As the CFO’s set of responsibilities morphs into driving the business’ strategy as well as acting as its financial steward, their teams are under increasing pressure to keep up. But with an ongoing accounting talent shortage — and with many companies planning to hold their finance staffing levels steady — finance professionals are swiftly becoming overburdened.
The majority — nine out of 10 — of executive leaders described their finance teams as either “lean” or “overextended,” according to a recent survey by Paro, which offers an AI-enabled marketplace of finance and accounting solutions.
However, while the accounting shortage is putting pressure on CFOs when it comes to finding skilled talent, it’s not “necessarily true that finance teams are smaller than they were pre-COVID,” said Michael Burdick, Paro’s founder and interim CFO. Rather, the volatility of the macro economic environment means it’s “very difficult for teams to adapt to all of the changes that are occurring,” he said in an interview.
Unraveling fixed costs
High interest rates, a tight labor market and geopolitical pressures have left CFOs racing to find a clear path forward in a murky economic environment, which requires high-level insights and support from their teams.
Much like finance chiefs themselves, however, finance teams which are “constantly getting whiplash” from one headwind or the next are going to be less effective “because their focus is going to drift, or they’re constantly going to be changing gears,” Burdick said. An alum of Big Four firm Deloitte, Burdick founded the Chicago, Illinois-based Paro in 2015 and has served as its chief strategy officer and interim CFO for three years, according to his LinkedIn profile.
An overworked finance team switching from one task to the next with little warning or support is likely to be less productive, Burdick said. Failing to support the team can also contribute to employee burnout and high attrition, as well as bump up the risk for errors that could nip at the company bottom line. For example, overextended teams could increase the likelihood of late filings with the Securities and Exchange Commission, which can lead to a drop in stock price or concern investors, Ro Sokhi, an audit partner for UHY, previously told CFO Dive.
Moreover, overworked finance teams lack the time and resources to contribute to strategic initiatives, halting both the company’s ability to move forward on future projects as well as finances’ evolution as a strategic leader, according to Paro’s study.
Navigating these challenges requires CFOs to shift some of their fixed costs — the greatest of which is typically headcount — to variable costs, Burdick said. That doesn’t necessarily mean having fewer employees but having the elasticity to “flex up and down depending on needs,” he said.
“As opposed to having maybe 10 full time employees as your base team, maybe you have seven, and then you flex up and down with…fractional experts and projects based upon the needs of that specific time period,” he said, by way of example.
Reducing fixed costs can give CFOs crucial flexibility especially in an uncertain macro economic environment, allowing them to contract certain processes or costs without having a large impact on already-stretched teams, he said. Adding that flexibility includes bringing in both fractional talent and new technologies to lighten the load.
“We’re seeing certainly a tailwind there whereby it’s sort of, ‘I have my core team and let me supplement them with experts and skills and resources to keep them focused on their core day to day…make sure they don’t burn out,’” Burdick said.
The AI, risk balancing act
Today’s CFOs also need to balance changes in how the accounting industry wants to operate in the face of emerging workforce trends and new technologies. For instance, artificial intelligence is an “incremental tool that [the] traditionally conservative department needs to figure out how to integrate and adapt,” Burdick said of finance teams.
Adding in new technologies such as AI is only adding more complexity for CFOs to juggle as they deal with transformation in their own roles, Burdick said, leaving finance chiefs “trying to find low risk ways for their teams to test AI.”
The most successful CFOs have managed a “balancing act” where they’ve enabled their teams to take small, low-risk opportunities when utilizing AI — allowing them to gain familiarity and ease with the tool without opening the company up to massive risk with a still-nascent tool, he said.
