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As we put 2023 behind us, what trends can FP&A professionals expect in the year ahead?
That was the topic of conversation in a recent episode of my podcast, The CFO Show, sponsored by Vena. During the episode, I spoke with my co-host Tom Seegmiller, Vena’s Vice President of FP&A, and we laid out our predictions for 2024.
I’d love to say it’s going to be a quiet year. But “quiet” is exactly the opposite of what I’m predicting.
Rather, after a challenging few years—most recently with rising inflation, volatile interest rates, wars in the Ukraine and Gaza and ups and downs in the job market ending in mass layoffs in 2023—I’m foreseeing 2024 will include many of the same uncertainties and challenges.
And just as they did in 2023, finance teams will be searching for the tools and strategies to help them through it.
Calling 2023 a “wild ride,” Tom agreed that we shouldn’t expect 2024 to be much different from the year past.
So what exactly can we expect for 2024, then? Here are our top five predictions on the trends, changes and challenges we foresee for FP&A this year—and what they might mean for finance teams and businesses in general.
The first of our FP&A predictions for 2024 isn’t a very sunny one.
In fact, if you’re tired of hearing about economic uncertainty—not to mention feeling its effects—we have some bad news. Because we predict 2024 will continue the trend that has been developing over the past few years, with more economic instability in the cards.
In the past year, we've seen continued inflation and some very steep increases in interest rates. And I don’t expect those to go away in 2024. That could mean there are still more increases, but even if there aren’t, it's still not going to undo itself overnight.
So that's going to remain a concern for FP&A teams, staying top of mind throughout 2024.
Outside of inflation and rising interest rates, though, there are other continued economic concerns we need to look out for as well.
For one, I’ve been seeing a tightening of available funding that I don't expect will change right away either. And with investors more cautious, they’ll be more critical of the companies they decide to invest in—so expect funding terms that aren’t as favorable as they’ve been in the past. As a result, many companies may not be able to raise funding at all.
Finally, don’t rule out the “r word”—recession. The threat of a recession hung over 2023, and it isn’t going away in 2024. Whether you believe that we're in a recession already, or that one is pending, the threat alone is going to create uncertainty, and will guide decision making this year.
As if economic uncertainty wasn’t enough, Tom and I expect 2024 to continue to bring geopolitical uncertainty as well—something that can add to resource shortages and supply chain issues, as well as further economic strife and increases in inflation.
“The world's on fire a little bit in terms of political uncertainty,” Tom said during the podcast. That’s evident in headline-worthy events like the continued war in Gaza, the ongoing effects of climate change—including the possibility for more extreme weather-related events like those we saw in 2023—and competition over natural resources.
All of that strife can impact the world’s economic markets and put more stress on FP&A teams. In fact, already this January, economic research firm Yardeni Research raised its odds of a 2024 recession due to the continued war in Gaza.
“All this pressure happening on natural resources like gas, we're definitely not in a climate where that's likely to dissipate anytime soon,” Tom added as another example.
Artificial intelligence (AI) has made huge strides in the past year—making it a top story of 2023. And we expect 2024 will see even more businesses harnessing its power, building new AI-driven capabilities into their organization that weren’t possible before.
In fact, I think companies everywhere are looking at what AI is going to mean for both their product and their business productivity. And that’s just as true in FP&A as anywhere else.
But embracing the new surge of AI solutions coming into the market may also introduce some practical requirements as well—and I think everyone is going to be trying to figure out where they should focus those efforts this year.
For instance, what's AI going to mean in terms of the upskilling or reskilling required within your workforce? Teams need to make sure they have the right talent and the right strategies in place—which will definitely be dominating people's mind share.
Finance teams are always looking for new ways to add efficiencies to their organization and free up their time and take on a more strategic role within their business.
And AI isn’t the only way they can add these new efficiencies to their operations. Traditional automation and focusing on process improvements will be important considerations for FP&A teams this year as they look to maximize productivity and help their organization run more smoothly.
“That is definitely something I see in my day to day … that focus on working with the resources that you've got, driving greater efficiency,” Tom said during the podcast.
And this is a time where Finance has really stepped into the forefront of the business in terms of identifying opportunities to drive ongoing efficiency and act as a strategic partner across the whole company.
Everything considered, it’s actually a really exciting time to be in finance.
Finally, the last prediction Tom and I made has to do with finding the right talent to meet your FP&A teams’ goals—and to embrace all of these changes head on.
While the war for talent may have dissipated to a point, it hasn’t completely gone away. And with added economic uncertainties and a need for efficiency, leaders are more focused than ever on getting their teams right, keeping headcount under control and ensuring they have the people they need to meet their goals.
With all of that in mind, I think finance leaders will be more focused on organizational design this year. Businesses will be ensuring they can bring in the right talent and retain that talent—and organizational structure is a big piece of that.
Getting the right org structure in place means asking the right questions about your team and future hiring priorities.
Questions like:
Especially with remote work, you've got wider opportunities to think about where you're hiring your resources, and you want to make sure that you're doing it wisely.
Incorporating the right skill sets is also key. And with the rise of technologies like AI, the skill sets teams need are changing—and the market for these new skills is becoming competitive.
That’s why any business that isn’t thinking about the future now and optimizing their team to take advantage of emerging technologies is missing out.
(To build on the skills of your FP&A team, explore Vena’s free CPE/CPD courses and certifications on Vena Academy.)
“You think about so many organizations spending 60% to 70% of their spend on people alone,” Tom said. “Sometimes we need a good reminder to focus on what counts—and people count.”
But neither Tom nor I expect any of these 2024 FP&A predictions to happen overnight.
Rather, most companies will embrace these changes through gradual evolution, not drastic revolution. Teams will take on “one problem at a time,” Tom suggested.
“It's not like they're going to magically say one day, ‘AI is going to displace 80% of my work,’” he added by way of example. “That's just not realistic in nature, [not] the way we operate as people and human beings. Not to mention the finance industry isn't really ready for it. Most organizations don't have that roadmap in place.”
Staying ahead of what’s next means constantly looking forward, evolving your goals to meet ongoing challenges and opportunities and putting in place contingency plans for any possible variable. Having the right tools to look ahead and plan for anything can help put you on the right path.
“Predicting the future is a particularly challenging thing. Forecasts are always going to change, always going to evolve,” Tom said.
In other words, don’t be shocked if 2024 has some surprises in store.
Join Vena's CFO Melissa Howatson for conversations with finance visionaries and business leaders as they navigate risks, address messy organizational challenges and share hard-learned expert advice.
Melissa Howatson, Chief Financial Officer at Vena, has a wealth of experience in financial and consulting roles, ranging from EdTech, automotive and Big Four accounting firms. She was CFO and board member at D2L—a global learning technology company—and led its successful initial public offering in 2021. Prior to that, she held finance leadership positions at Bend All Automotive, Qwalify and Primal. Melissa is a CPA-CA, having obtained her designation while working in KPMG's assurance practice. With her combination of scale-up and start-up experience, Melissa has an impressive track record of building and leading successful finance teams that drive the business forward.
