CFO challenges in 2024: from economic headwinds to global elections

Among the numerous challenges for CFOs around the world in 2024, there’s no doubt that macroeconomic factors will continue to loom large.

Research by Taulia found that 42% of finance leaders cited inflation as their greatest worry for 2023 – and although the threat of sky-high inflation may have abated in recent months, economic conditions look set to remain tough in the year ahead.

While the UK slipped into a technical recession in late 2023, the US could avoid following suit. That said, GDP growth is forecast to be “well below potential” due to the lagged impact of previous monetary tightening, according to the Q1 2024 US Economic Outlook by Capital Economics.

The EU economy, meanwhile, “entered 2024 on a weaker footing than previously expected,” according to the European Commission’s Winter 2024 Economic Forecast.

But while these concerns are not insignificant, CFOs are also facing other headwinds this year – not least of which is the prospect of political upheaval.

Over 64 elections are scheduled around the world in 2024, with a record 3-4 billion people – around 49% of the earth’s population – taking to the polls in a single year. The results of these elections will shape the political landscape for years to come.

Political decisions can significantly affect economic stability, with lasting effects on macroeconomic factors such as inflation (and its impact on purchasing power), as well as on interest rates, borrowing costs and market conditions. So where does all this leave the CFO?

Addressing economic challenges: the CFO’s role

The CFO has a vital role to play in helping firms navigate economic uncertainty. As well as overseeing financial planning and risk management activities, a CFO needs to be able to make well-informed strategic decisions and ensure that the company is equipped to mitigate any periods of disruption that may occur.

To do all this successfully, CFOs need to have the right tools and technology at their fingertips. Looking back to 2023, our research found that almost half (48%) of the CFOs surveyed were planning to invest more in IT infrastructure.

US companies were particularly focused on investment, with 53% of American CFOs expecting to invest in digital infrastructure, compared to 47% in the UK.

At the same time, most respondents said that working capital was important to their firms’ overall allocation strategy. As such, companies were taking steps to improve their working capital management practices across payables, receivables, and inventory.

At a global level, 55% had adopted inventory management solutions, while half had deployed early payment programs, and 41% were selling receivables.

In 2024, such solutions will continue to play a valuable role in helping companies improve relationships with key suppliers, unlock cash and secure access to the raw materials and goods they need to operate.

Shoring up supply chains

Navigating product shortages and periods of supply chain disruption has become an all-too-familiar challenge for companies over the last few years – and in the year ahead, CFOs will be alert to any new issues that might arise.

With 30% of CFOs identifying supply chain disruption as their greatest concern in 2023, it’s no surprise that financial leaders were also taking steps to shore up their supply chains.

Eighty four percent had revised their sourcing strategies in the last year, while 55% of respondents in the U.S. were looking at strategies such as reshoring and nearshoring. In Singapore, meanwhile, 35% of respondents were looking to change suppliers but remain in the same region.

A balancing act

In today’s landscape, it’s no surprise that CFOs are continuing to focus on the challenges presented by political instability and geopolitics. In the coming months, CFOs are likely to pay close attention to the evolving geopolitical environment, from the impact of world events on energy costs to fluctuations in supply and demand.

However, since world events of this type are outside the control of CFOs and business leaders, they can only plan to act in response to such events.

That’s not to say they can’t keep ahead of the curve in other ways. By making decisions such as investing in digital transformation, and gaining more visibility over their cash flows, finance leaders can make sure their companies are well positioned to navigate periods of volatility and adapt to supply chain disruptions.

There are two key trends unfolding that CFOs are paying attention to in order to ensure they’re operating at the cutting edge:

• Tech-assisted decision making: As businesses look ahead, technological investments will remain a big focus for CFOs. By adopting new technologies and harnessing digital innovation in the form of predictive analytics and data driven business management systems, finance leaders will be better able to gain a centralized view over their cash flows and make more effective decisions about their liquidity.

• Harnessing GenAI: Likewise, they are paying close attention to the arrival of generative AI (GenAI) and the opportunities this could bring for helping their businesses create efficiencies, speed up innovation and build a competitive advantage. According to Deloitte’s CFO Signals survey from Q3 2023, 42% of the North American CFOs polled said that their companies were experimenting with GenAI, while 15% were building it into their strategies. Nevertheless, two thirds added that less than 1% of their 2024 budget would be spent on the new technology.

Meanwhile, CFOs will also need to find an equilibrium between keeping costs under control and investing for growth. In a challenging business environment, businesses need to keep costs under control – but they also need to set their sights on harnessing growth opportunities, and balancing these priorities isn’t always straightforward.

According to the August 2023 PwC Pulse Survey, 89% of CFOs said that striking the right balance between cost-cutting and investing was a top challenge to transformation.

The year ahead

In summary, there will be no shortage of issues jostling for CFOs’ attention in the coming months. Upcoming global political activity could further contribute to existing economic challenges, while the risk of supply chain disruption will continue to loom large for companies that have weathered numerous unexpected events over the last few years.

In this environment, where CFOs face diverse challenges, it’s more important than ever that they use all the tools at their disposal to maximize financial health. That means using technology to increase visibility over their cash flows, optimize working capital and bolster supplier relationships.

To find out more, take a look at our recent report: Charting CFO paths: 2023-24 insights report