The changing challenges and focus areas for CFOs around the world

The post-pandemic landscape has made CFOs evaluate business models and place more value in transformative initiatives that help them prepare for future challenges. Their roles have changed along with their areas of focus.

CFOs' imperatives have changed since 2020, according to a new report from Everest Group and WNS, Global CFO Survey 2022: Separating Chatter From Reality. Cost and pricing pressures because of inflation are now atop a list of five organisational challenges, up from third-highest two years ago, the report said. And while business strategy reassessment was the top step the finance function took in 2020 to address challenges, strategy is now fourth on a list of five, replaced at the top of the 2022 list by cash flow improvement.

One strategy of best-in-class organisations to aid cash flow was related to technological tools. The report said such companies are using future-focused "analytics to predict late payments and prescribe actions to pursue customers based on behavioural analytics." However, the report said, overall adoption of such advanced tools is limited.

The survey polled 300 CFOs and their direct reports around the world and across industries.

The report also found that organisations are more eager to invest to create a future-ready finance and accounting function in 2022, when compared with 2020. While 41% are cautious about large-scale change and prefer to transform in steps, 29% have an appetite to "invest aggressively to move ahead of … competitors." The percentages in both categories are higher than in 2020, reflecting a greater desire to invest in transformation.

Complex, judgement-intensive areas are attracting an equal degree of transformation investment as transactional areas such as accounts payable and accounts receivable, the report said. "Almost 40% of organisations are moving beyond transactional processes to focus on transforming judgement-intensive processes," the report said.

Digital technologies on the increase

The report said that the adoption of digital technologies has increased significantly across most organisations, with more than 68% citing significant improvement in digital adoption and more than 85% successfully meeting or exceeding their expectations.

Most CFOs agree that improving data management drives the highest return on investment (ROI), the report said, and many of them are actively investing in improving data management.

Risk and compliance management is another area driving high ROI and active investments. The ownership of risk management is also shifting from internal audit, legal, and compliance leaders to business leaders, which points to the increasing recognition of risk management's strategic role, the report said.

"An integrated finance operations transformation approach helps organisations better design and drive their transformation journeys," the report said. "An effective approach uses connected ecosystems of digital and process enablers supported by knowledge specialists that account for organisational, domain, and industry-specific nuances."

Investment funding challenges remain

While there is a drive for increased investment across organisations, they still need to work hard to secure active involvement of their leadership and a dedicated funding mechanism for transformation to achieve success, the report found.

While most CFOs expect analytics and artificial intelligence to yield the highest ROI, less than one-third have made significant investments in these areas.

"While enterprises' overall investment appetite has increased, most transformation funding is decided or allocated on a case-by-case basis, and maintaining and sustaining long-term funding is still a challenge," the report said.

— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.