As we near the end of a challenging year, finance executives are bracing themselves to navigate yet another ultra-competitive landscape in 2024, amidst elevated interest rates and decreased investor enthusiasm. Ash Botten writes
We know that this has forced businesses in the UK to reassess their growth plans, with 78% believing sustainable growth is now more important than growth-at-all-costs, according to our research. Those that were able to pivot their strategies towards this more sustainable model will be better equipped to face a dynamic economic landscape.
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As we step into 2024, businesses will need to continue to be strategic, divesting from unprofitable ventures and prioritising timely key investments. The ability to remain agile is more important than ever before, and with an election on the cards for the year ahead suggesting further uncertainty, it’s crucial businesses have their house in order. This must start with the finance team.
Below, we delve into the four essential trends that successful finance teams are likely to encounter to achieve success in 2024.
- Smart CEOs will look to the CFO as an ally
- In periods of challenging economics, the CEO needs the finance team to be a strategic soundboard to the rest of the organisation. Tipalti’s research shows this demand emerging – over a third of UK CFOs (39%) said that collaboration with the CEO and other members of the C-suite has become more necessary than it was two years ago, while a fifth say they’ve seen a greater demand placed on them by the CEO and board.
There are big benefits to CFOs taking on a wider leadership role – naturally, they have more nuanced insights into the strategic direction of the business. Smart CEOs know they are also well placed to understand the short-term potential of the business’ growth plan, whilst taking into account the changing market conditions.
In a challenging climate, finance teams can help businesses stabilise operations and look ahead at how sustainable growth can be achieved. But it’s not all doom and gloom; they will be tasked with finding opportunities, strategically timing investment and expansion decisions, as well as forging a path to profitability long term.
However, to fulfil this role, the finance team needs greater visibility and control over day-to-day finance tasks in order to leverage the insight for strategic activities that will drive the business forward. This all begins with adopting the right technology to take care of manual responsibilities.
- In periods of challenging economics, the CEO needs the finance team to be a strategic soundboard to the rest of the organisation. Tipalti’s research shows this demand emerging – over a third of UK CFOs (39%) said that collaboration with the CEO and other members of the C-suite has become more necessary than it was two years ago, while a fifth say they’ve seen a greater demand placed on them by the CEO and board.
- The finance office will become a more attractive place for graduates
- As businesses continue to digitally transform and rely on technology to inform strategy, the hiring profile of the finance team will become less about traditional finance studies and more about being analytical. Traditionally, the role was focussed on compliance and control – in which graduates were led by a conventional ‘numbers CFO’. Technology will underpin this transformation in 2024 and beyond, as finance departments modernise and enable the CFO and finance team to break out of the ‘finance only’ bubble.
Consequently, the pull of working in a more dynamic environment will usher in a fresh cohort of skilled young professionals who will reshape the traditional responsibilities of finance professionals. Not only that, but young professionals entering the field will possess a blend of financial competence and technological prowess, further contributing to business strength in times of economic instability. And they themselves are already savvy to this transformation, with a third (32%) of young professionals saying that modernising finance with technology would be the most exciting problem to solve if they became a CFO. Successful businesses will recognise what benefits this new talent can bring to the finance function.
- As businesses continue to digitally transform and rely on technology to inform strategy, the hiring profile of the finance team will become less about traditional finance studies and more about being analytical. Traditionally, the role was focussed on compliance and control – in which graduates were led by a conventional ‘numbers CFO’. Technology will underpin this transformation in 2024 and beyond, as finance departments modernise and enable the CFO and finance team to break out of the ‘finance only’ bubble.
- Businesses will have an AI charter on them
- Now more than ever, finance leaders need to modernise with technology to remove manual processes, whilst increasing visibility and control. The past year has been the year that AI tools truly came to the fore for many businesses and it is now a competitive differentiator for finance teams, so much so that all businesses will have an AI charter on them in 2023. According to McKinsey, 40% of those reporting AI adoption at their organisations say their companies expect to invest more in AI overall with the rise of generative AI, and 28% say generative AI use is already on their board’s agenda. It’s therefore no surprise that 77% of UK finance professionals say they are excited about the opportunities that AI and machine learning can bring to accounts payable (AP) and finance.
- In the year ahead, we will see organisations pivot to using systems that have adopted AI already whilst applying AI to their department, to drive greater efficiencies across the whole business. To capitalise on this emerging technology, however, will require a degree of departmental tech consolidation. Systems need to be speaking to each other to detect patterns and identify potential risks, which can help the finance team create strategic growth models.
- The finance team will face a nuanced management challenge
- Aggressive growth models have proved less successful in times of economic uncertainty, so in 2024 we will see many businesses having to pull back on international expansion or product led ambitions. Knowing what to pull back on and what to not deliver to investors will require a strategic leader that has visibility over the areas of the business with the best productivity and profit margins.
For those that have never lived or worked through such challenging economic conditions, communicating this to the rest of the business will be key for success and stability – as well as ensuring employee engagement remains positive. The finance team is well placed to manage this oversight – even more so now with the emergence of AI tools – with the insight and visibility to communicate the direction of travel.
Predicting the future in a world of complex geopolitical shifts, economic uncertainties and rapid technological advancements is immensely challenging. What we do know is that businesses attempting to navigate the future of financial services in such a dynamic environment will require a nuanced strategy to remain competitive.
They must remain laser focussed on driving efficiency, modernising with technology and establishing sustainable growth in the year ahead. This will allow them to be better placed to adapt and remain agile enough to navigate the challenges of a fast moving, changing economic environment. This is particularly important for the finance team itself who will need visibility and control to inform long-term strategic decisions.
- Aggressive growth models have proved less successful in times of economic uncertainty, so in 2024 we will see many businesses having to pull back on international expansion or product led ambitions. Knowing what to pull back on and what to not deliver to investors will require a strategic leader that has visibility over the areas of the business with the best productivity and profit margins.
Ash Botten is Vice President Europe at Tipalti
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