As corporate treasurers, CFOs and CEOs work together to shoulder the responsibility for steering their organizations through a potential global recession in 2023, a significant lack of confidence is prevalent among the C-suite and finance and accounting (F&A) professionals “when it comes to the visibility their company has over its cash flow, suggesting that many global organizations could be making decisions without an accurate, up-to-date view of company liquidity”, states the Eye of The Storm: F&A’s Role in Responding to Instability & Volatility survey by BlackLine, Inc.

This fourth annual research report by Blackline was conducted by Censuswide, an independent research consultancy, that surveyed 1,483 C-suite executives and F&A professionals in large and medium-sized companies in the United States, Canada, the UK, France, Germany, Australia and Singapore.

The report found that the bleak outlook for the global economy has business leaders and finance executives worried about impacts on their cash flows. Rising interest rates and elevated uncertainties have once again underscored the importance of cash flow and working capital as the lifeblood of any business and the essence of the treasury function.

Keeping track of cash in real-time

“The flow of cash into and out of a company has always been an important indicator of a company’s financial health. But in the current climate, measuring and improving cash flow has become even more important”, according to Blackline’s survey.

This explains why six in ten (62%) respondents said that understanding cash flow in real time will become even more important for their organizations over the next 12 months. However, nearly all (98%) of those surveyed admitted that they could be more confident in the visibility of their cash flow.

Of these, nearly half (49%) stated that “A lack of visibility in this area makes them worried that their company is making decisions based on inaccurate or out-of-date information—with those in the UK (54%) and Singapore (56%) expressing particular concern.”

Besides being concerned about misinformed decision-making because of poor cash flow data, 48% of respondents told Blackline that not having a proper view of cash flow makes it harder to respond to market fluctuations, while 44% of those surveyed said it makes them less confident that their organization can remain competitive over the next year.

Financial data under the spotlight: real-time visibility over financial data key to survival

With a slowdown in global economic growth that is expected to trigger a worldwide recession next year, “Real-time visibility over financial data, processes and working capital will be key to survival, leading to greater pressure on CFOs and those who report into them”, as per the survey.

This indicates that as company finances and metrics come under the microscope, finance and accounting executives will be under greater stress to deliver insights to leadership in near real-time.

“As these recessionary fears rise, 62% of C-suite and F&A professionals predict that their companies’ financial reporting will come under increased scrutiny over the next year”, the report explains.

Rising pressures on F&A executives will put financial data on the spotlight, thereby resulting in more data-reliant decision making, with 62% agreeing and expecting the ability to view their companies' financial data in real-time as a "must-have" for business survival over the next 12 months. 

“This concern is most acute in the United States, where 71% of respondents said that real-time visibility would be crucial for survival. That compares with 58% in the UK, 59% in France, 50% in Germany, 62% in Canada, 63% in Australia, and 55% in Singapore”, the report further added.

“Over the last few months, global and market instability has increased, and for many businesses, this is adding more uncertainty to an already challenging and unpredictable global business environment”, observed BlackLine CEO Marc Huffman.

“Company leaders across the world will be carefully considering how their organization can respond and remain competitive, agile, and resilient in the coming months. There is no doubt that those who are using robust and comprehensive data to make rapid, intelligent decisions will be in a stronger position to adapt. In this environment, it’s likely that greater emphasis than ever will be placed on the strategic insights that Finance and Accounting can offer the business”, Huffman further added.

In response to increasing financial pressure, survey respondents are looking internally to optimise processes and working capital, with 40% saying they now need to find ways to optimise working capital without looking externally to borrow funds and 56% wanting to implement or scale automation solutions to help optimise and increase working capital within the next year.

Conclusion

Three of the biggest challenges that C-suite and F&A professionals are expected to face in the coming year as per the survey report are: increasing regulation and scrutiny, being able to provide accurate data quickly enough to help the organization respond to market changes, and attracting and retaining talent.

As business leaders, finance chiefs and their teams gear up to confront these challenges, as well as prepare for a recession, they should consider scaling investment in financial automation solutions to increase visibility and accuracy of financial data, allowing for faster and more informed decisions. In these unpredictable times, this at least can offer a modicum of certainty to CEOs, CFOs and their departments and organizations.