As companies continue to battle unexpectedly high inflation and economic uncertainty, understanding this year’s prevailing trends across financial forecasting, fintech stacks, procurement, and customer attribution can help them to increase revenue and market share. Our ongoing research and conversations with other c-suite professionals in the industry have revealed several key shifts in these areas that can affect not only how a CFO does their job but also how their organizations develop and execute on strategic plans.
All the financial shifts we are seeing provide opportunities for companies to seize in 2023 and indicate it will be a year full of great potential despite the broader economic challenges they may face. Let’s take a look at what this year may hold in store:
A New Supply Chain Approach
The Trend: In a recent study almost half of CFOs have indicated that they are moving away from Just-In-Time (JIT) for their supply chain model. As Grace Noto explains,
“CFOs are left contemplating changes to their supply chains as they attempt to navigate shifting economic trends… The study found 72% of respondents said their companies had experienced disruptions or delays due to supply chain challenges, inflation’s effect on third-party vendors, and ongoing pandemic-related issues... Financial executives are taking various steps to address these challenges, with 45% of CFOs and VPs of finance noting they are transitioning away from efficient supply chain models to revenue assurance models.”
While it cannot be determined yet how long this departure will last, leaving JIT behind is a huge shift that will ripple through the business world as a whole. Companies that design software, make products, or offer services to help manage the complexities of JIT will need to pivot to adapt to this change to maintain revenue. Simultaneously, new companies will likely emerge to fulfill new organizational needs where new supply chain approaches are being utilized. As the global landscape of procurement and distribution gets more complex, the most successful companies will be those that utilize the right tools to fulfill those needs seamlessly.
The Financial Implication: Any significant deviation from an existing supply chain approach will cause a seismic financial shift across revenue, reporting, and cash flow management in the short-term, although these financial jolts will ultimately balance out over the long-term. A seasoned financial executive can help lead an organization through this kind of change to minimize the bumps along the way.
Greater Tech Utilization
The Trend: The days of wondering if companies will make investments in their technology are over. These days the question is just how much they are willing to invest. And if recent research reveals anything, it’s a hefty amount!
According to a Gartner study tech spend ranks as a top priority for CEOs and CFOs right now as budgets tighten in response to economic uncertainty. The top areas where executive leaders expect to cut spend are in the areas of M&A and sustainability, with investments in technology receiving the fewest votes. In fact, according to CFO Dive, the majority of CFOs wish that they had invested more heavily in technology to improve efficiency and scalability sooner. They explain,
“59% admitted that if they knew two years ago what they know today, they would have increased technology investments for the finance function earlier. ...Hindsight is 20/20, but this reckoning, in the right hands, can be a powerful tool. CFOs who can look back on past missteps regarding missed technology opportunities may avoid having the same thing happen in the future.”
The Financial Implication: Organizations are going to be even more likely to invest heavily in software, applications, and automation in 2023 and 2024 to support future growth. This shift in prioritization is an important factor to consider when doing ongoing forecasting and modeling because expenses in these areas show no signs of subsiding in the near future.
Increased Focus on Fintech Stack
The Trend: One area of tech in particular that deserves extra consideration is fintech. Each year technology and finance tie-ins are even more in demand than the year before, increasing the size of the fintech market. (A company’s fintech stack is the suite of tools they use to run, support, and improve their accounting and finance functions.) An article on the top trends in finance leadership explains why Fintech has become such a hot topic by saying, “For many businesses, tech stacks solve the problems worth solving. And high-velocity companies implement the most modern technology to propel their business forward.”
If the goal is to optimize a company’s financial management, there is plenty of opportunity for SaaS companies to continue to develop and improve on existing software to support this need. So, much like the resiliency that tech companies are enjoying due to a greater acceptance of the importance of tech spend, the increased adoption of fintech points to a bright future for software companies as they continue to support the financial needs of customers across all verticals. And the companies utilizing this technology similarly benefit by gaining access to the right suite of tools needed to better optimize their accounting and finance activities, improving business results across revenue generation and profitability along the way.
The Financial Implication: A greater adoption of fintech solutions provides new revenue opportunities for tech and services companies looking to expand into additional markets. However, these expansion opportunities must be thoroughly evaluated before proceeding to ensure they are an appropriate use of the organization’s monetary and human resources.
Dark Social Influence
The Trend: While the name may sound sinister, “dark social” just refers to the social interactions that occur in places that companies do not have access to – the shares, recommendations, and discussions on Slack, WhatsApp, Teams, LinkedIn, and other private platforms where un-trackable conversations are happening.
In these places purchase decisions are being made without any input from sales or marketing teams as peers share information and discuss their opinions on business products or services. As a result, companies may be deriving significant leads and conversions from these areas without even realizing it. Conversely, they may be losing leads and missing out on conversions due to what is being shared in these private areas without knowing why.
Leveraging dark social has a great potential to drive revenue, but it poses a problem for companies that rely on accurate funnel data to determine which platforms deserve their marketing spend and how they can best optimize their sales functions.
The Financial Implication: Organizations will need strong financial leadership that can help analyze data (even where the numbers are difficult to discern) to offer a more complete picture of where they are executing well on their strategic plans and where there are opportunities for improvement.
Need help adapting to these shifts? We have a team of highly experienced CFOs that are ready to lend their expertise to companies on a part-time or interim basis. Find out more about how our CFO consulting services can provide your organization the financial leadership it needs to grow. If you need full-time executive financial leadership instead, we also offer CFO recruiting services to help you find the right candidate.
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