While a significant share of CFOs are confident in their business growth this year, over 80% believe their forecasting requires improvement which begs the question of whether their predictions are in fact accurate at all?
CFOs are expecting growth over the next 12 months despite inflation remaining the top challenge, according to findings from a new survey conducted by the Office of the CFO Solutions practice at FTI Consulting.
Nearly three-quarters (74%) of those surveyed predict double-digit growth in 2024, with 33% predicting growth over 30%. The survey polled the views of more than 375 senior finance executives across North America, Europe, the Middle East and Africa; Asia; and Australia.
“Many of our CFO clients were prepared for a downturn last year, but recession fears seem to be easing” said Gina Gutzeit, a Senior Managing Director and Global Leader of the Office of the CFO Solutions practice at FTI Consulting.
“While inflation is still the top concern, the findings of this survey reflect optimism and the desire to end the wait-and-see approach as senior finance executives become more confident in the global markets.”
While CFOs anticipate growth, they also recognize the challenges that lie ahead. Inflation remains a top concern for CFOs in 2024, with 76% of respondents citing it as their primary challenge.
Competitive pressures and the cost of capital also rank high on the list of CFO concerns, with 74% and 70% of respondents respectively identifying them as significant challenges.
“We continue to see two irreversible trends play out in the UK and across the EMEA region—that although Chief Financial Officers play a strategic role in broader areas of business operations, they will increasingly be asked to do more with comparably less,” says Christopher Ruell, EMEA Co-Leader – Office of the CFO Solutions practice at FTI Consulting.
“These are the driving forces behind a number of the key observations from our survey responses, specifically the needs to boost efficiency and accelerate reporting, deploy financial technology enablers, and, critically, retain talent. Achieving these will allow finance teams to provide the actionable insight necessary to empower management decision making in a rapidly changing business environment.”
There is also a noticeable divide between the perception of supply chain disruptions among CFOs of large companies versus those of smaller organizations. 72% of CFOs in companies with revenues over $5 billion see supply chain disruptions as medium to high risk, compared to less than half of CFOs from companies with revenues under $100 million.
This distinction highlights the need for CFOs to adapt their strategies based on the scale of their organizations and the potential impact of supply chain disruptions.
Accurate forecasting is essential for prioritizing and allocating resources to strategic initiatives. CFOs recognise the need to enhance forecasting accuracy, with 84% of respondents agreeing that improvements in this area are necessary. Rolling financial forecasts are gaining popularity, providing organisations with the flexibility to recalibrate their strategies based on emerging data and market trends.
The adoption of finance technology and automation is also critical for CFOs aiming to optimise their finance functions. 86% of CFOs believe that finance technology and automation should be the primary area of improvement within their organizations.
This includes leveraging artificial intelligence (AI) and machine learning (ML) for finance use cases. However, budget constraints and a shortage of finance technology skills pose challenges to implementation.
“Complex and manual processes are a primary challenge to increasing efficiencies and can inhibit a finance organization’s ability to grow,” said David White, a Senior Managing Director in FTI Consulting’s Office of the CFO Solutions practice. “CFOs recognise this, and not surprisingly, they are turning to intelligent automation to optimize existing workflows and allow current talent to focus on more impactful analyses enhancing finance’s decision support capabilities.”
CFOs are increasingly focused on driving operational efficiencies within their finance functions. 91% of CFOs plan to spend more time improving productivity in 2024.
This includes streamlining processes, eliminating manual tasks, and reducing complexity. Overly complex and manual processes are seen as significant impediments to scalability and agility, with 95% of CFOs acknowledging their impact on finance functions.
In this regard, attracting and retaining finance talent remains a top priority for CFOs. 90% of CFOs plan to spend more time focusing on talent acquisition and retention in 2024. The hybrid work model, which has emerged as the new norm, presents both challenges and opportunities in talent management. CFOs must balance the need for flexibility and remote work options with the benefits of in-office collaboration.
CFOs are also increasingly considering outsourcing aspects of their finance functions to achieve cost savings and access specialized skills. Companies of all sizes are leveraging outsourcing to compete for limited talent resources.
However, CFOs must carefully consider the potential risks, such as data security and loss of control over financial operations, when outsourcing finance functions.
