Dive Brief:

• Inflation and a lack of skilled talent are putting pressure on CFOs who are tasked with keeping their companies steady despite shrinking resources. Such pressures are leaving finance teams markedly less efficient this year than they were a year prior, according to a recent survey by reporting, analytics, and performance management solution provider insightsoftware.
• Finance teams were found to be less efficient in all responsibilities tracked by the software provider’s Finance Team Trends Report for 2023, with capital management and treasury, short-term business strategy, and mergers and acquisitions seeing the steepest drops.  
• To boost efficiency — even as they face a rise in the responsibilities associated with the finance function — CFOs “need to focus on prioritizing the most impactful projects to create a more agile, resilient organization enabled to capitalize on growth opportunities throughout the market changes,” insightsoftware CFO David Woodworth said in response to questions emailed by CFO Dive.

Dive Insight:

Nearly 70% of finance professionals reported feeling pressure from inflation, economic disruption and the possibility of recession, according to the survey — factors which have also pushed up the demand for finance teams to increase their efficiency.

“This means CFOs commonly find themselves with their head down to deliver the immediate requirements instead of looking forward and making changes to enable the future, including using the best tools to enhance team efficiency,” Woodworth said of how macroeconomic factors are affecting finance teams.  

Budget constraints (32%), raised prices (29%) and a lack of skill present in their team members (27%) are all top challenges finance leaders are facing, the survey found.

CFOs therefore need to find ways to be more efficient with less resources —"doing more with less is the key to scaling effectively,” Woodworth said, which includes eliminating “as many manual processes as possible” to help save time and funds.

Skill shortages in particular remain troublesome for finance professionals, with 41% of survey respondents indicating talent woes were a top external factor impacting their efficiency.

Federal Reserve Chair Jerome Powell pointed to persistent tightness in the labor market as one of the reasons contributing to continued inflation in comments to the House Financial Services Committee last week. Inflation remains well above the Fed’s 2% target as demand for labor continues to outstrip supply, Powell said, making it likely that the Fed will once again raise interest rates before the end of the year despite its June pause.

CFOs need to weather both demands to improve efficiency and a need to be more discerning with their hiring; 64% of finance professionals expect their teams to grow this year, compared to 73% in 2022, according to the insightsoftware survey.

Controllership, capital management and FP&A are among the finance functions suffering the worst talent gaps, Woodworth said.  CFOs “need to prioritize training and development, balanced with progress toward digitization and automation,” he said. “Enabling teams with the best tools to decrease non-value-added work helps attract and retain top talent.”

However, while strategic hiring and an increased focus on training can help some financial leaders bridge existing skill gaps, a “significant percentage of leaders” need to focus on software implementation and automation to do so, Woodworth said.

CFOs are looking outside of their teams and leaning on their IT departments for the skills their teams lack  — something that then creates a “bottleneck” for both teams when they need to focus on potentially weathering a coming recession, the survey found.

The percentage of finance professionals who reported being satisfied with their relationship with their IT counterparts dropped sharply this year, according to the survey, with 28% reporting they were completely satisfied with this relationship compared to the 54% who said the same last year. Moreover, 66% of finance professionals say they are too reliant on IT, according to the survey.

Implementing automation can help to ease the pressure on the finance team by reducing the need for existing employees to learn specific technical skills, Woodworth explained, or by easing the need to rely on the company’s IT teams for such skills.  

“Ultimately, there needs to be a focus on the right technology and increased training to ensure these skill gaps are addressed effectively,” he said.

However, with CFOs caught addressing the immediate needs of the business, automation’s potential has slumped slightly on finance leaders’ priority lists, insightsoftware’s survey found. While 24% of finance professionals pointed to manual processes as a key challenge impacting their teams’ efficiency, only 25% said they were prioritizing automation — a 15% drop from last year.

Failing to integrate automation now — especially as generative AI models in particular continue to improve — will lead to a competitive disadvantage for companies later down the line, Woodworth said. CFOs therefore need to understand that using such tools, which allow for greater collection and use of data, will enable greater and more agile reporting, allowing decision-makers access to the most current information to make the best decisions.

“They must also recognize that the right technology can address the challenge of lack of skills on their finance team — especially when prioritizing technology that uses familiar interfaces to conduct new tasks.” Woodworth said.

Conducted in partnership with Hanover Research, the survey included responses from 519 senior finance and accounting professionals across North America, Europe, the Middle East and Africa.