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Can CFOs balance the books with rising operating costs?

Can CFOs balance the books with rising operating costs? 36

By Mark Blakemore, Chief Finance Officer at Compleat Software, the purchase to pay (P2P) software house

As almost every single finance leader (98%) surveyed by Deloitte recently said they anticipated operating costs to rise this year, how can they balance the books in the face of some of the most challenging economic forecasts in recent history?

Almost half (46%) of the CFOs surveyed also said they expect these rises to be significant, while 71% believe operating margins will fall over the next 12 months.

High inflation and interest rates have overtaken concerns over brexit and the pandemic, putting the pressure on businesses to operate with fine margins.

The spotlight is on CFOs to balance growing operating costs while maintaining growth, but can it be done?

Is there an endgame?

With no exception, the day-to-day expenses associated with the maintenance and administration of a business are rising. From the cost of energy, to raw materials, labour shortages and rising interest rates.

Ultimately if businesses do not find solutions to deal with rising operating costs, businesses will fail, further compounding the issues faced.

In this era of predictable unpredictability, CFOs face an unenviable challenge that needs to be met, with both optimism and practicality – it is a good job that CFOs have broad shoulders!

Given the global, interconnected and data-driven way in which businesses operate, the pace of change is often rapid and long lasting, due to the relationship between the key factors impacting a business’s bottom line.

The hangover of Brexit and the pandemic have blended with rising geopolitical risks associated with the war in Ukraine, set alongside record inflation, globally – all are driving costs up for businesses.

Even if businesses provide and sell more services, they’re not making the margins they once did, which will see constant knocking on the finance door to provide answers to this significant challenge!

Donning the battle armour

CFOs are answering the door and facing the challenge head on. But what approach should they take? Tighten purse strings, reduce energy consumption, remove the dead wood, invest in better practices – all of the above?

It is not quite as simple as that.

CFOs are in a unique position to balance the books in the face of rising operating costs, as the scope of their roles allows them to impact upon all aspects of a business, from steering strategy around technology investments, to ensuring supply chain resilience, as well as influencing talent management and even organisational culture.

CFOs should not be scrambling to batten down the hatches and adopt simple cost cutting measures that they may have undertaken during the pandemic, such as reducing workforces, stopping bonuses and increasing prices and expect this to ride out.

There are simply too many factors involved, which are intertwined.

CFOs are presented with a great opportunity to introduce much needed innovation into their businesses. This could take the form of creating new products, or services, entering new markets, as well as looking to invest in technology to innovate and automate processes.

Unleash innovation by leveraging intelligent automation

In these times of narrow margins and increasing costs for pretty much every business commodity, organisations are increasingly turning to their CFOs for strategic direction and to drive business transformation.

The role of finance professionals has altered dramatically over recent years due to emerging and proven technologies, such as intelligent automation, AI and machine learning – all of which help CFOs to streamline processes, improve accuracy and maximise compliance – in short, CFOs can assist businesses to accomplish more with less by, investing in true automation.

Many financial operations can, and are fully automated, using currently available technologies.

CFOs which embrace emerging technologies to automate finance operations can free up significant resources within their organisations, in areas such as cash flow forecasting, invoice processing, accounts receivable – freeing up resources to add value in other areas of the business, as well as accessing vital business data gained from automation to help drive business decisions.

By ensuring that a business spends less time dealing with manual, time consuming tasks, CFOs can pave the way for the business to implement strategies to support their employees in reinvesting their energy into work that requires more creativity and critical thinking.

Adopting intelligent automation and emerging technology now allows forward-thinking finance leaders to remain competitive amidst today’s complex challenges.

CFOs have many solutions at their disposal to help balance the books in the face of rising operating costs.

By taking a holistic approach to the problem and fully embracing the benefits of automation, CFOs are able to free up significant resources in their organisations to focus on strategic leadership and innovation, helping them to balance the books in the face of rising operational costs.

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