As the economy remains staid, CFOs' confidence in their organizations may not be enough to ensure they reach the goals set out at the start of 2023. According to The CFO Alliance’s mid-year CFO checkpoint report, only half (50%) of the 9,000-plus CFO Alliance members, several hundred of which are CFOs, remain confident they can meet this year’s top- and bottom-line goals.
Short Staffing, FP&A Function Are Hurdles
Finance teams face workloads that continue to exceed some of their capabilities. One-third (33%) of those surveyed reported they were working harder than expected, while over a quarter (28%) reported operating at least one person short on their teams. To remedy this, nearly a quarter (24%) allocated funds to internal upskilling, while less than one-fifth (18%) relied on outsourced labor.
“The data demonstrates that the CFO’s steadfast commitment to navigating the currents of change and uncertainty will likely help many of the businesses that they lead and serve to stand up against these challenges and position them to seize current and future opportunities,” Nick Araco Jr., founder of the CFO Alliance, told CFO. “That bodes well for forecasting business and economic performance in 2024.”
A significant hurdle for organizations is the FP&A function. Nearly nine in 10 (87%) said FP&A tasks, including reporting and forecasting, needed improvement. Finance leaders were still confident in their budgets, as 83% of them said they were either balanced or aggressive in their view of budgeting heading into next year.
EBITDA Underperformance
Confidence in hitting year-end profit targets is waning. Barely half (49%) of those surveyed expect year-over-year increases in EBITDA. But, nearly three-quarters (71%) of that group said they are confident they will hit their full-year plan.
Less than a fifth (15%) of CFOs in organizations predicting EBITDA declines said the same, and half (52%) of all finance execs were confident in reaching EBITDA goals, down from 80% as measured by the CFO Alliance at the start of 2023. According to Araco Jr., many of those with low confidence will find a way to come out in one piece.
“As business sentiment continues to shift throughout the remainder of 2023, our CFO Alliance members' unwavering dedication and financial stewardship will continue to be instrumental in steering their enterprises toward prosperity, reflecting not only their proficiency but also their collective resilience as a team,” he said.
One variable CFOs have been prepared for is inflation. Two-thirds (66%) of finance executives indicated the year-to-date impact of inflation on their organization was either expected or better than expected. Eight in 10 expected the full-year impact to align with their estimates.
