CFO Outlook: Optimistic? Yes. Wary? Yes.

Financial professionals who can read a chart are rightly worried about the long-term economic health of the U.S. To quote the late, great economist Herbert Stein, “If something cannot go on forever, it will stop.”

Try telling that to the banks buying treasuries at a feverish rate this spring. The $34 trillion and exponentially growing debt will eventually lead to a default of sorts and long-term T-note holders getting the shaft. But we’re still a ways off from there (hopefully).

For the here and now, optimism is on the rise among many CFOs and controllers. On the flip side, concerns about employee retention and data security remain high (more on that further down).

CFO Cost-Cutting Enabled a Softer Landing

Signs are strong that dating back to last summer, decision makers at private companies bet on a sharp economic downturn at the start of 2024. They decided to make some very tough cuts over the past few months — unfortunately in the form of layoffs in many cases — to help weather the storm. Bigger companies took a hatchet to areas that struggle to drive revenue. HR and administrative positions took a hard hit across the board in companies of all sizes.

Government spending is no doubt propping up the economy. But the key word is “up” — most sectors of the economy aren’t in a economic recession. And finance experts’ optimism about the economy and their firms’ outlook through the end of the year is also on the upswing.

Case in point: The Federal Reserve Banks of Richmond and Atlanta and Duke University’s Fuqua School of Business survey hundreds of CFOs and financial execs every quarter to gauge the mindset of business leaders. Execs say they’re feeling better than they’ve felt in three years — CFOs’ optimism about the overall economy topped a 60 score, the highest since the 2nd quarter of 2021.

They’re even more bullish on their own organizations: “CFO optimism about their own firm’s financial prospects … stands at a level of 69,” and “CFOs revised upward their expectations for real gross domestic product over the next four quarters to 2.2% … [up from] 1.4% a year ago.”

Automation: Costing Jobs, Saving Businesses?

Automation and artificial intelligence is increasing the likelihood of a hiring slowdown and flat-out freeze for many. “[More] than half of respondent firms report implementing software, equipment and/or other technology to automate tasks previously completed by employees,” say the Richmond and Atlanta Feds. “Among those firms that automated tasks over the last 12 months, close to 40% noted that automation caused them to either slow the rate of hiring new employees, decline to fill open positions or lay off employees.”

Fifty-two percent of companies expected to freeze hiring for 2024, according to a recent Resume Builder survey. Almost 40% of C-level and senior management respondents said more layoffs were likely at their companies this year, and the same percentage expected to implement automation and AI for work functions.

Digitizing accounts payable and receivables top the wish lists of CFOs and controllers. A/P and A/R automation solutions offer dashboards that provide real-time visibility into cash flow and working capital and a better understanding of spending patterns. Skilled A/P, A/R and credit & collections professionals will be expected to embrace automation tools for routine tasks so they can focus on more important projects.

Cyber Threats Put CFOs On Edge

CFOs who answered the Atlanta and Richmond Feds survey ranked monetary policy as their top business concern, followed closely by labor quality and availability. The quest to find and hold on to talent is a hot topic for business leaders in other areas besides finance, to be sure.

So is stopping cyber thieves from hacking into systems and stealing customer data. According to the most recent CFO Signals survey by Deloitte, cybersecurity ranked as the top concern beyond financial reporting and internal controls. Seventy-six percent of financial chiefs say cybersecurity will be a top priority for their companies’ audit committees in 2024.

Those findings jibe with a late 2023 PricewaterhouseCoopers survey: More than three out of four CFOs (78%) said they planned to enhance their cyber risk management. Too many companies still aren’t backing up critical data or following encryption best practices to protect themselves from ransomware attacks and (even worse) AI deep fake scams.