mid-year review: the biggest challenges for cfos in 2024.

Financial forecasting is often the key to a successful year. At the end of last year, Tatum advised CFOs on the best way to plan ahead for a 2024 filled with economic uncertainty, recruitment challenges and disruptive technology.

But planning ahead isn’t easy, especially in such volatile times. Business leaders face challenges such as supply chain disruption and fluctuating interest rates. This year, we’ll see a high-stakes U.S. election, plus wide-scale adoption of AI technology. On top of all this, you have the normal internal factors that affect every business, such as cost management and strategic investment.

For these reasons, many CFOs use the mid-year as a moment to review their financial forecasts and prepare for a strong finish to 2024. Here are some of the factors to consider when you’re looking at the road ahead.

1. external economic challenges

Businesses have survived a series of shocks since the beginning of the decade. Last year saw a spike in inflation and interest rates, plus a number of high-profile Reductions In Force at large tech companies.

Currently, predictions for the year ahead look positive:

• The OECD expects inflation to fall to 2.3 percent by Q1 2025.
• Analysts expect the Federal Reserve to cut interest rates before the end of this year.
• S&P predicts improved liquidity conditions in 2024, although credit costs may increase.

However, the picture could change depending on world events. 2024 is an election year in the United States, with serious implications for federal economic policy. The global geopolitical situation remains volatile, which could impact markets, supply chains and consumer sentiment.

All these factors are beyond the CFO’s control. Instead, finance leaders should focus on building business resilience and ensuring they’re ready for whatever lies ahead.

2. new opportunities for cost optimization

Cost management is a key part of business resilience. Right now, CFOs are continuing to look at ways to find efficiencies and reduce expenses, especially with the help of cutting-edge technology.

Some tech-driven cost optimization strategies include:

• streamlining business processes by using artificial intelligence and machine learning
• reducing labor costs by extending remote and hybrid work programs
• employing predictive analytics to improve financial forecasting and resource planning

Technology plays an important role in other cost-management strategies, such as budget reviews or workforce reorganization. CFOs require high-quality data to help identify efficiencies — and to highlight the areas that require further investment.

3. deploying new AI services

Artificial intelligence is becoming part of everyday life, with 33 percent of office workers saying they’ve used generative AI tools in their jobs and 55 percent expressing a desire for more training. This is good news for CFOs, 80 percent of whom plan to embed AI in their processes over the course of 2024.

AI is the latest phase of the ongoing digital transformation journey. As most CFOs know, digital transformation projects can present some major challenges, such as:

• recruiting and upskilling staff to work with new digital tools
• developing new processes to maximize the value of digitization
• implementing controls to reduce risk and meet compliance requirements

AI adoption poses the same challenges, plus artificial intelligence is an emerging technology, and therefore not yet 100 percent reliable. CFOs, CIOs and other stakeholders need to proceed with caution when making decisions about AI investment.

4. dealing with talent shortages

Most analysts expect the recruitment market to slow slightly through 2024, with salary growth of around 3.5 percent to 4 percent. Overall, this means hiring plans should proceed as expected for the end of the year.

However, most employers are facing talent shortages in highly skilled positions, especially in areas like finance and IT. This has implications for business strategy, but it also directly affects CFOs, especially if you intend to build your team’s capacity and integrate new technology.

If your plans depend on hiring skilled people, there are some important steps to take now:

• Work with recruiters to create candidate profiles for your must-have employees.
• Explore options for upskilling and retraining your incumbent team members.
• Look at consultancy options to fill urgent skills gaps.

Talented people are always in demand, which means talent shortages will always be an issue to some extent. It’s a good idea to work with your recruitment team to build a reliable talent pipeline. You can also build a relationship with a trusted partner who can deliver skilled consultants when you need them.

5. new compliance and reporting requirements

Companies face an ever-changing challenge when meeting their regulatory obligations. For example, in recent years, the SEC has introduced guidelines that require some companies to report on ESG risks, C-Suite diversity and cybersecurity. Later this year, the SEC may require companies to provide reports on climate change initiatives.

2024’s political uncertainty could have a huge impact on compliance, as the winning candidate might slash regulations or introduce new rules. This year will also see state and local elections which could impact businesses. Other countries may also change their rules, which could impact international markets.

For CFOs, the main challenges here are:

• staying on top of regulatory changes and understanding how such changes might impact long-term strategy
• looking for ways to automate and streamline internal controls by using artificial intelligence
• identifying opportunities that might arise from shifts in the regulatory landscape

Staffing and digital transformation both play an important role in regulatory compliance. It’s easier to stay compliant if you’ve got the right data, the right reporting tools and the right people to help you navigate the rules.

6. cash flow and liquidity concerns

Economic volatility continues to affect liquidity, which is directly affecting long-term strategy at some companies. For example, the credit rating agency Fitch predicts M&A activity will remain subdued for the rest of 2024, due to factors such as high interest rates, unstable valuations and changes in banking regulation.

Liquidity issues can also be a cause of near-term concern for CFOs, both in terms of access to working capital and the potential impact on creditors. Finance leaders need to think about how to mitigate liquidity risks and finance upcoming investments, which might require actions such as:

• optimizing accounts receivable processes to improve cash flow
• negotiating better terms with suppliers to extend payment deadlines
• exploring alternative financing options, such as asset-based lending or factoring

If access to capital is likely to impact long-term plans, the leadership will need the CFO to offer further guidance. This is why it's crucial finance leaders have an accurate, data-driven understanding of the organization’s current financial resilience.

7. cybercrime prevention

Hackers can do enormous damage to a business. As well as the material cost of dealing with a breach, your company may also face reputational damage, regulatory fines and legal liability. The rate of cybercrime continues to increase, and cyber attacks are expected to cost over $10 trillion in 2025.

Finance teams are responsible for many of the internal controls that can help prevent crime and fraud, which means CFOs play a vital role in cybersecurity. Some of the main concerns this year include: 

• ensuring new IT vendors (such as AI companies) meet security standards
• assessing potential risks from remote and hybrid working patterns
• conducting audits to identify malicious activity, such as hacking, data theft or unauthorized access of customer records

Cybersecurity is no longer the exclusive domain of the CIO or Head of IT. Cybercrime is an existential threat to the entire company, so the entire leadership team must work together to keep your data safe.

8. managing stakeholder relationships

CFOs play a crucial role in their organization, providing a mix of data-driven insights and strategic vision. The CFO also influences key decisions, such as staffing, IT investment, marketing and operations.

In volatile times such as these, the CFO’s relationships with other stakeholders are more important than ever. People will look to the finance leadership for answers to questions like:

• How will market volatility affect our future business plans?
• Is the company resilient enough to withstand any shocks?
• Is the company in a good position to take advantage of any new opportunities?
• How will technology such as AI impact business processes?
• Will there be any major staffing changes in the future?

Accurate data can help CFOs give useful answers to questions such as these. Even where there’s uncertainty, it’s important to have open and transparent conversations about the main challenges facing the business.