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The biggest challenges facing CFOs in 2023

13 December 2022 | EN

The economic disruption facing CFOs has been identified as the biggest challenge of 2023. According to a “Decision Maker Outlook” survey of 650 CFOs in North America and Europe conducted by Hanover Research, commissioned by OneStream, 75% of them indicate this factor, and only 4% of executives say that the recession will not affect their activity in 2023. In the coming year, CFOs will face a full set of challenges, including, above all, problems arising from the ESG policy, adapting to a rather rigid labor market, further research and investment in new technologies, unifying data in the organization and changing the role of the CFO in the organization.

What during and after the recession?

CFOs, as employees who have a broad view of the functioning of the organization, forecast large changes, also resulting from the increase in inflation, which is supposed to reflect the economic disruptions just announced. The results of the survey also show that 93% of them believe that inflation will remain elevated in 2023, and thus the prices of products will also increase and the value of cash reserves will decrease. However, the data shows that financial leaders do not expect the economy to collapse until late 2023. In response to these forecasts, more than half of respondents (56%) said they planned to increase prices, and another 47% reported slowing down employment or reducing operating costs.

ESG investments

Another predicted factor affecting the complexity of the challenges in the coming year is undoubtedly ESG factors. Stakeholders of many companies, including those related to companies conducting financial activities, have been obliged to report ESG (Environmental Social Governance) factors for some time, about which we write more here. ESG and climate-related disclosures in 2023 will affect an increasing audience, which translates into increased investment in ESG-related areas to better prepare their organizations for the upcoming changes in the information disclosure policy. Data shows that 87% of organizations plan to make consistent and increased ESG investments in their operations. Only a few respondents said it would reduce or eliminate ESG spending. Leaders will need to invest in ESG requirements while preparing for the recession by balancing their investments in increasing shareholder value.

Talent acquisition

In the coming year, a large number of CFOs also anticipate a change in the approach to hiring finance department staff. This area has been studied by Forbes, and research shows that nearly 80% of CFOs prioritize technology knowledge when evaluating new hires. In fact, given the role technology plays in finance, some believe that hiring data analysts and teaching them financial principles could be more effective in 2023, and it is critical to focus on retaining employees with these skills

The role of technology and automation

In 2021-2022, many companies adopted a new approach to technology and saw their success in this, driving revenue growth while keeping employees connected at a distance. These implementations were mainly based on the implementation of ERP systems. The key challenge for CFOs in 2023 and later years will be the further transformation of finance and the implementation of technology over ERP, i.e. over transactional systems that only collect and store data. The next step is the implementation of Corporate Performance Management (or Financial Performance Management) systems that give meaning to data and the expansion of FP&A (Financial Planning and Analysis) departments, significantly different from ordinary financial departments. Technology implementations in the financial area will also be a big challenge because a large percentage of CFOs claim that they do not have enough knowledge to fully optimize the technology and choose a good tool for financial transformation, which introduces additional difficulties. After all, the majority of CFOs believe that software for financial management significantly increases productivity.

Unification of various data in the organization

In 2023, CFOs will finally have to face the challenges of legacy data collected over many years in disparate, unconnected systems. The speed and agility expected of businesses in 2023 are increasing the need for up-to-date, accurate data to support decision-making. Unification of data for analysis eliminates downloading them from separate databases and spreadsheets. At the same time, a single data source also increases reporting speed and reduces the inefficiencies and errors inherent in manual processes. Accenture found that 76% of UW CFOs believe that the unification of dissimilar data is necessary to achieve business goals. Another important dimension of the disparate data challenge is the need to ensure that the company’s financial statements are accurate and auditable. This is a perennial problem for public companies, and it will affect public and private companies of all sizes in 2023 – for example, when applying for loans. The added benefit of unified data: seamless audit engagements and lower costs for professional services and finance department overtime.

Changing the role of the CFO

It has always been known that CFOs have a lot on their minds. The role of the CFO extends beyond financial responsibilities to include strategic responsibilities throughout the company. After closing the books of accounts for 2022, CFOs will face their toughest tests yet. Today’s CFOs are active members of their company’s management team with broad strategic responsibilities and report directly to CEOs, boards of directors, and CEOs. A Brainyard survey of leaders across 21 industries found that most CFOs are responsible for functions outside of finance. This evolution of the CFO role sees them take on new strategic responsibilities. All indications are that the evolution of the role of CFO will continue in the coming year, according to research by the Institute of Management Accountants, where 72% of surveyed members believe that the role of CFO will continue to expand – even very significantly – until 2025.