If you're in finance, planning for the future is your job. CFOs and finance leaders must remain at the forefront of the latest trends and priorities for industry growth and development to thrive. Data-driven financial executives willing to adopt new strategies and technology can speed up insights, leading to better decisions.
Don’t risk being left behind. From supply chain disruptions to treasury management fundamentals, here are five CFO trends you need to watch.
1. Market risk
Supply chain disruptions and inflation became considerable risk factors in 2021 and 2022, primarily due to the coronavirus pandemic. Annual inflation reached 7.9% in February 2022 — the sharpest increase since 1982 — making inflation a bigger threat than in the past. To help mitigate market risk, a CFO can:
- Evaluate products and service streams to ensure revenue mix
- Proactively strengthen pricing to stay ahead of the rising market costs
- Set up an alternate supply chain and review stock levels
- Focus on the future, not the past, to proactively manage cash flow
- Use tools to track critical data visualization for better decision making
SMBs may see some relief as the Federal Reserve began to raise interest rates in March 2022 for the first time since 2018, but managing market risk is crucial.
2. Cloud-based solutions
Many businesses accelerated the shift to cloud-based solutions because of the pandemic. But even in a post-pandemic world, cloud usage is vital in business processes. According to the Flexera 2022 State of the Cloud Report, nearly one in four SMBs have up to $600k in annual cloud spend, and 67% spend up to $2.4 million.
It’s easy to understand why it’s a growing trend — the cloud increases accessibility, scalability, economy and reach. That’s why cloud computing, cloud architecture, cloud migration and cost management are critical strategies for CFOs.
3. AI and other advanced technologies
CFOs cited artificial intelligence (AI) as a “top strategic shift in a CFO Signals™ survey. So, there’s no doubt AI and other advanced digital technologies can modernize insight and empower finance teams to take their businesses to the next level.
According to a McKinsey Global Survey, AI adoption is on the rise, with 56% of respondents using it for at least one function. The adoption of this technology is increasing, and the potential value is huge. AI can learn from large data sets and introduce task automation to improve accuracy in budgeting, enhance liquidity forecasting and fortify against payment fraud.
4. Focus on professional and team development
Professional development is a top financial focus for CFOs largely because of the technology-driven and “always-on” business environment. Specifically, the need for digital skills can change quickly. A focus on skills development can improve agility, allowing quick course correction when the situation calls for it.
CFOs must also invest in their teams to grow skill sets and increase the company’s overall resilience. Proficiencies in analytical and problem-solving skills are key, but emotional intelligence and interpersonal skills are also crucial for a company’s longevity.
5. Implement treasury as a service
Treasury as a service (TaaS) is a complete outsourcing solution to better manage a company’s assets. While treasury management is an essential financial service for large enterprises, it’s now available for SMBs without hiring an entire treasury team. It enhances idle cash management and opens the door to a new revenue stream without sacrificing liquidity.
In the world of technology, everything is evolving at a fast pace. Despite the current economic conditions, businesses have plenty of opportunities to grow. As a CFO, you need to consider risks and be willing to say "yes" to emerging trends. A strategic approach can help you stay a step ahead and avoid falling behind on technology advancements.
For TaaS, Treasure can help you get 100x* more revenue on your idle cash. It’s simple to implement, and you have the option of no-market-risk allocation and low-risk fixed income mutual funds selected and managed by Treasure.
Sign up for a Treasure account today — it takes less than 10 minutes.
*Based on the yield of the funds offered by Treasure as of 03/31/2022. Source: Bloomberg.
*Average business bank account yield is currently 0.03%. Source: Bankrate.