The future is never certain. Yet, as Chief Financial Officers (CFOs), anticipating the future is an essential part of the job.
So, what should be on your radar for 2024? 🤔
Below, we explore some of the biggest CFO trends you can expect to see over the next 12 months.
1. Embracing finance transformation and AI
The digital revolution in finance is here, and it's powered by Artificial Intelligence (AI). KPMG reports a whopping 59% of C-Suite leaders are using AI in their finance departments, signaling a seismic shift towards digital transformation. But why is this CFO trend so pivotal?
AI and automation are reshaping finance, from streamlining transaction processing to enhancing forecasting with machine learning. It's not just about efficiency; it's about unlocking strategic decision-making and transforming the very nature of finance functions.
CFOs are diving deep into AI, leveraging predictive analytics and intelligent automation, driving quicker close cycles, and freeing up staff for strategic roles.
Key focus areas include:
- Automating transaction processing and reporting.
- Applying machine learning for enhanced forecasting and planning.
- Leveraging predictive analytics to model different risk scenarios.
As CFOs continue expanding their use of AI for finance activities, there are a few best practices worth emphasizing to maximize value:
1. Educate and train your team
For starters, your team will only love AI as much as they understand it. Take time to develop AI literacy within your finance team to ensure they understand and can leverage these technologies effectively. When your people grasp how AI can enhance their impact, adoption skyrockets.
2. Invest in the right tools
Not all tools are created equal, so invest wisely in financial software that can automate routine tasks, enhance data accuracy, and provide predictive analytics.
3. Prioritize data security
Never lose sight of protecting your most valuable asset – your data. State-of-the-art data security safeguards information integrity and keeps outsiders outside...where they belong!
2. Developing ESG and sustainable financial strategies
Sustainability is no longer a buzzword - it's a financial imperative (and one of the biggest CFO trends of 2024).
Nearly a third of CFOs are now evaluating how climate change scenarios could impact financial performance in 2024.
Sustainable financial strategies are at the core of corporate responsibility, and investors are taking notice. This year, you'll notice more CFOs integrating ESG considerations into financial planning, exploring green finance options, and optimizing ESG performance to drive long-term value and resilience.
Tips for improving ESG efforts:
- Integrate ESG into financial planning: Embed ESG factors into financial models and risk assessments.
- Collaborate with stakeholders: Engage with investors, customers, and employees to align your ESG strategies with their expectations and values.
- Report transparently: Ensure your ESG initiatives and their financial implications are communicated clearly in your reporting.
Sabrinthia Donnelly
3. Focus on profitable growth and optimizing costs
The balancing act between growth and cost-efficiency is more critical than ever. CFOs are scrutinizing budgets, evaluating growth opportunities, and focusing on the most profitable ventures.
Key initiatives include:
- Reviewing portfolio of products and services to identify and double down on the most profitable.
- Scrutinizing budgets and identifying areas of cost savings through process efficiency.
- Carefully evaluating growth opportunities against potential ROI.
By focusing on profitable growth and cost levers, CFOs can guide their organizations toward peak performance despite turbulent seas.
4. Improving financial data storytelling, a growing CFO trend
CFOs are looking to not just report the numbers, but tell stories that matter. Effective data storytelling enables CFOs to convey complex financial information in a clear, engaging, and actionable manner, leading to better decision-making across the organization.
The CFOs able to connect the dots between financial data and corporate priorities will have a leading edge. Here’s how you can be one of them:
- Develop narrative skills: Learn to craft compelling narratives around data to highlight key insights and actions.
- Use visualization tools: Use dashboards and infographics to make financial data more accessible and understandable.
- Train for clarity: Educate your team on how to present data clearly to different audiences (remember - not everyone speaks 'finance').
Sabrinthia Donnelly
5. Talent retention
“Failing to prioritize talent management results in increased competition for qualified candidates and potential gaps in staffing.” – William Carter Jr., M.F.A., AICPA & CIMA
As William Carter Jr. from AICPA & CIMA points out, neglecting talent management leads to increased competition for qualified candidates and staffing gaps.
Retaining top finance talent is a rising CFO trend because it’s crucial for maintaining continuity, fostering innovation, and ensuring competitive edge.
With talent competition heating up, the costs of turnover and loss of intellectual capital can significantly hurt bottom lines. As such, CFOs are thinking deeply about talent retention strategies on multiple fronts — competitive compensation, stimulating work environments, upskilling programs, career development opportunities., etc.
Investing in top talent retention will likely be a key theme across the C-Suite in 2024. Because at the end of the day, people fuel the numbers.
Tips to help retain top finance talent:
- Invest in professional development: Offer continuous learning opportunities to keep your team engaged and up-to-date with the latest financial trends and technologies.
- Foster a positive work culture: Create an inclusive and supportive work environment that values employee contributions.
- Offer competitive benefits: Ensure your compensation and benefits packages are competitive to attract and retain top talent.
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