James Rochette explores what CFOs should focus on to reinforce their business amid economic volatility in 2024, and why CFOs shouldn’t overlook intellectual property in their financial plannings.
As CFOs tackle their financial plans for 2024, they’re being pulled in a myriad of directions. Top of mind for many is growing awareness around artificial intelligence (AI), which has CFOs trying to determine how AI will impact their business and how internal AI products, offerings, or integrations will improve productivity.
With the Silicon Valley Bank (SVB) collapse and a surge in ransomware attacks targeting financial institutions, 2023 was a year of drastic changes in the world of finance. What’s more, geopolitical conflicts are throwing exchange rates into flux and creating an unpredictable – and therefore challenging – market.
Amid all this chaos, it can be hard to separate the priorities from the distractions. During periods of rapid change, it is even more vital for CFOs to rely on a financial backbone to help their business weather the storm. Going back to the basics by shoring up intellectual property, embracing automation, and re-focusing their priorities will serve CFOs well in 2024 and beyond.
In the midst of economic turbulence, intellectual property (IP) emerges as a stabilizing force, demonstrating resilience through crises like the 2008 housing downturn and the 2020 pandemic. Unlike many business assets susceptible to market fluctuations, the value of IP remains robust during economic recessions. Although this doesn’t guarantee immunity from budget cuts, it underscores the critical importance of strategic IP management, even in times of economic slowdown.
Maintaining momentum in patent and trademark filings is imperative for companies during economic downturns. In periods of reduced consumer spending and scaled-back investments, innovation becomes a linchpin for retaining a competitive edge. While IP management might be overshadowed by more immediate concerns, investing in intellectual property is a strategic decision capable of not only generating new revenue but also establishing financial advantages over competitors.
Neglecting proper IP management can lead to filing errors and missed renewal deadlines, exposing businesses to various financial risks. A robust IP management strategy is essential for the legal team to effectively enforce patent rights, shielding against fraud and unauthorized use of the company’s ideas and inventions.
Moreover, a well-executed IP strategy provides valuable insights into competitors’ activities. The patent landscape, accessible through global IP and patent/trademark offices, offers a window into competitors’ resource allocations and identifies open areas for expansion. For instance, a competitor’s new patent filing may signify plans for a product release or initial research and development.
Intellectual property goes beyond protection; it can serve as collateral for loans and a valuable asset for securing financing. CFOs should actively explore opportunities to leverage IP, unlocking additional capital or favourable financing terms. Understanding the tax implications of IP is equally crucial, with CFOs needing to be aware of incentives such as deductions for research and development expenses or tax credits for specific IP-related activities.
In contrast to relegating IP considerations as an afterthought, CFOs should prioritize intellectual property in their strategic financial planning for 2024. By recognizing the dynamic role that IP plays in navigating economic uncertainties, CFOs can ensure that their organizations not only endure challenges but also thrive in an ever-changing business landscape.
We’ve been hearing about the digitization of finance for years, but now we’re beginning to see technology like automation in action. Instead of shying away from new tech, CFOs should not hesitate to use it within their own department.
Increasing automation allows financial teams to cut down on manual tasks and spend more time analysing data than producing it. It increases productivity without increasing headcount, which is essential in a tight labor market making it harder for finance teams to adequately staff talent.
A recent study found that 84% of CFOs in the UK and US are dealing with a scarcity of skilled professionals in their finance and accounting departments. Integrating automation means that finance departments can handle more input – from a merger or global expansion, for example – without first needing to increase headcount.
Finance, at its core, is a service department that supports the organization. The financial departments’ priority is usually serving customers and stakeholders, and it can be all too easy to lose sight of the finance department’s role in organizing and supporting other departments. More than any other department, finance drives the bottom line, and it’s the CFO’s job is to develop strategic goals and workflows to ensure the business is running efficiently and help the other departments understand the value of what they’re proposing.
Using an example discussed earlier, IP is valuable to the overall business when it is respected and properly integrated across departments. If CFOs can properly explain its importance to the bottom line, other departments are more likely to perform their due diligence by bringing IP into the fold to correctly capture new ideas and innovations.
That level of understanding – for any financial priority, not just IP – increases the likelihood that the financial team’s initiatives and goals will have the greatest impact. It all comes down to improving the business and accelerating what is going well and changing when things need to be improved.
The new year can be a great time to level set with other departments by sharing the company’s financial goals, outlining how each departments’ individual goals play a role, and discussing how the finance department can help achieve those goals.
CFOs are planners by nature and prefer to have a game plan in place for any contingency. But even the best laid plans often go awry. If the industry has learned anything in 2023, it’s that nothing is certain in today’s business environment.
To ensure their business is resilient to these changes, CFOs should embrace proper IP management, invest in automation, and reset their mindset as they enter 2024. By acknowledging the transformative potential of these strategies, CFOs can not only navigate disruptions but also position their businesses for sustained success in an ever-evolving business landscape.
James Rochette is the CFO of Anaqua, an IP management and analytics firm. He joined Anaqua in 2022, after 5 years as CFO of OROLIA and closing of the sale of Eurazeo Private Equity majority stake to Safran. James has 25+ years of experience leading financial strategies in both private equity-backed and publicly traded companies. In addition, James has successful M&A experience both in sales and raising equity. James began his career in France and relocated to the metro Washington DC area in 2017.
