How an Outsourced CFO can help businesses thrive in 2023

Navigating the Challenges of 2022: How an Outsourced CFO Can Help Businesses Thrive in 2023’s Unpredictable Economic Climate

As the year comes to a close, we reflect on a year of economic transition and the challenges it has brought. Despite the difficulties, it has been a successful year for many. One of the key challenges has been the need for outsourced CFOs to manage a diverse range of financial operations. We are taking a closer look at navigating the challenge of 2022 and how Outsourced CFOs can help business thrive in 2023’s unpredictable economic climate.

With the right guidance and expertise, businesses can ensure that their finances are properly managed, allowing them to thrive in today’s ever-changing economic landscape.

Some of the challenges we have faced during 2022 were:

Resourcing

Finding staff has been almost impossible! It has created service delivery issues and cost pressures for many businesses. The tight labour market saw wage costs increase, while obtaining materials has also been difficult—further complicated by logistical pressures and increased freight costs. These factors have put considerable strain on businesses, with resource acquisition proving to be a major challenge.

The Change in Government

A new government with a new agenda creates more uncertainty about priorities. We saw a new Industrial Relations platform rolled out that left businesses trying understand the full impact at a time when there were already labour shortages. To help businesses navigate the new changes, the Outsourced CFO can provide the advice and support they need to stay up to date with industry changes and make informed decisions.

Inflation and operation costs

Inflation and operating costs are on the rise, with electricity prices skyrocketing and driving up operating costs. To help mitigate the impact of these escalating costs, businesses must find ways to be more energy-efficient and find ways to reduce their electricity bills. This could include investing in energy-saving technology, instituting energy-saving policies, and/or utilising renewable energy sources. Taking these steps can help to control operating costs and ensure a more sustainable future.

Net Zero

Businesses are increasingly looking at the carbon footprints and net Zero plans. Even if you are a small business, larger businesses who are your customers are building net Zero into their supplier selection process – as a small business you don’t want to be caught out. You too can start making the move towards net zero and be ahead of the game. There is some government assistance available and setting out the net Zero plan for the next 5 years – an Outsourced CFO can guide you through this process.

Interest rate rises

Interest rates are on the rise, putting additional financial pressure on businesses with higher gearing. The higher interest rates mean businesses with higher debt levels are facing an increased cost of borrowing—making it difficult to manage their debt obligations. This could potentially lead to higher costs and decreased profitability, putting them at risk of insolvency.

Businesses with high gearing should take steps to mitigate the impact of higher interest rates by reviewing their debt structure, reducing their debt levels, and exploring other financing options. Taking these actions now can help to protect businesses from the financial strain of higher interest rates in the future.

2023 a year of adjustment

2023 is shaping up to be a year of adjustment, as the full impact of these factors has yet to be realised. We have observed several emerging trends they may shape the year to come:

• As cost pressures continue to mount, we are witnessing slowing order books across the board. Companies are feeling the strain of rising costs and having to make tough decisions about their operations. To stay competitive, businesses must find ways to manage their budgets and maximise efficiency.
• As the labour market continues to soften, we are seeing more and more backpackers returning to the market. With the influx of workers and the competition that brings, businesses can now benefit from a larger pool of talented people. This is great news for employers, as they can now more easily fill their job openings with the best and brightest workers.
• Nine months ago, containers were nowhere to be found, but now this is easing and costs are coming down. After the global demand for shipping containers skyrocketing, this is somewhat of a relief and should assist the passage of goods

Solutions for staying ahead of the competition

With the economic outlook for 2023 uncertain, businesses need to remain alert and agile to stay ahead of their competition. Consumer spending is likely to decrease, making it more challenging for businesses to maintain their sales. Companies with considerable debt levels should be prepared for rising interest rates, which could put further pressure on their cash flow. To stay competitive and profitable, monitoring these trends closely and making the necessary adjustments will be important.

Decisions should be based on evidence of the long-term benefits they will bring. By recognising and adapting to the cyclical nature of the economy, businesses will be better equipped to weather the storm and remain successful.

To find out how an outsourced CFO could provide you with the support you need, you can learn more about the roles and responsibilities.