Why CFOs shouldn't focus on just finances in 2024
One word to describe 2024? Uncertainty. That’s according to Statista’s 2024 in Finance webinar, which pointed to a perfect storm of inflation, interest rates and geopolitics in the year ahead.
Despite inflation falling across Europe towards the end of 2023, it is too early for businesses to think they’ll have an easy ride of it. Plus with more than 50 countries potentially having national elections this year, there are certain to be a lot of changing policies to contend with.
So, how do businesses – and especially finance teams – react and fulfil their growth ambitions this year? Well, bear with me here, but one way could be to focus on even more than just finances.
Almost all (98%) of business decision makers think the role of the CFO has changed, crossing over into business areas that include marketing, operations, compliance and technology innovation. It might therefore seem like a bad idea to add more responsibility into the equation. But in 2024, CFOs won’t necessarily have a choice.
Below, I dive into the key areas of focus popping up for CFOs in the year ahead. And explore what they involve, what CFOs need to do to prepare and why these new factors could even be good news for businesses.
First of all, ESG (environmental, social and governance) reporting is going to become a major focus area for companies in 2024. As we approach the halfway mark in the decade, we’re reminded of the global ambition to achieve a 45% reduction in emissions by 2030 and reach net zero by 2050.
Not to mention our responsibility to build businesses fit for the future and socially responsible. The significance of this means that governments, regulators and stakeholders everywhere are cranking up the pressure on businesses to show compliance and purpose.
For business leaders, 2024 will mean having to apply the rules for the first time this financial year to feed into reports in 2025. So, where do businesses start? Well, despite ESG reporting having very little to do with finances, leaders should look to their CFOs.
This is because their skill sets are widely applicable to this form of non-financial reporting, with Deloitte, for instance, putting it down to the four faces of CFOs: catalyst, strategist, steward and operator.
Whether setting KPIs, implementing an ambitious strategy or stamping out miscommunication and a lack of transparency (e.g. greenwashing), CFOs are a perfect fit for this type of role.
We mentioned earlier that technology innovation is one of the key focus areas for CFOs. This is because they have a comprehensive understanding of ROI, and at a time when businesses can be guilty of splurging tech budgets on multiple tools, CFOs can ensure investment delivers results.
This is easier said than done though, with PwC’s Pulse Survey showing how 88% of CFOs and other business executives say they struggle to capture value from their technology investments.
To address this, CFOs must work together with CIOs and CTOs, take a step back and think more strategically about tech investment.
This comes down to exploring different tools on the market, holding back on costly and lengthy subscriptions and thinking strategically about how to unlock more people power. For those CFOs looking for a place to start, there’s nowhere better than their own doorstep.
According to Pleo’s CFO Playbook for 2024, only 27% of businesses are confident about the introduction of AI (generative and otherwise) into their finance operations. By using the finance team as a testing ground, finance leaders can help tackle two of the biggest barriers to effective AI implementation – change management and education.
With expectations that some major central banks including the US Federal Reserve and the European Central Bank will start cutting interest rates this year, IPO is back on the agenda for a lot of businesses.
2023 was a relatively lean year for IPOs compared to 2022, but now businesses need to prepare themselves in readiness. CFOs go together with IPOs because they’re in a prime position to decide whether a company has everything in the right place – from establishing infrastructure, to having the right team, to maintaining financial analysis and forecasting, before finally starting and supporting the process.
As expected, going for an IPO is not your everyday task. It requires commitment, resilience and, in some cases, recruitment. But the CFO can make it a reality by sticking close to the CEO to form a C-suite power couple that can temper ambition with strategy and woo investors.
So how exactly do these three business behemoths translate to good news when leaders are already stretched in terms of time and resource? Firstly, instead of seeing these focus areas as another pile-on for your finance leaders, they should be seen as opportunities.
For instance, the opportunity to run a more sustainable and compliant business. The opportunity to harness the most powerful workplace technology since the internet. The opportunity to increase public awareness and your customer base.
But to seize each and every one, business leaders need to liberate their CFOs from the day-to-day of the finance team. For a role that’s already stretched to its limits, CFOs must delegate the busywork and admin they face on a daily basis – whether to AI or their wider teams. If not, it’ll be a challenge to achieve just one of the above, let alone all three.
In the year ahead, the focus for CFOs is set to change once again. But with the right preparation, you can ensure your company’s financial outlook is still 20/20.