Strategy

A CFO Action Plan for 2023

Here are the challenges businesses should be ready for this year and what actions CFOs should be taking.
Steve McNallyJanuary 9, 2023
A CFO Action Plan for 2023
Photo: Getty Images

Many small- and medium-sized companies are still navigating through incredibly turbulent waters. We entered 2022 after enduring over 18 months of COVID-19 spikes. Throughout the year, we faced inflation, market uncertainty, the war in Ukraine, and other disruptions in addition to the lingering impact of COVID-19. 

CFOs are uniquely positioned to see the bigger picture, understand the ins and outs of their companies, and map the best path to success. What challenges will businesses encounter in the new year and what actions should their CFOs be taking in 2023?   

Economic Turbulence – Again

The economic turbulence experienced in 2022 will likely continue throughout 2023. Inflation, while trending down, has increased the cost of materials, services, utilities, and other expenditures. Employees, also feeling inflation’s sting, want (higher than normal) raises. Increasing interest rates makes it more costly to borrow funds. Market uncertainty is testing consumer confidence. Fear of recession may slow capital and other strategic investments. But how do you drive growth if you are always on the defense?

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During times of economic instability, more than ever, CFOs must take a leading role to ensure their organizations weather the storm. Make sure you intimately understand your company’s financial position. Provide accurate reporting and actionable insights. Run what-if scenarios to determine the potential impacts of inflation, wage increases, lost customers, etc. Carefully monitor cash, ensuring you have enough to meet debt obligations, pay suppliers, and issue payroll. And identify opportunities to streamline your processes, cut costs, and protect the business. 

Broken Supply Chains

Many global supply chains are on the verge of breaking if they aren’t broken already. Disruption has impacted every link in the supply chain. Factory shutdowns, parts and labor shortages, port congestion, capacity and space constraints, extreme weather events, trade conflicts, tariffs, and increasing delivery delays and costs have caused unprecedented challenges. 

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  Steve McNally

CFOs should strengthen their supply chains in the year ahead, carefully analyzing them end-to-end to identify potential weaknesses and opportunities. Identify critical suppliers, build relationships with them, ensure they have scale, and designate alternate sources where needed. Engage key customers in joint demand planning, gaining commitments for short-term requirements. Invest in preventive maintenance programs to minimize unplanned downtime. Implement cycle counting for raw materials, finished products, and spare parts to ensure complete visibility. And, in general, monitor your supply chain risks and react accordingly.   

CFOs should strengthen their supply chains in the year ahead, carefully analyzing them end-to-end to identify potential weaknesses and opportunities.

You Gotta Have Talent

In early 2022, my team lost a long-term general accounting clerk. We brought on a temporary resource while searching for a permanent replacement. The search, while ultimately successful, was slow and painful. Leveraging a temp was painful too — we are still correcting the temp’s mistakes over six months later. To meet the increasing demands of our cross-functional partners, the CFO team needs to be highly competent and engaged. But the tight job market — whether driven by the “great resignation,” the great reshuffle, or quiet quitting — is making it increasingly difficult to hire and retain a team. Demands for higher wages, the desire for remote work, and the need for upskilling aren’t making it any easier. 

As CFOs grapple with hiring and retention challenges, they should start by investing heavily in current staff. Encourage your team to define individual development plans based on their career goals, then enable their upskilling by providing relevant training opportunities and on-the-job experiences. Create a fun work culture consistent with your company’s values. Invest in well-being initiatives and other incentives. Embrace the new normal of remote and hybrid work, looking at your team through a new lens to find a win-win solution. And leverage automation to minimize repetitive tasks, allowing your team to focus on higher-level analysis and decision support.     

As CFOs grapple with hiring and retention challenges, they should start by investing heavily in current staff. 

Sustainable Business Management

The drumbeat is growing louder for a greater focus on environmental, social, and governance (ESG) initiatives in general and specifically for sustainability disclosures. ESG will see an evolution as impending reporting requirements and shifting industry priorities continue to shape how we define and implement such initiatives. Within this overall ESG lens are diversity, equity, and inclusion (DE&I) initiatives and the work that must be done within our profession to make it more inclusive and equitable.

As CFOs make decisions during the upcoming year, despite the uncertainties, they must continue embracing and prioritizing (and not defunding) such initiatives. By doing so, you can supply what stakeholders want while creating economic value for your organization. So, build your personal awareness of ESG trends and related reporting requirements. Educate your staff and cross-functional partners on how these trends could impact your organization. Regarding ESG reporting, implement appropriate controls and provide effective oversight as you do for financial reporting. Seek ESG initiatives with a positive return on investment (ROI). In short, adopt a sustainable business management mindset.      

Technology: The Good and the Bad

Embracing sophisticated data analytics and visualization tools, using robotic process automation (RPA), exploring the use of blockchain, and leveraging other new technologies could prove a game-changer for an organization. Successfully navigating the waves of new technology coming our way is a business imperative. On the other hand, though, the bad actors are becoming more creative and more aggressive. Ensuring the security, privacy, and quality of data as cybersecurity breaches continue to skyrocket is a challenge. Rising cyber risk complicates risk mitigation and increases the cost of cybersecurity insurance.

Today’s CFO must ensure their organization is fully leveraging technology while mitigating associated risks. Start by developing a digital-savvy mindset, and building your knowledge of new technologies and trends. Collaborate with your cross-functional partners to create an overall technology strategy for the business. Drive discipline into the decision-making process when considering technology-related investments.

Leverage existing technology for maximum benefit, allocating budget for system enhancements and training. And ensure cybersecurity considerations are woven into your team’s decision-making, revisiting cash management and other controls, acquiring adequate cyber insurance coverage, and developing contingency and recovery plans in case a cyber attack does happen.   

Steve McNally, CMA, CPA, is CFO of The PTI (Plastic Technologies Inc.) Group of companies and Chair Emeritus of IMA (Institute of Management Accountants).