CFO Priorities in 2024: The Main Items on Your Agenda
2023 was rough for the finance department. Everyone was looking around, shifty-eyed, wondering when the recession would rear its ugly head.
Some think we're on the other side of that period, while others think the worst is to come.
Regardless of where you stand, there seems to be light poking through the horizon. In that light, CFOs have generally agreed on these priorities as the most important for the year ahead.
Macroeconomic Snapshot
Here’s the lowdown of where we're at, economically:
- It's no longer generally accepted that a recession is coming; however, you should still exercise caution amidst an uncertain global geopolitical climate.
- The US economy is expected to experience a slowdown in 2024, with a projected growth rate of 0.7%. This slowdown is intended to bring about a soft landing for the US economy, rather than the collapse that many had feared.
- Inflation is showing signs of easing, yet remains higher than the Federal Reserve's target. It's generally predicted that interest rates are expected to remain steady for the first half of the year, with potential reductions to follow.
- While we're experiencing a strong labor market at present - with unemployment at 3.7% - a predicted slowdown in GDP growth leads experts to believe this rate will rise.
- Despite expectations of a market slowdown, businesses have been increasing their spending; particularly in IT sectors, such as cloud computing, cybersecurity, AI, and process automation.
Top CFO Priorities in 2024
I've analyzed the sentiment from a collection of whitepapers on the outlook for CFOs in 2024, including those from PWC, Gartner, McKinsey, and more.
Based on this res are the 5 biggest priorities for CFOs across North America in 2024:
- Embracing a Broader CFO Mandate
- Navigating Inflation & the Macroeconomic Landscape
- Supply Chain Disruption & Management
- Advancing ESG Initiatives
- New Technologies & Automation
I'll dive into each one in more detail below:
1. Embracing a Broader CFO Mandate
If you haven't heard the term "strategic CFO", you may want to familiarize yourself with it.
Companies are increasingly expecting their CFO to take a more active, operational position within the business, implementing robust financial technology to give the executive team more analytical insights.
While much of the current narrative surrounding this concept focuses on technological implementation, the CFO is also expected to be increasingly involved in day-to-day operations within companies. This includes:
- Spending time with the business's other functional operators - ie business line managers - to best understand the financial data they're receiving
- Expanding skillsets beyond accounting to focus on forward-looking information
- Making decisions on the direction of the business, based on intricate risk models
- Creating varied forecasts that can be relied upon in rapidly changing economic circumstances
2. Navigating the Macroeconomic Landscape
Inflation and macroeconomic stability are major concerns for all executives, but the CFO is charged with leading efforts here.
This includes devising and implementing strategies such as:
- Right-sizing and cost-cutting
- Implementing automation
- Enhancing procurement and supply chain management
- Balanced investments in both resilience and proactive growth
The ability to balance cost management with strategic investments in critical areas such as IT infrastructure, employee training, and data management technology Is the exact type of thing that will set great CFOs apart, as we move further into 2024.
3. Supply Chain Disruption & Management
While the pandemic's world-changing effects largely seem to be in the rear-view mirror, CFOs are finding rampant issues and insecurity in supply chain management.
Despite some improvements, ongoing geopolitical tensions and other factors continue to pose significant risks, necessitating continuous efforts to strengthen supply chain operations.
Other leading CFOs have declared they're exploring strategies like reshoring and nearshoring to mitigate risks and improve supply chain resilience. The emphasis is on reviewing sourcing strategies, investing in technology to enhance supply chain visibility, and working closely with suppliers to ensure continuity and flexibility.
4. Advancing ESG Initiatives
The Securities & Exchange Commission proposed that all public companies disclose their carbon emissions, climate risks, and plans for reducing greenhouse gases starting in 2024.
This can quickly become an operational risk for the business, with 41% of finance leaders citing that not meeting sustainability commitments is a moderate or serious risk for their companies.
Implementing a solid game plan now can bring transparency, meet stakeholder expectations, and help mitigate regulatory risk as the SEC gets closer to their proposed action date.
5. New Technologies & Automation
As future revenue looks insecure, CFOs are choosing to invest in technology and reskill current staff to hone analytical capabilities.
Generative AI is the biggest thing since sliced bread, which has made everyone jump in. In fact, most businesses are only seeking financial talent that can help them with digital financial transformation.
If you've already implemented a good starting tech suite, the next best step here Is hyper-automation. It combines robotic process automation (RPA) with machine learning, making repetitive processes better by using different types of new technology together.
Your Priorities Are Multifaceted
At the end of the day, the priorities of CFOs will always boil down to what you can do to achieve business growth right now without sacrificing long-term sustainability.
Start from the broader picture and bring it down to an action plan for the next six months. And remember, you got this.
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