Economic unpredictability may be giving senior leadership and shareholders second thoughts about your 2023 budget priorities.
Here’s what some experts are saying about the approaches your peers may be taking with their 2023 budgets, which can give you some budgeting insight as well.
Enhancing the tech stack
When prices rise and purchasing power decreases, that’s a key time to optimize efficiency. That’s why CFOs may opt to push back against inflation by automating repetitive or time-consuming tasks. Automation can help reduce the number of staffers dedicated to manual processes, such as invoice processing, and helps free up employees to focus on more strategic projects to drive business growth.
Because of its evolving data flow that can help companies adapt to changes in their industry or the economy, some organizations are turning to an advanced version of robotic process automation that’s capable of identifying patterns and making predictions based on data.
In addition to the costs that come with this technology, don’t forget that your company may need to hire people to manage the programs and train employees on the software functions that affect their jobs.
And because fraud prevention is so essential, have you considered all associated costs for cybersecurity and software updates in your 2023 budget?
2023 budget for hiring, retaining talent
If your company plans to hire in 2023, what measures will you be taking to attract top talent in an employee-centric job market? Will you have adequate resources available to execute or revise that recruiting strategy?
Because investing funds in your employees can create a committed, engaged and adaptive workforce, will your compensation be competitive enough? Consider that a survey by Willis Towers Watson found that employers are budgeting an average pay increase of 4.1% for 2023 and that nearly two in three companies have budgeted for higher raises than last year.
Employee benefits are also closely linked to retention, and a health and benefits strategies survey by Mercer indicates that 70% of your peers at large companies and 53% of small business leaders said they’re working employee benefits program enhancements into the 2023 budget.
Some enhancements they may be considering include online training/certification programs, childcare assistance and transportation subsidies.
Accounting changes and your 2023 budget
Does your 2023 budget take into account the latest (and potential) changes in accounting standards, tax laws or government regulations that could affect your bottom line?
A few examples that could come into play:
- The proposed Securities and Exchange Commission requirements for environmental, social and governance reporting
- The Inflation Reduction Act of 2022, and
- Lease accounting standard changes.
Implementing ASC 842, for example, involves budgeting funds for staff training, a communications strategy for stakeholders and possibly lease accounting software.
A checklist of additional forecasting questions to ask before presenting the final version of your 2023 budget:
- Were there big-ticket repair and maintenance costs from this year that aren’t likely to be repeated next year?
- What’s going to be the impact of increases in interest rates over the coming year?
- Will we be increasing prices because of an inflationary environment?
- What products or services were more popular than anticipated this year and why?
- Are there innovative ideas in the pipeline that could have a positive impact on the bottom line?