Chief financial officers are predicting net profit growth in 2023, according to a new survey from advisory firm Grant Thornton LLP.
The Q3/23 CFO survey revealed that CFOs focus on profitability despite the uncertain interest rate outlook and global economy, with only 28% of the surveyed executives being pessimistic about the market situation, representing a 7% increase since last quarter.
Seventy-six percent of finance leaders expect net profit growth, with just over half (52%) saying their organizations will grow profits by more than 5%. This profit growth prediction represents a 9% rise from the second quarter.
The survey also showed that supply chain was once again rated as the top challenge, with just 45% of CFOs saying they were confident in meeting their supply chain needs.
Technology as the answer
Technology is increasingly becoming the answer to a variety of challenges, including supply chain woes, and finance leaders are consistently in search of the best technology-enabled solutions.
In just three months, the percentage of CFOs who said their organisations are using generative artificial intelligence grew to 43% from 30% the previous quarter. Meanwhile, 45% of respondents noted that they are exploring potential use cases for generative AI.
More than half (57%) of CFOs said their organisations have formal training in place on the use of generative AI, up from 49% in Q2.
New technology can also come with some added costs as finance leaders understand that they will have to spend money to take advantage of these technological opportunities, and that finding the most efficient and effective technologies with a high return on investment is a priority. Fifty-eight percent of CFOs expect to increase their spending on IT/digital transformation.
Cost optimisation as priority
The survey also revealed that CFOs continue to choose cost optimisation as their number one priority. However, identifying opportunities to save may be difficult for companies, as the portion of CFOs who expect their operations costs to increase rose to 47%.
Along with vendor or supplier savings, workforce rationalisation also emerged as a possible cost-reduction option for CFOs: 45% of finance leaders listed it as one of their top areas of focus, up from 41% the previous quarter. Additionally, the portion of CFOs who predicted potential layoffs in the next six months rose 10 percentage points to 37%.
Finance automation for profits
The Q3/23 CFO survey found that finance automation has the potential to drive cost savings and profits, enabling faster strategic shifts to capitalise on rapidly changing market conditions.
Thirty-six percent of CFOs said their financial planning and analysis (FP&A) teams alter their forecasts at least weekly, with 14% adjusting at least once a day and 9% making real-time changes.
This trend toward speedy analysis is made possible by the growing use of advanced technology in finance departments. In fact, 30% of survey respondents said they are already using AI in their finance processes, and an additional 40% plan to implement AI in this area in 2024.
Looking further ahead, each of the following technologies — AI, distributed ledger technology, machine learning, optical character recognition and robotic process automation — will be implemented by at least 70% of the CFOs responding to the survey.
The survey also found that CFOs have confidence in their forecasting functions’ capabilities to deliver results for them. According to the data, 76% of CFOs said their FP&A function is effective, and 83% said the recommendations FP&A provides are useful. The underlying theme is that these FP&A insights are helping CFOs make a big play for profits, no matter what obstacles lie ahead.
