One lesson we have learned in the 2020s is that the concept of “normal” no longer exists. Disruption is the name of the game. The financial landscape is constantly changing, and to be successful, finance leaders must have a clear vision and be prepared to adapt. By investing in proper technologies and resources now, executives and CFOs can put plans in action to ensure financial success in 2023.
Modern CFOs are expected to use their financial expertise to drive digital transformation and improve customer satisfaction, retention, and revenue for their organizations. To do this effectively, it is important for CFOs to invest in technologies that can automate processes and help mitigate the effects of inflation. Automating financial reporting, for example, can not only increase efficiency but also reduce overhead resource costs and minimize the impact of inflation.
1) The Impact of Cloud Integration on Resource Requirements
According to a recent Gartner study, a majority of CFOs (80%) plan to maintain or increase their investments in digital technologies through 2023 regardless of inflation, and with good reason. As ERPs continue to integrate with cloud technologies, innovative tech stacks will significantly simplify business operations and free up resources within reporting, planning, budgeting, and tax teams. As resource needs evolve, budget allocation priorities may shift, such as directing more funding toward planning and forecasting in the event of a potential recession.
2) The Importance of Timely Business Insights
The additional resources freed up by cloud adoption will be particularly useful as finance teams will be expected to provide crucial business insights in a more timely and accurate manner. Many organizations use multiple ERPs and data sources, and without a single source of truth to house and process their data, their financial planning and analysis (FP&A) teams will struggle to provide the timely and insightful insights required to navigate during unpredictable times.
3) The Shift from Periodic to Real-Time Reporting
Although cyclical reporting schedules have long been the standard, cloud technology improves the feasibility of real-time reporting, making it become the preferred reporting technique. Finance teams will be able to shorten reporting cycles and produce faster outcomes with the help of cloud-compatible reporting technologies. The month-end close process will be replaced by real-time financial reporting as finance teams improve their ability to produce forecasts and actuals on demand.
4) The Ability To Be Agile Will Be Necessary
Inflation has proven difficult to curb, increasing the likelihood of a recession. To prepare, businesses should ensure they have the necessary plans and technology in place to weather an economic downturn. By implementing agile technology solutions, organizations can begin planning and budgeting for both the best and worst-case scenarios as well as what-if scenarios, making them more adaptable to impending economic turmoil.
5) Investor Preference for Established Companies Over Risky Start-ups
Inflation and the possibility of recession are causing venture capitalists and private equity firms to be more cautious about investing in start-ups that present a high financial risk. Instead, they are more likely to support established companies that have demonstrated their profitability and financial stability. To attract investment from external investors, organizations must be able to provide strong financial reports demonstrating their financial health and viability as an investment.
Get a Head Start on the New Year
The turbulent nature of the 2020s has left many business leaders uncertain about the future of their organizations. The increasing adoption of cloud technology and agile reporting presents an opportunity for innovation and resource optimization, while the threat of recession and the need to address inflation make effective budgeting and planning critical. Whatever 2023 ultimately brings, CFOs and business leaders will need technology tools that deliver an accurate, timely, and transparent view of relevant data, together with insights into what that data means for their organization.