Over the past several years, the role of the chief financial officer has seen a complete reimagination. No longer confined to the task of reporting on the financial health of the organization, CFOs and their finance departments are taking a front seat in strategic decision-making to help businesses navigate a challenging macroeconomic landscape.
As the saying goes, however, with great power comes great responsibility. With CFOs taking a more active role in deciding how capital is invested and the corresponding strategy, the forces impacting their departments have become more numerous and complex.
What’s in the works for CFOs for the rest of the year? From adopting generative AI to embracing consensus forecasting, here are five emerging trends that will help CFOs lead their companies to success.
CFOs Will Find New Ways to Manage Cost and Growth in a Dynamic Environment
CFOs are striking a delicate balance between cost and growth to navigate turbulent waters. To drive organic growth, they’ll be using sharper insights and forecasts that prioritize customers and products. And with global instability and economic pressures continuing to impact their organizations, they’ll use extensive scenario planning to build new business models that are agile enough to withstand volatility.
Unfortunately, the shortage of accountants with the right combination of skills isn’t showing signs of slowing. As a result, many CFOs are on the hunt for new ways to attract and retain skilled employees. To boost employee engagement while curbing costs, we suggest a taxonomy-based approach to create the right service placement and competency-based operating models. By implementing end-to-end digitization and re-imagining processes, employees will be able to focus on more fulfilling activities that maximize their skills and potential.
Gen AI Will Take Its Seat as the Finance Operations’ Co-Pilot
Gen AI is emerging as a valuable assistant to accountants, enabling them to deliver and create value. For example, savvy finance teams already use the tech to empower their accounts payable helpdesks to improve user experiences by learning how suppliers and customers talk and what’s important to them. This leads to deeper supplier loyalty and more fruitful vendor negotiations.
CFOs are also embracing gen AI’s power to enhance partnerships across the business by generating actionable insights and writing intelligent commentary tailored to teams’ specific needs and interests. It also makes the FP&A process more proactive by giving real-time answers—rather than tapping into a retroactive repository of charts and diagrams—which improve decision-making, communication, and strategic alignment.
Additionally, accountants will be increasingly being asked to monitor gen AI models, ensuring their outputs are accurate, compliant, and ethically aligned. This underscores the need for CFOs to facilitate training on how to guide and optimize gen AI through effective prompt engineering.
Business Functions Will Receive Relevant Insights from Dedicated Finance Specialists
As a way of democratizing intelligence, CFOs will give business functions access to financial skills and insights tailored to their needs. This transforms the role of finance from a supporting player to central partner, driving business success in several key ways:
When finance collaborates more closely with marketing, operations, and sales, for example, companies will see better and faster decision-making, ushering in profitable growth. And with finance professionals readily available to develop specific intelligence and strategies for each department, financial acumen and performance will improve across the organization.
Having access to relevant financial insight will also boost proactive risk management by offering strategic forecasting and planning tailored to each business unit.
Consensus Forecasting and Scenario-Based Decisions Will Be the New Norm
CFOs will play an increasingly central role through consensus forecasting. This process combines multiple stakeholders’ perspectives with external experts and sources to create a more accurate and comprehensive forecast for the company’s financial future.
By orchestrating this collaborative approach, CFOs will use their unique roles at the intersection of finance, strategy, and operations to bring together insights from multiple functions. When blended with input from objective external information, such as market trends and industry analysis, the result offers an unbiased baseline.
It’s also crucial for CFOs to adapt to scenario-based decision-making, which involves considering multiple ‘what if’ scenarios, rather than making a single decision based on one prediction. Whether it’s sustainability, new regulations, or go-to-market, this approach allows a company to prepare for a range of outcomes, resulting in more informed, flexible, and resilient decisions.
Divestitures Are on the Rise
The number of divestures is growing, and we expect this trend to continue. Businesses are offloading non-core assets because they can’t afford to tie up more capital investment or the management effort it takes to run them. Meanwhile, new entities want to make a clean break from their previous companies and don’t want to carry the legacy burden.
What does this trend mean for CFOs? In mid-cap businesses, they’ll be front and center, leading on execution. They’ll need to bring their expertise on how to break apart and create process operating models, systems, talent, access controls, and more. For example, ensuring that both the divested entity and the remaining company have the necessary technological support, assessing staffing needs, managing the transition process for employees, and enabling regulatory and legal compliance.
Lavi Sharma,Senior Partner, Finance and Accounting at Genpact also contributed to the article.