New Report: Financial Officers Playing It Safe Heading Into 2023

“Cost control” is king to CFOs in the new year.

U.S. Bank is out with its latest Bank CFO Insights Report and it shines a light on how senior financial executives are prioritizing cost containment in 2024 – even if they admit artificial intelligence remains a separate priority.

The annual survey, which tracks 1,400 corporate financial management leaders, shows emphasizing revenue growth (which was a big interest point in 2021 and 2022) has taken a back seat to cost containment in 2023 and looking forward to 2024.

“CFOs have positioned themselves decisively in defense mode,” said Stephen Philipson, head of global markets at U.S. Bank. “With the end of the low-cost capital era and inflation still uncomfortably high in some parts of the economy, finance leaders are taking control by driving efficiencies in their organizations.”

CFOs seem to want balance going forward between budgets and investing, and that’s not going to be an easy task.

“As we work with CFO clients on how to position their balance sheets for a potentially more challenging economic environment, the focus is on prudent capital-allocation decisions. We talk about how to weigh cost-control efforts against focused investments that could drive future growth. As our survey results show, this balance is challenging CFOs,” Philipson noted.

According to the study, rising interest rates and compliance and regulatory responsibilities rose the most as a “risk” factor in this year’s U.S. Bank study. Also ranking high on the CFO concern list was talent shortage (cited by 48% of respondents) and technology changes and digital disruptions (cited by 40% of survey respondents).

AI Remains a Big Deal Heading Into 2024

The U.S. Bank survey also noted that a clear majority of finance executives believe artificial intelligence “could completely redefine how the finance function operates”, although there’s also “strong interest” in data analytics and cloud computing.

About one-third (32%) of survey respondents say they’re taking a close look at curbing technology spending right now, including on AI, data management, and cloud technologies. That’s up from 25% in 2021, U.S. Bank reports.

Meanwhile, 45% of senior financial executives say they plan on investing more cash in AI and the cloud, hoping that doing so will “deliver cost savings” in 2024.

Business leaders are hopeful they can pair cost containment with AI-powered data initiatives to curb costs.

“Cost optimization has always been our bread and butter,” said Kent Ratzlaff, EVP of finance at Niagara Bottling. “We’ve always done operational analytics, but diving deeper is a key focus for us right now.”

For example, while Niagara understands the cost of raw materials very well, more detailed analytics can change the game for the company.

“(Advanced) analytics can help us better understand the costs of labor, repairs, and maintenance, along with wider manufacturing costs for a specific product at a specific plant,” Ratzlaff adds. “That helps us make informed decisions about the products we manufacture.”

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