The job of Chief Financial Officers (CFOs) is changing rapidly as we enter 2024. In a time of digital changes, economic uncertainties, and shifting regulations, CFOs are taking a leading role in making important strategic decisions.
Here are some important trends that will affect what CFOs should focus on and their responsibilities in 2024.
Exploring the Key Priorities for CFOs in 2024
Global political instability, encompassing war, superpower tensions, and internal turmoil, adds complexity to planning for 2024. Despite these challenges, CFOs must collaborate with their management teams to formulate practical solutions.
In this article, we highlight the Top 10 Priorities for CFOs in 2024
1. Strategic Leadership
Given the rapid transformation of business models, especially with the ongoing green energy shift and the pervasive XaaS trend, CFOs play a crucial role in guiding strategic discussions within their companies. Their insights can assist the management team in making valuable decisions with trillions at stake.
2. Revamp Finance Operations
As the CFO's responsibilities grow, the finance function's impact also expands. Managing vast amounts of data, finance leaders now play a crucial role as data custodians. Through advanced analytics and cloud solutions, CFOs can leverage strategic insights to enhance forecasting, optimize cash management, and reconsider organizational frameworks.
However, finding skilled professionals with the required strategic and technical expertise to navigate uncertainties is increasingly challenging. There's a significant demand for individuals proficient in data analysis, forecasting, and the associated technologies.
3. Address the Talent Gap
In today's evolving world and workplace, the finance function requires a new set of skills. Automation handles transactional tasks, analytics handles Big Data, and business leaders seek real-time insights. The CFO and finance team must enhance skills in data, analytics, and human aspects like influence, communication, relationship-building, and self-leadership. Simply hiring won't suffice due to a significant talent shortage in this field.
4. Navigating the Future
Predicting the future is uncertain, even for CFOs. Change is constant, and McKinsey's Next Normals will continue to impact us. CFOs should prioritize building agility and resilience in all company endeavors to adapt effectively.
5. Embrace Generative AI for Ongoing Digital Transformation
In 2023, many companies explored this technology, but some CFOs hesitated due to data protection concerns. Despite reservations, it's crucial to experiment with Generative AI in 2024 to uncover its benefits for the company and finance team. As major software players integrate these tools into standard solutions, CFOs may find it more convenient to adopt them.
6. Maximize Returns Through Reinvention
High-performing CFOs understand the importance of a self-sustaining budget for driving organizational transformation. They confidently make strategic investments, incorporating new revenue streams, expanding into different markets, and adopting cutting-edge technologies like AI and FP&A software (example in the image below).
Embracing technology not only boosts efficiency and productivity but also controls or lowers costs. Additionally, tech tools can optimize the return on major expenses, emphasizing a comprehensive evaluation of risk across various levels such as business, programs, technology, data, security, and controls.
7. Fuel Expansion
The economy faces a crucial juncture, with predictions ranging from a possible recession to a return to normal growth in 2024. Following 1.5 years of inflation and current high interest rates, resilient CFOs are steering growth through savvy strategies like business model shifts and mergers and acquisitions.
8. Enhanced Financial Planning
In today's unpredictable financial landscape, effective financial planning is crucial for businesses globally. Companies seek insight into the future, making it essential to develop accurate machine-learning models. This allows FP&A teams to focus on interpreting results and planning actions, fulfilling management's need for visibility into the future.
9. Reduce Debt
In the past decade, money seemed free, leading to rising debt levels in global companies. Now, companies must lower their debt levels as refinancing comes at a high cost. Prioritize freeing up cash to repay loans.
10. Improve Collaboration
Enhancing teamwork for better financial planning is crucial for CFOs. In 2024, prioritizing a more integrated business planning setup is essential. This approach not only enhances the planning process but also encourages collaboration among all company teams. To outperform competitors, it's vital to work together rather than in isolation and prioritize actions that benefit the company as a whole.
Conclusion
Now is the perfect moment to assess your progress on various priorities – some may have advanced in 2023, while others might require starting from scratch. Knowing your initial position provides a solid foundation. Engage in discussions about these priorities with your team, ensuring alignment with the company's overall goals. Finance should not operate in isolation but rather contribute to the broader company direction. Involve the team in strategizing their participation, and identifying key talents for priority areas as valuable development opportunities.