Chief financial officers (CFOs) acting as organizational navigators are staring down choppy seas.
Amid historically high inflation, rising interest rates, and broader economic volatility, there is now a banking crisis whose knock-on effects are evolving the notion of providing value from the finance seat.
For “PYMNTS CFO Series: What’s Different?” James Ritter, CFO at ABBYY, said that while his business is naturally diversified from a banking relationship standpoint given its international footprint, the recent failures of Silicon Valley Bank and Signature Bank, as well as the self-liquidation of Silvergate Bank, have nonetheless brought “some of the more banking and financial aspects” of ABBYY’s relationships into focus.
“As long as [businesses] have an interest in profitability, they are going to be reviewing their relationships and making decisions that weigh their risk exposures,” Ritter said.
Still, he emphasized that despite the current crisis, in the medium and long term the biggest concern facing finance teams remains the ongoing risk from inflation.
“Inflationary conditions are still real and still relevant, and companies need to react to that,” he said. “I think [dealing with inflation] is still the highest priority for a lot of financial executives at their companies.”
Read also: Strategic Working Capital Allocation Helps CFOs Realize Stronger ROI
According to 2023 PYMNTS data, more than 90% of CFOs expect a global recession within the next year.
The macroeconomic headwinds buffeting today’s business landscape are prompting organizations to turn to more centralized and streamlined strategies as they look to give their operational fundamentals a lift.
“There’s been quite a number of layoffs in tech specifically, as they try to solve for short-term cost pressures,” Ritter said. “I think long term, and acting now, what’s really going to make a difference is setting up your organization for success by identifying cost efficiencies as well process and operational efficiencies.”
Underpinning this approach, Ritter added, is the ongoing digitization and automation of back-office operations with modern solutions proven to help companies reduce costs.
“It’s the future of business operations,” he said. “Companies have the ability to make those changes today and see those benefits today.”
While the tumultuous business climate may provide an opportune time for finance leaders to cut their teeth and gain valuable experience through on-the-job training, CFOs are also now spending less time in their jobs as responsibilities move beyond finance.
Read also: Generative AI Set to Drive Headcount Efficiencies Across the Enterprise
An integrated approach to business growth planning is only becoming more important for the CFO office, as the responsibilities of finance teams more broadly shift, and Ritter said that some of the existing roles in companies are “evolving” as businesses digitize and automate processes.
“[Businesses] don’t necessarily need someone to do specific data entry type tasks as much anymore, but you do need individuals that are able to provide additional critical analysis,” he said. Roles will “evolve to be increasingly focused on more critical aspects of the business.”
PYMNTS has previously written about how automated software solutions and generative artificial intelligence (AI) tools are increasingly taking on more of the mundane and repetitive tasks that accountants no longer want to do.
These modern tools, Ritter said, are “really going to evolve the skillset of the employee base” by changing how employees both engage with information and then activate that information to make decisions for the business.
“It’s changing the way that people look at the operational relationship between systems and people,” he said.
Still, Ritter underscored that inflation and its ripple effects should remain a foremost concern as costs continue to increase everywhere, both for business and their employees.
“Companies are to balance how to operationalize their businesses to make sure they’re as efficient as possible,” he said. “Right now, if you’re not taking a look at back-office operations and finding ways to digitize and automate those systems and processes with cost-effective solutions that free up employees for more important and strategic initiatives, you are going to fall behind.”
Studies project that over the next three years, nearly half of all B2B invoices will be issued, processed and paid without any human intervention, while PYMNTS research shows that nine in 10 Software-as-a-Service (SaaS) firms are just a month away from onboarding new software into their existing accounts payable (AP) systems, with a further majority of surveyed executives saying the process would take just two weeks.
Digital modernization tends to be a one-way street. As companies adopt automated solutions, they rarely return to historical ways of doing things.
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