You may have noticed it: This is a strange moment for businesses. On the one hand, economic growth is skyrocketing across the board. Demand is through the roof, and many consumers are working toward their own personal sense of normalcy. You’ve likely seen and experienced challenges, but you’ll also find incredible opportunities in the current economic climate. Even as you embrace the opportunities, you’re still facing significant financial challenges.
The twin issues of inflation and workforce shortage drive expenses, cost, and revenue, making it harder for your business to operate. These challenges mean that your key executive positions in financing (Chief Financial Officers, Chief Revenue Officers) must understand and be prepared for how your company will respond. As such, here are five things that all CFOs should know today.
Yes, goods are more expensive, and inflation is affecting your business. You don’t need to be an economist to recognize that inflation is increasingly impacting every sector across the board. You see how you and your customers have a reduced purchasing power, so they’re spending more to get what they purchased before.
As a revenue officer, though, you’ve seen that inflation isn’t even consistent in how it might hit your business. Rising inflation might hit energy, food, and vehicle-related concerns. Then you might see comparatively slow growth to inflation in medical costs, alcohol, shelter, and apparel. For good and bad, you’ll likely experience the same spikes in your business.
So, what does this mean from a revenue perspective? Your revenue may increase, but your costs are likely increasing at a more-than-commiserate rate. The increase in inflation has not slowed down. You may feel the pressure to either increase your revenue by raising your prices or cutting costs elsewhere to keep your margins the same.
Alternatively, you may need to shift your revenue or expenditure collections to an area where inflation might not affect you in the same way. There is no easy answer, of course. As a CFO, you need to review the data and make the decision that works for you and your company.
The massive labor shortage you’ve seen over the last few years showszero signs of a swift conclusion. These new realities of labor shortage and collection necessity are just additional pressure points you’ll continue to face as you work to fill your job vacancies, manage workflow, and organize your office dynamics. While you may have been hit harder than others, it’s safe to say that you have probably not escaped unscathed, and it’s not over yet.
This shortage has also hit areas like finance and accounting. So, you may see your key employees leave these fields in search of more profitable and less stressful positions. You might call it a response to employee burnout, but it still means a shortage in your essential staffing roles in finance and accounting, which are critical to your company’s success and growth.
According to a September 2021 survey, 95% of CFOs were having a more challenging time fulfilling jobs. That’s affecting revenue collection operations in particular since it has become more challenging to track your outstanding revenue. Your team will also face challenges as you attempt to spot the trends in your industry and properly bill your clients for services rendered.
It may be the new norm, but it also means that you need to find new ways to structure your office and critical office roles to meet demand and move forward no matter what challenges you might face. It means CFOs are often required to be more technologically driven, with an eye for bringing on talent that will contribute digital expertise and experience.
Beyond the basics of finance skills and knowledge, CFOs need team members who already have the ability to analyze data and think more critically. Those key technical and problem-solving abilities are key to bridging the current gap in the labor shortage, 57% of finance leaders also believe it’s key to a company’s growth and long-term success.
By now, CFOs are familiar with the concept of automation, and many have already jumped fully onboard. Rapidly accelerating automation has ramped up over the past decade with good reason. Already, 67% of companies are using automation, with functions that have already improved the process and procedures for CFO and DevOps in a variety of ways. Here are just a few of the benefits you’ve already seen.
- You can rely on tech tools to keep in better touch with other departments. So, revenue operations are less siloed and more interconnected within your larger company.
- You can use data analytics to demonstrate and track trends. So you can better forecast where revenue will come from and when it will arrive.
- You can take full advantage of automated collections, refunds, and customer service. So, you can strategically use your limited resources elsewhere in your department or across the company.
- You can better make use of and become reliant on algorithms to make calculations and identify weaknesses within your department and even across the company.
- You can use advanced technology to move from the need to constantly generate or create reports to real-time data and analytics.
A big driver in the recent push for more automation has been directly compatible with the labor shortage in the revenue-collections sector. When you don’t have the support staff you need to fulfill orders and collect, you have no choice but to find other ways to pick up the slack. Even for those CFOs who haven’t yet fully embraced automation, they’re not far off.
Some 58% of companies plan to adopt automation strategies and functionalities, and 33% plan to do it in 2022. Of course, once you shift to more automated processes and procedures, you probably won’t go back. So, CFOs are also becoming more dependent on computers than ever before. Those automated tasks are now fulfilling the roles of your staff members, but they still need a team that knows how to push the right buttons and understands the analytics and reporting process.
CFOs may need automation to streamline the path toward technological innovation, but they also need talented team members who will embrace the required digital finance skills, make the appropriate changes, continually develop new skills as needed, and embrace the changing finance functions to best serve and support the company’s needs. It may not be easy to find with the labor shortages and other challenges, but automation paired with a talented support team of change managers are absolutely essential.
A report from McKinsey consulting demonstrates that CFOs are having a more challenging time than ever as they work to fulfill critical job roles and responsibilities. It’s inevitable that they are also feeling overextended as their own CFO responsibilities continue to expand. According to the report, CFOs have consistently felt the need to expand into new areas not traditionally considered to operate under their portfolios.
As just a few of their evolving responsibilities, they’ve taken on investor relations, post-merger integration, working directly with corporate boards, making purchases, and so much more. These new responsibilities add pressure to an already overburdened executive. So, it’s even harder for CFOs to fulfill the essential responsibilities of their job.
What’s really being asked of CFOs is that they act as a bastion for stability and reliability in their role as finance guru while embracing technology. They must be dynamic and capable in their ability to fuel and support corporate growth, but they can’t get bogged down in the quagmire or nitty-gritty details of everyday mandates and requirements. They must simultaneously maintain their delicate balancing act on the cutting edge of technology and innovation, while carefully navigating control and compliance challenges.
In the past, a CFO may have spent the majority of their time on core functions, with less time focused on the “big picture” strategic development, transformation, and future growth. As the scope of responsibilities has exploded, CFOs must pivot to focus more on sustainable growth and change. It’s a growing fixation on the future, but it’s more than just a resolution in the pursuit of growth.
An estimated 31% of small businesses shut down or ceased operations either temporarily or permanently over the last few years. We’ve seen a resurgence of growth with businesses opening up and even thriving, but CFOs also know that they’re not out of the woods yet. It’s now more important than ever to use available data to make sure your company’s financial operations are as productive and efficient as possible.
The quality and reliability of data is essential for 41% of CFOs as they work to boost their internal processes, enact change, and make educated decisions that will set them on the right path for their company’s future success and growth.
Of course, one of the chief job responsibilities that many CFOs fulfill is revenue forecasting and projection. In the best of circumstances, these key job responsibilities are challenging and time-consuming. It may feel more like art than science even under the best of conditions, but now it’s nearly impossible. Consider these three difficulties currently affecting CFOs as they work to maintain their strategic projections and revenue forecasting schedules:
- Rapidly increasing inflation is hitting sectors of the economy differently, making attempting to estimate costs and prices that much more difficult.
- Worldwide pandemic concerns are still affecting workers and tying up the supply chains in ways that are still difficult to forecast.
- An ongoing war in Europe has further complicated and delayed the shipping of raw goods. It’s a nightmare that still threatens to affect nearly all international concerns in some way.
These issues simultaneously make it harder for you to forecast revenue. At the same time, it’s more important than ever that you understand and can quickly articulate how your supply chain will be affected by the changing world and evolving economic conditions. You must plan for the future without having a clear and stable method for achieving the desired revenue forecasting and projections.
It’s more important than ever that you get the most accurate revenue forecasts, despite the challenges you’ll face. If you are looking for help to empower your revenue operations, collect more money, and strategically grow your forecasting ability, Next Quarter is here to help. These are the tools and proven solutions that will ensure your growth and success no matter what challenges you’re facing.
We offer a variety of unique tools and forecasting solutions that will help you understand your market and grow your business now and in the future. We ensure that you have all the resources and tools at your disposal to offer the forecasting revenue projections you need. If you’re ready to learn more about what we offer, just reach out to our team. We’re standing by to support your growth and success in the current economic landscape. Contact Next Quarter today to schedule a demo.