By W.B. King
When 600 chief financial officers (CFOs) and finance leaders from the U.S. and Europe were polled in early 2023, 90% reported “increasing struggles to maintain a competitive edge, exacerbated by tradeoffs between cutting costs and investing in growth.”
These were among findings in Coupa Software’s inaugural strategic CFO survey, Maintaining a Competitive Edge in Uncertain Times. The San Mateo, Calif.-based fintech offers a cloud solution for business spend management (BSM).
Ninety-one percent of respondents, the report also found, are concerned about meeting sales forecasts in the next year.
“Grappling with difficult choices, finance leaders are under unrelenting pressure to make sacrifices, including layoffs, despite their strong conviction that layoffs should remain a final recourse,” the report stated. “In fact, even as these concerns keep them up at night, more than four in five (86%) CFOs and finance leaders say layoffs are a last resort to cut costs.”
As a result of these takeaways, CFOs are being challenged to balance the proverbial checkbook in new ways, with 93% concerned about company financial performance in the event of a recession. To this end, the top three strategies to champion profitability are: increasing efficiency (53%), increasing digitization (33%) and reducing business travel (32%). Fifty-three percent remain concerned about the ability to improve efficiency in the coming years. One of the reasons for the stance is that 46% said they lack “full visibility” into how their company spends money on data.
Faced with making critical financial decisions, sometimes quickly, CFOs feel the most tension with CEOs (49%), followed by CIOs/IT (33%), CPOs/HR (28%) and board of directors (26%).
“Amid widespread speculation about an imminent recession, CFOs and finance leaders face escalating pressure to maintain profitability and a competitive edge – and are even gripped by fears of paying employees on time,” the report noted. “Declining profitability and margins (42%), meeting payroll (39%), and falling behind the competition (37%) are finance leaders’ top three concerns in the face of economic uncertainty.”
Increasing Digitization in 2023 and Beyond
To better understand the macro and micro view of a company, the report pointed to the importance of BSM. “This empowers finance leadership to better understand — and influence — not only how resources are being used across their company, but also the strategic impact of managing spend in a holistic way.”
The report continued. “It gives CFOs the opportunity and visibility to understand spending practices across their organizations and apply precision tools — not blunt instruments — to contain costs. With increased visibility across all spend types, from cost of goods sold (COGS) to operating expenses, finance leaders are better able to make the informed decisions necessary to ensure their company remains competitive.”
When asked what other roadblocks stand in their way, CFOs pointed to outdated legacy systems.
“These leave finance leaders vulnerable to blind spots and misguided assumptions when managing spend and making financial decisions,” the report continued. “It’s a serious, increasingly perilous deficiency; especially given that less than half (46%) have proactive or predictive financial forecasting and risk management in their organization.”
While 85% of those polled noted that they can access their spend data instantly, 57% require multiple systems.
“Worse, 15% say it takes them multiple days across multiple systems,” the report stated. “(32%) say their processes are still manual or hands-on, which hampers their ability to be agile and respond quickly. In light of varied, often unpredictable disruption, it’s in the best interest of CFOs, finance leaders, and their teams to digitize the entire back office.”
Looking forward, among top priorities for CFOs in the coming year and beyond is increasing digitization (41%).
“A lack of automation can significantly hobble a company’s ability to survive and prosper in times of economic strain,” the report stated. “An overwhelming 93% of finance leaders agree, saying more automation would help their company better respond to today’s economic challenges.”
