Uncover the top 5 challenges that finance teams and CFOs will have to tackle in 2024 to stay ahead of the curve.
The chief financial officer role has changed more in the last decade than in the three before it. The compliance and control responsibilities have not gone anywhere, and a set of expectations has been added on top that would have belonged to a different executive not long ago.
What follows are the five pressures we see most consistently across the Australian businesses we work with, along with what actually helps. Not a survey, and an honest account of what finance leaders raise repeatedly in conversation.
They are related, which is part of the difficulty. Solving any one of them in isolation tends to make another worse.
The traditional finance output is a report on a closed period. The current expectation is a view of what happens next.
That is a fundamentally different discipline. Reporting requires accuracy and completeness. Forecasting requires judgement, assumptions that can be defended, and a willingness to be wrong in public.
The practical difficulty is that most finance functions are structured for the first and asked to do the second. The month end process consumes the capacity that forecasting would need, and the forecast becomes an annual budget exercise rather than a living view.
The businesses that handle this well have made a structural change rather than an effort based one. Month end is compressed so capacity exists. Forecasting is continuous and rolling rather than annual. And the forecast is built on drivers rather than on last year plus a percentage, so when reality diverges you can see which assumption broke.
Almost every finance leader has more data than their predecessors and less confidence in it.
The cause is usually structural. Sales sits in a customer relationship system, operations in an industry specific application, finance in an accounting package, and payroll somewhere else again. Each holds a version of the truth and no two agree.
The consequence is that answering a cross functional question is a project. What is our margin by customer segment requires an export from three systems, a reconciliation, and someone's judgement about which source wins where they differ. So the question gets asked quarterly instead of monthly, and the answer is treated as indicative rather than reliable.
The fix is architectural rather than analytical. A single system of record with consistent dimensional coding turns those questions into reports. Businesses that consolidate onto one platform describe the change less as better reporting and more as questions becoming askable that previously were not.
Finance headcount rarely grows in proportion to what finance is asked to deliver, which is the arithmetic behind most of the pressure in the role.
The expansion is real. Statutory reporting, tax, treasury, business partnering, systems, analytics, and increasingly sustainability and supply chain risk. The team is the same size.
The usual response is to work harder, which is not a strategy and does not scale. The alternative is to systematically remove transactional work from the function.
That means automating what is rules based, which is most of accounts payable matching, bank reconciliation, expense processing and standard journals. It means eliminating reconciliation created by having multiple systems rather than getting faster at it. And it means being deliberate about what finance stops doing, because a function that only ever adds responsibilities eventually fails at all of them.
Finance recruitment has become genuinely difficult, and the difficulty is concentrated in exactly the roles that matter most.
Transactional roles are fillable. Roles requiring both accounting depth and systems capability, the people who can build a model and also understand why the data behind it behaves the way it does, are scarce and expensive.
Retention has its own problem. The people who are good at analysis are frequently the ones spending most of their week on manual processing, because they are the ones who can be trusted with it. That is precisely the work they will leave to escape.
What helps is fairly direct. Remove the manual work so the interesting work is what is available. Invest in systems capability within the team rather than treating it as the technology function's problem. And be realistic that some capability is better bought as a service than hired, particularly where the requirement is periodic.
The finance leader increasingly owns or heavily influences system selection, implementation and ongoing management, frequently without a technology background and alongside the day job.
This is not unreasonable, since finance systems affect finance most and finance understands the requirements best. It is demanding, because the decisions are consequential, expensive and difficult to reverse.
The failure modes are consistent. Selecting on demonstration rather than on fit. Underestimating the effort required from the business as opposed to the vendor. Treating go live as the finish rather than the start. And under investing in the change management that determines whether people actually use what was built.
What helps is engaging people who have done it before, being sceptical of timelines that assume nothing goes wrong, and protecting the internal capacity the project requires rather than assuming it will be found. Our implementation approach is built around that reality.
Five is a tidy number and there is a sixth that finance leaders raise almost as often, which is the steady expansion of what has to be reported and to whom.
The statutory obligations were always there. What has grown is everything alongside them. Payment terms reporting for larger businesses, increasingly detailed payroll reporting, supply chain and modern slavery disclosure, and a growing expectation around environmental and social reporting that in many cases has no established process behind it.
Each of these individually is manageable. Collectively they consume real capacity, and they usually land on finance because finance is where the data is and where the discipline exists.
What helps is treating them as data problems rather than reporting problems. Where the underlying information is captured properly at source, with the right coding, most of these obligations become an extract. Where it is not, each one becomes an annual scramble that repeats indefinitely.
These are not independent problems and treating them separately is why progress is often slower than expected.
Fragmented data creates manual work. Manual work consumes the capacity that forecasting needs. Absent capacity, the forecast stays annual and the pressure to predict remains unmet. The manual work also drives away the analytical people, which reduces capacity further.
And the technology decisions that would break the cycle are hard to make well while the function is at capacity, so they get deferred, which perpetuates the fragmentation.
The practical implication is that the highest leverage intervention is usually the one that removes manual work, because it is the constraint that everything else is downstream of. Businesses that start with better reporting on top of a fragmented foundation get a better view of the same problem.
Part of the pressure comes from a change in what the board wants from the finance pack, and it is worth being specific about it.
Historical accuracy is assumed rather than valued. Nobody thanks finance for a correct profit and loss, and everybody notices an incorrect one. The reporting that gets attention is forward looking.
Boards want to know what the numbers imply. Which trend is real and which is noise. What the cash position looks like under a downside scenario. Which assumption in the plan is most likely to break and what happens when it does.
They also want less of it. A pack that runs to sixty pages gets skimmed, and a well constructed ten page pack with commentary that explains rather than describes gets read and discussed.
Finance leaders who have made this shift describe it as a change in the writing more than the analysis. The variance table was always there, and the sentence explaining what caused the variance and what is being done about it was not.
Since the underlying constraint is usually structural, it is worth being specific about what a consolidated platform changes.
Transactions carry dimensional coding at entry, so subsidiary, department, class and location are attributes of every transaction rather than something derived later. Margin analysis by any of those dimensions is a report.
Consolidation across entities happens in the system rather than in a spreadsheet, including currency translation and intercompany elimination, which for multi entity businesses removes several days from every close.
Approvals and controls are configured rather than manual, so the audit trail exists by default rather than being assembled.
And the reporting layer reads live data, which means the management pack is refreshed rather than rebuilt, and the finance team stops spending the first week of every month producing last month's numbers.
Some markers are worth holding as targets, because they are observable rather than a matter of impression.
Month end completes in a small number of working days rather than most of a fortnight, with the reporting available immediately rather than a week later.
The cash flow forecast is rolling, maintained continuously, and consulted before commitments are made rather than reviewed afterwards.
Margin is known at whatever level the business actually manages, whether that is product, project, customer or channel, and it is available without a special exercise.
Reconciliation between systems is not a recurring task, because the systems are not separate.
And the finance team spends the majority of its time on analysis and business partnering rather than on processing, which is the outcome all of the above exists to produce.
Where the current position is a long way from that, the order of work matters.
Start with the data foundation, because analysis built on unreliable data produces confident wrong answers, and everything else depends on it.
Then compress the close, since that is what creates the capacity for everything else, and it is achievable through automation and process discipline without a large project.
Then build the forecasting discipline, using the capacity the close compression released.
Then extend into business partnering, which requires both the credibility that reliable reporting brings and the time that automation created.
Attempting these in a different order is common and rarely works, because each depends on the one before it.
The obvious objection to any sequencing advice is that a finance function under pressure has no spare capacity to improve itself, which is true and is why so little changes.
The way through is to pick something small and finish it. Not a transformation programme, one process that is currently manual and could stop being manual within a month. Bank reconciliation is a common candidate. So is expense processing, or the standard journals that get rekeyed every period.
What that buys is hours, and hours are what the next improvement needs. Two or three of these compound into meaningful capacity within a quarter, which is when larger changes become possible.
The alternative approach, waiting for a quiet period to begin a big programme, fails reliably because the quiet period does not arrive and the programme is too large to start without it.
Not everything needs to be built internally, and finance leaders are frequently slower than their peers in other functions to use external capability.
Transactional processing is a reasonable candidate, since it is well defined, it does not differentiate the business, and providers who do it at volume make fewer errors than teams doing it occasionally.
Periodic specialist requirements are another, since capability needed twice a year is expensive to employ and straightforward to engage.
Systems work is a third, particularly implementation and significant configuration change, where the internal team has the business knowledge and not the platform depth.
What should stay internal is anything requiring business context and judgement, which is the analysis, the partnering and the decisions. The general principle is to keep what is specific to your business and consider outsourcing what is not. Our overview of business process outsourcing covers where the line usually sits.
The common thread across all five challenges is that the role has moved from stewardship of what happened to influence over what happens next, without shedding the original responsibility.
That is only sustainable if the mechanical part of the job shrinks, which is why the systems question keeps appearing in what looks like a set of people and expectation problems.
Finance leaders who have made real progress describe a similar sequence. They stopped trying to do more with the existing structure, changed the structure, and used the capacity that released.
Our chief financial officer resources cover this in more depth, and our pieces on automation and the modern finance function and management reporting essentials take specific parts of it further.
If you would like to talk through where your finance function is constrained, get in touch.
