forward-looking and informed CFOs are considering emerging technologies like financial forecasting with machine learning, robotic process automation, and blockchain to help maximize business value and efficiency.

Building a Foundation Through Upskilling

A new post-pandemic opportunity has presented itself for CFOs to train the team beyond the bounds of their own finance team; providing an education that cascades through the business within the length and breadth of the industry in which they operate. They are now required to have a full understanding of the organization to make recommendations on every aspect of enterprise growth and success.

A PwC study reveals that firms investing heavily in upskilling have a 27 percent lower turnover rate. This data suggests that if CFOs adhere to an owner’s mindset of staying agile to new leadership opportunities, it could lead to massive retention savings paired with the increased productivity of a well-rewarded team. This could be considered the new definition of financial leadership in the modern era.

In 2023, data drives business more than ever; therefore, hiring CFOs who can reduce costs and add stability to a business using lucrative technological opportunities is invaluable. The role of CFO has transcended beyond financial acumen and supervision to becoming the captain of risk assessment and future planning.

No longer are CFOs just leading day-to-day finance operations, now they are stepping into unfamiliar territory with the opportunity of making more financial advancement and big business impact than ever before.

Vikram Bhandari is Founder & CEO of Yantra. With more than 25 years of experience in professional consulting and entrepreneurship, Vikram leverages a diverse set of capabilities to lead the strategy and development of companies across Retail, Software, Hitech, and Manufacturing industries globally. As an entrepreneur steeped in innovation and transformation, he combines his bold vision, operational rigor and innate market understanding to support high-growth businesses.

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