Monitoring financial trends is simultaneously one of the most difficult and one of the most important aspects of a CFO’s job. When tracked and predicted correctly those trends can be incorporated into the company’s plans and integrated internally for more efficient, reliable and—ultimately—more profitable investments that increase company and shareholder value.
The first quarter of 2013 is almost over, but thus far the year is shaping up to be the perfect storm of necessity and opportunity, with financial trends at both ends of the spectrum that corporate CFOs need to be aware of in order to make smart decisions going forward.
1. Shareholders Speak Up
Shareholders have begun to flex their muscle more (and more often)—even at profitable companies—playing a much more active role in corporate governance than in recent years.
That’s led to an increase in pressure on CFOs to unlock corporate cash hordes and make investments that will result in a greater return on shareholder equity via corporate growth. According to CFO Magazine’s list of top corporate finance trends, such activities include spending in categories such as plants and equipment, research and development, and hiring.
While a number of concerns continue to weigh on the minds of CFOs that will limit spending somewhat, a recent survey from the American Institute of CPAs (AICPA) reported that in the first quarter of 2013, 50% of survey respondents were optimistic about their business’ prospects, up from 41% in the last quarter of 2012.
2. Employment Prospects Mixed
While the actual data is unclear about the likelihood of more hiring in corporate America for the remainder of 2013, whether or not to hire will be among the top decisions CFOs will make this year.
Many companies have become good at doing more with less, increasing profits by cutting costs. There’s a limit, however, to the amount of growth that can be seen through that method and some analysts are predicting that companies will reach that limit this year, leading to increased hiring.
The numbers currently available on hiring for corporate financial jobs have yet to show that—but there’s always a chance that will change as the year progresses.
3. Technology As a Financial Trend
For better or worse, a recent Gartner study reported that the number of information technology leaders reporting to the CFO has increased, rising from 42% in 2011 to 45% in 2012. That means it’s more important than ever for those in finance to keep up on the latest in technology, as finance trends and tech trends continue to become increasingly intermingled.
For starters, technology is changing how companies of all sizes handle funding. So much so that CFO Magazine is predicting that tight credit at banks will lead bigger companies to adopt the same crowdfunding strategies that smaller companies have begun to implement. Trendwatch.com’s prediction that presumers will become increasingly prevalent, investing money in the creation process and becoming increasingly engaged with products and services prelaunch, seems to augment that prediction.
And that’s not the only way technology will infiltrate the ranks of the financial sector. As the price of predictive analytics and big data tools continue to drop, it’s likely there will be increased adoption of tech tools to analyze the return on various investments to help companies get the most for their money.