In early 2022, we surveyed* 154 mid-market finance leaders in the US to understand their priorities, concerns, focus areas, and technology investment plans.
In this article, we look at the CFO concerns that we identified from this survey. The concerns of CFOs cover a wide range of areas, including rising costs, market shutdowns, talent crunches, and technology risks.
We asked our survey respondents what are the biggest risks they face in achieving their 2022 goals. These are the top seven responses that we received.
The pandemic has shattered businesses since its widespread onset in 2020. 8.5% of businesses in the US have permanently closed down in the last year due to COVID-19 related market shutdowns. Shutdowns resulted in businesses having to stop operations overnight, payments getting stuck in the cash cycle, employees being laid off, and inventory wasting away.
How to tackle it: In 2020, businesses were forced to manage operations remotely overnight as governments worldwide announced the shutdown of public spaces due to the spread of coronavirus. But, today, many businesses have suitably prepared themselves for remote work, investing in a wide range of technology tools for collaboration, IT security, and cash management. Investing in business continuity preparations and disaster recovery is something that businesses should look at considering the volatile environment.
Finance leaders are always concerned about costs, no matter what other responsibilities they might handle. Ensuring costs do not go above a threshold and optimizing expenses is the top-most priority for mid-market CFOs. But 2022 can prove a difficult year for this and CFOs are much concerned about the rise in input prices. The ongoing war between Russia and Ukraine has further worsened the situation, leading to higher inflation rates.
Input price increases raise the cost of doing business by making the components required for manufacturing a product or delivering service more expensive. It may also lead to supply disruptions. Input prices on a variety of commodities including oil, natural gas, coal, energy, agricultural products, and shipping costs will continue to remain high and put pressure on businesses.
How to tackle it: Reimagine your budgeting and financial planning processes. You may need to rework them to suit the changing conditions such as higher input costs, discounts for customers, etc. Widen your supply chain base and re-evaluate contracts to minimize wastages. Look for good hedging opportunities and design a rolling, scenario-based planning approach to manage demand at least one cycle ahead.
As businesses go increasingly digital and adopt a remote-only or hybrid work model, the chances of cyberattacks also increase. Cyberattacks cause thousands of dollars of loss, crippling business operations. Cyberattacks increased by over 50% in 2021, at the rate of 1,353 weekly attacks per organization. Damages related to cybercrime are estimated to have cost businesses $6 trillion in 2021. This trend is expected to continue into 2022, with increased intensity.
How to tackle it: CFOs need to work with CIOs and the IT team to ensure that their networks and digital assets are secured against all known and potentially emerging types of cyberattacks. Conducting regular security assessments and investing in the right IT and data security tools is crucial.
As businesses emerge from the pandemic, CFOs are ‘double-optimistic’ about revenue growth than they were in 2021. 28% of businesses expect revenues to grow over 50% in 2022 compared to only 14% in 2021. As businesses gear up to acquire and poach customers, increase marketing spend, and enhance the budget for product development and market expansion, CFOs are worried about increased competition dampening their goals.
How to tackle it: Work with the other C-suite executives—CMO, CIO, CTO—to prioritize action items, chart business goals and plans, and decide on budgets and spending that’ll help beat the competition. Analyze the moves that competitors are making, study market predictions by leading analysts, and track the ROI on your investments to measure productivity and value creation.
Regulatory mandates around data security, privacy, and financial reporting have been tightened in the last few years. Companies that violate any of these regulations are fined heavily, not to mention the reputation damage that they suffer. CFOs are primarily concerned about finance-related regulations such as tax codes, antitrust laws, insurance, and data-privacy laws such as GDPR. Mid-market teams often do not have sufficient resources (such as a legal team) to ensure compliance and this could be worrying the CFOs.
How to tackle it: Work with third-party agencies, if needed, to ensure regulatory compliance. Conduct periodic internal and external audits to review financial reports and statements. Use financial reporting tools to centralize data, reduce errors, and drive compliance.
Many mid-size businesses continue to struggle with their IT systems. The lack of IT investment planning has resulted in companies spending randomly on popular solutions, leading to disparate systems that are data silos and often not the most efficient tools. More than half of the finance leaders (58%) we surveyed felt that lack of IT modernization was a big risk to achieving their 2022 goals. More than two-thirds (68%) of the respondents say outdated technology stacks and manual processes negatively impact the efficiency of their operations. These are also voted as the top challenges in managing accounts receivables, along with the lack of digital payment options (60%) and centralized customer data repository (58%).
How to tackle it: The technology landscape is dynamic. Stay up to date with trends and changes in this space. Evaluate possibilities of adopting emerging technologies to stay ahead of the competition and improve productivity and efficiency. When evaluating software solutions, check if they are intelligent solutions powered by AI and ML that can self-learn. Update your legacy systems and invest in cloud solutions, wherever possible.
Attracting and retaining talent is increasingly becoming a concern for business management teams, including the CFO and his office. According to a report, 75% of all Certified Public Accountants (CPAs) will retire in the next 15 years, and fewer millennials are interested in taking up these roles. The ‘great resignation’ has also hit this industry with firms finding it harder to attract and retain accounting staff.
Nearly a quarter of our respondents said that the shortage of staff is a gap in their current AR and AP teams. 70% of CFOs want to hire more people to close the skills gap in their AR and AP teams. Organizations that lag in implementing technology such as AR automation will find it difficult to attract talent, according to 33% of our respondents. 43% of our respondents also say they’ll be focusing more on talent acquisition and retention.
How to tackle it: Look at upskilling and retaining your existing talent. You should empower your teams with technology to improve their productivity and ease their work. Potential hires would also be more interested in your organization if you offer them cutting-edge technology to work on. Also, offer remote and hybrid work options as these are among the most sought after in the post-pandemic years.
Being aware of the market and technological changes happening around you is key to tackling challenges. Stay on top of the latest market and tech trends by following blogs and reports. Look out for webinars and events on trends in your industry and network with your peers and industry leaders to know their thoughts.
Here are some resources on our website that will help you stay abreast of what’s happening in the finance and fintech space, especially around accounts receivable management, treasury management, and record-to-report.
Join our community of finance leaders: CFO Circle
Some blogs, eBooks, and templates that may interest you:
Check out our resources section for more.
If you’d like to talk to us about your AR challenges and check whether we’d be able to help you, do not hesitate to fill out this form and block a time with us. We are always eager to address CFO concerns and help tackle them.
Risk mitigation is a top priority for 75% of the mid-market CFOs that we surveyed earlier in the year. CFOs need to consider all the risk factors, such as liquidity risk, compliance risk, cybersecurity risk, and other operational risks while making decisions. For example, when going ahead with an M&A decision, the CFO needs to consider the debt risk, compliance risks, and personnel risks, among others.
The goals of a CFO include cost optimization, accessing sources of funding, liquidity management, shortening the cash conversion cycle, and growth through acquisitions. In addition to these, modern CFOs also aim for finance team restructuring, data-driven decision making, investment in the right digital technologies, and talent retention.
CFOs care about a wide range of topics such as financial accounting, financial analysis, cash management, budgeting, reporting, revenue forecasting, receivables management, and expenditure planning. New-age CFOs also care about customer experience, talent management, technology adoption, and digital transformation.
CFOs need to be aware of the latest market and tech trends. They should also stay abreast of regulatory and compliance changes and ensure that financial fraud and reporting errors are eliminated. Today, CFOs also need to take on client and media-facing roles to build a strong brand image for the business.
*About the survey: HighRadius and Industry Dive, a leading finance research organization, surveyed 154 finance leaders (CFOs: 44%, VP Finance: 15%, Director of Finance: 29%, and Chief Accounting Officers: 12%) from small and mid-market businesses (with revenue less than $1 billion in the most recent financial year) in the US to understand their priorities, challenges, market outlook, and views on the accounts receivable function and technology at large. This survey was conducted between 10 Dec 2021 and 14-Jan-2022 by CFO Dive.
The HighRadius RadiusOne AR Suite is a complete accounts receivable’s solution designed for mid-sized businesses to put their order-to-cash on auto-pilot with AI-powered solutions. It leverages automation to fast-track key accounts receivable functions including eInvoicing & Collections, Cash Reconciliation, and Credit Risk Management powered by RadiusOne AR Apps to improve productivity, maximize working capital, and enable faster cash conversion. Affordable, quick to deploy, and functionality-rich: it is pre-loaded with industry-specific best-practices and ready-to-plug with popular ERPs such as NetSuite and Sage Intacct. The HighRadius RadiusOne AR Suite is designed to automate labor-intensive processes while streamlining credit and collections activities for faster AR processing, better cash flow and improved profitability.
Lightning-fast Remote Deployment | Minimal IT Dependency Prepackaged Modules with Industry-Specific Best Practices.