4 Challenges and Opportunities for Finance Chiefs

by Jennifer Toomey

The combination of inflation, rising interest rates, geopolitical unrest and supply chain disruptions are having a massive impact on the bottom line for businesses. As a result, it’s not surprising that CFOs are taking a hard look at their businesses. It will be up to finance leaders and their teams to help companies ride out the storm.

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The role of the CFO has evolved dramatically over recent years, moving beyond the balance sheet and into more strategic decision-making. CFOs are working more closely with business leaders across every department – no longer staying in their finance swimlane, but really becoming a key partner in how the business operates. 

As CFOs look to drive growth, safeguard against risk, and map the best paths to success for their organizations, they are up against some unique challenges. The bright side? Each challenge also presents a distinct opportunity to collaborate with cross-functional business partners and maximize a company’s long-term profitability. 

Here are some of the key challenges that finance leaders face as they help their companies navigate turbulent waters and withstand a tricky macroeconomic climate. 

Controlling Costs 

Cost control is top of mind for CFOs as they take steps to protect their companies against the economic downturn. They are taking a holistic view of the business to understand where costs come from and where to invest. They look at which products are most profitable and examine staffing levels and operating costs. While layoffs make headlines, the reality is that most finance chiefs are concerned with hiring and retaining the right people with the right skills. It’s the ultimate balancing act of controlling costs while keeping quality talent and investing in projects, with innovation that drives revenue and profitable growth. 

In addition, more thought is going into technology investments. For many companies, legacy on-premises systems that require expensive infrastructure, constant maintenance and costly upgrades are a huge annual expense. Migrating these applications to Software-as-a-Service offerings can significantly reduce costs. 

Getting More from Technology Investments 

The theme for the year ahead will be doing more with less. With uncertainty looming, CFOs will be looking to digital technology to help create efficiencies and cost savings wherever possible. 

For companies who have doubled down on technology investments and moved to cloud-based systems since the pandemic, there is an emphasis on leveraging technology to help reinvent, rather than maintain their current business. With embedded analytics and machine learning, modern business applications can help organizations automate tasks so that teams can spend more time on value-added work. 

This is not just an efficiency play, it’s key to enabling organizations to move at speed and make better data-driven decisions. By viewing these advancements in technology as strategically important for their businesses, CFOs are uniquely positioned to lead an integrated approach to business growth planning and can look to these recent investments to drive returns, reduce total cost of ownership, and help the company introduce new services with a minimal amount of new spend. 

Managing Supply Chain Disruptions 

The lockdowns might have ended, but the supply chain disruptions continue. 

The good news? Finance leaders have an opportunity to make long-lasting strides and help build and manage effective supply chains for their organizations. The link between shareholder value and supply chain performance points to a growing role for the CFO in supply chain leadership and optimization. 

Over the course of the next year, CFOs will need to work closely with their chief operating officers (COOs) to plan for and mitigate supply chain disruptions with the help of integrated business planning software. Through this type of collaboration, business leaders can work to reduce waste, actively review inventory levels, identify exposure and reduce costs. With the right tools, processes and organizational structure, CFOs will be able to make business-critical decisions with the best available information. 

Facilitating ESG Planning and Reporting 

In 2023, the demand for environmental, social and governance (ESG) initiatives and reporting will only grow as the SEC’s final rule on climate reporting is expected to be issued early this year. 

According to Oracle’s No Planet B study, 91 percent of business leaders say they are facing major obstacles when implementing sustainability and ESG initiatives. The biggest challenges include obtaining ESG metrics from partners and third parties, a lack of data and time-consuming manual reporting processes. 

As ESG reporting becomes standard in financial reports, the task of pulling together accurate data from across the company—including finance, sales, operations, HR and supply chain systems—is falling on the CFO’s desk. As a result, CFOs must ensure that they have the integrated technology and reporting solutions needed to pull together accurate data from across the company. Not only will greater involvement in ESG initiatives help CFOs establish clear frameworks for reporting, but there will also be an opportunity to seek out sustainability initiatives that will have a positive return on investment. 

Breaking Down Silos with Integrated Systems and Processes 

Finance leaders have their work cut out as their domain expands and their organizations continue to face market uncertainty. However, there is a silver lining: technology can help. Investments in enterprise resource planning (ERP) systems have risen as finance leaders look to increase efficiency and improve controls. 

When business solutions cover every department and bring together data on a single integrated platform, CFOs can take advantage of the cloud to break down silos. CFOs gain the opportunity to work closely with other C-suite leaders to identify the best places to remove costs while keeping enough capital on hand to drive investment and growth. 

With the right systems and processes in place, CFOs can counteract economic and commercial headwinds and chart the future with confidence. Even in a sea of challenges, there are still opportunities to bolster enterprise resilience and stay on course toward achieving long-term growth goals. 

Jennifer Toomey is Vice President, Product Marketing, Oracle