The CFO’s role and function have changed over the years, going from financial reporting to data-driven strategizing. Chief Financial Officers have become essential business partners working alongside leaders from COO, sales, and HR — leading to new CFO challenges. One of the top challenges facing CFOs: staying up-to-date with a constantly evolving finance industry. Keep reading to discover what awaits you, and how to prepare for it!
Trustpair helps finance leaders by securing their financial transactions and eradicating fraud risks. Our software automates third-party account validation, so you always know who you’re paying. Request a demo to learn more!
Navigating uncertainty
Let’s start with the most obvious: in 2024, the financial markets are very unstable. We have a lot of geopolitical unrest in different parts of the world which massively impacts our economy. It’s harder than ever to hire (and retain) skilled talents within the new generations.
Add to this inflation, higher interest rates, and a recession in many countries, and you have a global economy that isn’t easy to navigate.
Uncertainty goes against the very nature of finance leaders, and CFO challenges include navigating this storm without a map. It’s not fun, and riskier than we’d like.
To weather this storm, CFOs will need to stay up-to-date with international news and macroeconomic trends. Planning for different scenarios and using data-driven models will help keep their finances and organizations afloat.
Watching Key Performance Indicators and using predictive analytics tools will be a must in 2024 to help CFOs create accurate forecasts and course-correct as the year goes on.
Investing in talents by developing their leadership and global capabilities (both regarding data and people management) is also a good strategy to help you better navigate the next few years. Planning for your future team’s organization is a strategy that will pay tenfold and contribute to your company’s long-term growth.
Staying profitable
In this climate, it’s no wonder that some companies struggle to remain profitable — at least to the level shareholders are used to.
To try to do so, CFOs must act on both variables:
- Increasing their revenues,
- Lowering their costs.
While this seems like textbook advice, the difficulty here comes from applying it. With inflation and rising interest rates directly impacting their purchasing power, consumers and businesses alike have become more price-sensitive.
According to Gartner, finance professionals have to reconsider their reflex of increasing prices to remain profitable, and should instead turn toward dynamic pricing.
What do CFOs consider to be their top priority? According to 58% of respondents from a Grant Thornton CFO survey, it’s cost optimization. Reducing the right expenses was named as the financial leaders’ priority for the next 6 months.
While those cost cuts are company-specific, it’s a safe bet to move toward greater automation to reduce labor costs. For example, finance automation can save your finance team hours each week so they can focus on higher-value tasks.
Learn more about the benefits of digital transformation in this article!
Optimizing cash flow
Now more than ever, cash is king. Chief Financial Officers are well aware of this, especially in the current economy. Companies have to be able to compensate:
- The increase in costs (from financing and operations) and
- The potential revenue or profitability losses.
For that, they must be equipped with modern software that displays their cash flow forecasting, and other financial Key Performance Indicators in real-time.
Using technology services through the use of finance software automation can improve your decision-making when it comes to leveraging debt or equity.
The CFO role is to constantly adapt to the economy, relying on good data management and featured insights to plan for the future. Digital transformation — incorporating technology to streamline finance processes — is part of their finance function.
2024 is the year to invest beyond Netsuite and plan for your growth through tools that offer a more advanced menu of features and analytics. For example:
- Data modeling software can help plan for inflation and the overall increase in costs your company will face.
- Financial hubs can centralize all your important data automatically.
- Anti-fraud software can streamline and secure your payment processes.
Considering various scenarios and knowing where you stand at all times also means you’ll be able to weigh in on investment opportunities with the latest financial data available. And using fraud detection software protects your cash flow from the direct and indirect costs of fraud.
All of that contributes to the good financial health of your business in the mid-term and long-term future. It’s worth investing in services (and talents!) that can help you double down on this in 2024.
Keeping up with compliance
CFO challenges will forever include compliance. With ever-changing regulations in the US, the EU, and beyond, it’s no wonder compliance has become a full-time duty for finance teams and other departments — highlighting the need for efficient detective controls.
We’re talking about financial regulations like Anti Money Laundering laws, but also about Environmental, Social, and Governance (ESG) regulations.
In the European Union, the latter have become stricter, and the SEC is thinking of introducing similar rules in the US. ESG reporting needs to include data from various departments (from finance to sales, operations, and supply chain) to create accurate statements that comply with the forthcoming regulations.
For CFOs, it means improving their financial data management and adopting tools that will make reporting easier and faster in the move toward more sustainability. That also involves adequate team training, as knowing how to navigate compliance isn’t an innate talent (sadly).
Increasing fraud risks
According to our most recent fraud survey, 96% of US companies were targeted by at least one fraud attempt in 2023 — that’s a 71% surge from the previous year.
Not only are fraudsters more aggressively targeting large companies, but they’re also highly successful: only 10% of targeted companies managed to protect themselves against the attack.
The average financial loss is also substantial: 36% of companies lost more than $1 million. These numbers can be explained by the ever-changing nature of fraud: as cybersecurity and fraud become inextricably linked fraud becomes more difficult to detect.
Corporate fraud has entered the cyber era, as tools like ChatGPT make it easier than ever to generate credible content for unsuspicious victims. Phishing through text messages, phone calls or even fake websites is easier than ever to do and has catastrophic consequences.
One of the most important CFO challenges of 2024 will be to meet this increasing fraud risk with adequate protection. Investing in cyber security should be a priority to safeguard your business and its assets.
Get all the latest trends and numbers in our latest fraud study!
Protecting yourself with Trustpair
With fraud on the rise, fraud protection needs to be a priority. Fraud has a negative impact on:
- Your cash flow,
- Your customer relationship,
- Your supplier relationship.
Trustpair helps you eradicate those financial risks by continuously monitoring your third-party credentials. Our software secures your payment chain from end to end, so you always know who you’re paying.
With wire transfer fraud being the number one type of fraud, using anti-fraud software has become a necessary part of your strategy to safeguard your organization.
We use predictive modeling to detect suspicious activity. Most fraud cases go undetected until it’s too late. With Trustpair monitoring your suppliers’ bank details continuously, you’re protected against cyber attacks and social engineering attacks against your company.
In turn, this frees up your finance teams’ time as well as your management time. Trustpair helps you embrace more digital transformation so your business keeps on thriving no matter what.
Key Takeaways:
CFOs face new challenges in 2024: increased economic uncertainty, ever-changing compliance, and a surge in fraud cases. Companies need to invest in tools that help them face CFO challenges head-on. Trustpair offers complete protection against third-party fraud, so you can focus your efforts on strategic decisions while securing your assets.
